The Theory

Modern Portfolio theory is putting together securities of different asset classes in a portfolio and risk, to get an efficient frontier, which is the highest expected return for a given level of risk (Pers.Fin.Plan. Theory & Prac. Textbook).

Asset Classes

The following is a list of asset classes and returns for the last 10 years. (Numbers in percents) (Tam-asset.com):

Under Bonds there is Short-term: 4.3, Five-year: 6.1, Intermediate: 6.2, Long-term: 7.1.

Then under U.S. Stocks there is Large market: 8.9, Large value: 11.9, Small Micro: 13.6, Small market: 11.8, Small value: 15.9, Real estate: 15.1, Cash equivalents: 5.1.

Then International Stocks are: Large market: 6.2, Large value: 9.2, Small market: N/A, Small value: 10.2, Emerging Markets: 8.5.

Allocating Assets

Based on these returns, the next step is deciding what asset allocation to use based on my risk tolerance, and time horizon of goals. I want to use most of the money to help pay for a house, and a summer home. Right now I live in Marysville, Mi. And I want to have a home in about 5-7 years. And I am planning on buying or leasing a summer home up in Lexington on Lake Huron. I am 27, and plan on retirement at about 62 years old. I want about a 7 to 8% return on my assets. I know that is not a high return, but I do not want a lot of high-risk investments. And I only want to keep my investments between 5-7 years.

Then after I sell my investments, I will reinvest the money earned on them, and add more each year, and then leave my investments in there until I retire at age 62. But the main issue is how I am going to invest the $50,000. Since my immediate goals are: house, and summer home, and some retirement money, I chose to allocate the money as follows. Under the equity category which basically covers the things I will leave in and wont get a fixed income from, I am allocating large growth: 10%, large value:10, foreign large growth: 5. Under the fixed income category I am allocating Municipal Bond: 30%, Taxable bond:30, Cash and equivalents-Money Market: 15.

Mutual Fund Screening

Being that I have only $50,000, the best option is to put my money into mutual funds. So the next step was screening for the funds at Morningstar.com. I used the fund screener and for the equity I narrowed it by MS category-large growth, etc., minimum initial purchase required of $10,000 or less, and no load funds. For the MS category I would simply pick large growth, etc., and a minimum purchase was usually at $10,000 or less. And for the load funds category I wanted no load funds, with ratings of 4 and 5.
And for fixed income I did a similar process, except that I wanted funds that had bond ratings of AA or higher and 4-5 years maturity.

And once it was narrowed down from the screening process, I then looked at low expense ratios with the highest YTD return. For equity I looked at ratios with expenses around 1.00 or less with the highest returns. As I clicked on the funds I looked at how they were performing as compared with their index. For large growth and large value it was compared with the S&P 500. For foreign large growth it was compared to MSCI EAFE NDTR_D. The municipal bond was compared with the LB municipal, and the taxable bond with the LG aggregate. For each of them, I wanted funds that were performing right around or above their respective indexes.

After narrowing it down from there, I looked at the manager tenure, modern portfolio statistics, as well as the history of the investment performance-if they were investing in what they said. After all this, I narrowed it down to my final fund choices.

Sample of a Fund

For the equity category of large growth I chose American Funds Grth Fund of Amer 529F. The following are the returns, and the modern portfolio statistics looked at for this fund: (Morningstar.com)

In the Large growth fund the 3 year annualized return was 13.02%, R-squared: 83, Beta: 1.1, Alpha: 2.03, Sharpe Ratio: 1.14, Standard deviation: 9.47

The first statistic is r-squared. For this fund, the 83 means that 83% of the changes in the fund are attributable to changes in the market. So therefore the other part of the fund is affected by unsystematic risks. And beta measures the systematic risk, and provides an indication of the volatility of the portfolio compared to the market. Funds with a beta over 1.0 are more volatile than the market. So in this case 1.11 would be more volatile than the market. But this statistic measures systematic risk, and is more appropriate if the portfolio and mutual fund are highly correlated to the market and sufficiently diversified.

The next statistic is alpha; it shows how the actual performance of the investment compares with the expected performance. In this fund, 2.03 is above 0 so it performed better than expected. Next, is the Sharpe ratio. This is also a measure of risk-adjusted performance. The ratio by itself does not mean anything, only when it is compared to similar investments. So for this fund the ratio is 1.14. By comparing it to other funds with ratios of 1.53, and .93, I can see that this is about the middle of the road because the higher the fund the better risk-adjusted performance. In this case the 1.53 fund, Amana trust growth, may be a better choice. And lastly, the standard deviation in this fund is 9.47. The higher the deviation the more risk is a fund, and therefore the higher return that is expected.

This analysis can be continued by looking at each asset allocation category and comparing it with the appropriate fund (the S&P 500 etc.). Then look at the six returns and statistic listed above and analyze those. I continued this process but for lack of space I did not include those results.

I chose the previous funds because they had good management experience either in the fund, or in previous companies. And they were chosen because of the funds high returns for the least amount of cost and risk, and because of their consistent style of investing. The importance of each aspect will be different for every investor.

Final Tips

So with the $50,000 I believe I can meet my goals of some money for a house, summer house, and start saving for retirement. But there is a process. You need to know the returns in each asset category, your risk level, and then decide how much money to put into each category. Then decide on mutual funds using various aspects such as return, management tenure, expenses, etc. And of course, going to a financial planner makes this process much easier, because they have software programs that can calculate all these issues. But whether you invest yourself, or through a financial planner, the most important thing is to be comfortable with your investment decisions.

Baron Rothschild said “buy when there is blood in the streets.” With all of the bad news around home prices, there certainly is sufficient blood in the streets to consider investing in the homebuilders. Much of the blood in the streets is red ink spilling out of the homebuilders' financial statements - they are losing a lot of money on their inventory of homes already built, and are selling vacant land that they purchased at higher prices for home construction. WCI Communities, a publicly-traded home and condominium builder declared bankruptcy recently, as did privately-owned Levitt & Sons. Homebuilders Tousa, Kara, and Neumann Homes also sought bankruptcy protection within the last year. However, despite the awful market conditions, not many publicly-traded homebuilders have gone bankrupt. Granted there are some that are weak, and the industry is clearly suffering the worst homebuilding environment in decades - maybe even generations, but the current bad news is already price into the stocks for these companies.

It is interesting to note though that with much less building housing starts on an annualized basis have declined to below 1,000,000, historically recessionary levels from which housing turnarounds have begun. Furthermore, single-family housing starts have declined to the point where there are fewer homes being started than are being purchased so that the inventory of new homes is starting to decline. Granted there is a large inventory of used homes (called existing homes) for sale, and with foreclosures rising there could be more.

This writer believes that Toll Brothers (symbol TOL), a luxury homebuilder, and an S&P homebuilding exchange-traded fund (symbol XHB) are reasonable purchases in today's risky homebuilding environment. There is a lot of risk in the homebuilding companies today, but there are also conditions being established for a turnaround. There will be further volatility in the sector, but with so much bad news already priced into the stocks of these companies, the downside risk seems bearable; whereas any good news in the sector could signal the end of a trying couple of years in a battered industry and reward patient investors with returns above that of the general market. By the time the headlines tout the positive trends for homebuilding companies, much of the stock price gains from the turnaround will have occurred.

Organization is the key to this business and for me was the hardest part to master. In fact I am still fine tuning my skills but I can give you what has worked for me this far.

Get a Filing Cabinet

The first thing I did was buy a filing cabinet. This is very important because without it your paperwork will be all over the place, and as you may know all you have to do is buy one piece of real estate and suddenly you have more paperwork than you have ever seen in your life. Now multiply that paperwork by two or three when you start buying more property and you will easily see that without a filing cabinet you will get disorganized really quickly.

Software

There are a variety of software packages out there today both online and offline. You will invariably choose one that is bests for they type of investing that you are doing, but for me it is Quicken's Rental Property Manager. It handles everything I need for my residential investing. It is low cost, and keeps all of my tax items neatly arranged so that at the end of the year when tax time rolls around I simply hand the paper to my accountant and it is all done.

Tenant Records

This is easy with one property but once you start managing 3 or more properties it can get out of control quickly. To keep good records on which tenants pay and which do not (hopefully you will never see that end of it "wink" "wink"), copy the check or money order they send you and attach that copy to a copy of the invoice that you sent them. Mark on the invoice copy when you received the payment. Then put that into the tenant's file located in the filing cabinet which we know you already own. I do not recommend accepting cash from tenants. It can get messy and it is too time consuming to go pick it up. Make them mail you a check or money order.

Follow these three suggestions above and you are sure to be on your way to becoming more organized in your real estate investment career.

A mathematician or a physicist when seeking the essence of a thing or event, frequently finds the key in an analogy that to others seems merely frivolous. This may be one reason scientists are so widely mistrusted. For example, a "game theory" of anything so momentous as war and defense policy strikes the nonscientist as a bad joke in bad taste and helps to explain why it has not received the public attention it deserves. We suspect of pulling our leg a social scientist who suggests that the essence of political practice may be discovered by considering it as a branch of show business. Perhaps a less alien, because more frequently advanced, parallel suggests itself as a means to recognizing the chief value of the stock market; that is, horse racing. The stock market's apologies for staying in business are two: It gives business firms, upon which our continued well-being is dependent, a place to raise money on which to start and grow. And it is the instrument by which ownership in, and income from, the means of production may be widely distributed in a manner consistent with beliefs which are the foundation of the existing social order. But as a capital market, and a means to distribute income within a free market economy, few devices can rival in efficiency a well run race track.

Race tracks are numerous and freely accessible to all, irrespective of race, creed or previous condition of servitude. People bring to the track such money as they have been able to set aside or come into, and invest, according to their best lights, on one of several factors in a competition unimpeded by conspiracy or Government intervention. The combined judgment of the auction market, the individual assessment of all players, determines the prize quickly and precisely (less taxes paid by the track and by the individual, plus overhead). Pari-mutuel tickets are freely negotiable during the race, or in the case of a Daily Double, between races. The player may bet on as many horses in a race as he wishes. Horse and man (or woman), the fittest in judgment, training and native capacity, take home the most money. Even the place and show horses and their backers receive enough to more than cover their investment. Information is freely and inexpensively available from the racing publications, and tout sheets sold outside the stands by the equivalent of customers' men. Also, the track does its part for the Gross Domestic Product. It employs a large work force, most of who are well paid, or, like the concessionaires, are paid commissions on sales. About the only thing a race track lacks is a public welfare agency, where those who get cleaned out can pick up a free sandwich and train fare home,

Here we come to the critical difference between the race track and the stock market, which is that the race track offers a player opportunities for the exercise of fewer kinds of desire and fewer of his faculties than does the stock market (or, for that matter, a poker game). The stock market is essentially an auction involving too many separate items and too many customers with too many objects in mind, and representing too many gradations of ambition and information, to be comprehended all at once by a single mind. To be successful, therefore, requires precise definition of aim (income, quick profit, growth, or some combination from among the three), plus a venturesome but prudent spirit attending to it. In return for an abundant assortment of opportunities, it exacts more than most players are able, or willing, to give to it. The successful investor must bring industry and diligence to the search for opportunities; attention to detail for a sound appraisal of them; discipline to avoid being swept away or distracted; boldness to back an unpopular conviction, and decisiveness. The investor should be grounded, at minimum, in science and medicine, trends in education, labor relations and the operations of Government. He should be a sound judge of popular psychology and a canny interpreter of events. For example, in order to have assessed the effect of a recently introduced after-the-fact birth control pill on the manufacturer's earnings, the investor should have been able not only to weigh its competitive advantages, and chances for acceptance by consumers, but also to anticipate a theological debate and its likely effect on Government policy. She must then have been able to guess what conclusion other investors would reach on the same set of facts. This is an indication of why the most efficient way to keep informed these days is by reading newspapers and magazines directed primarily at businesspeople. (I omit televised business channels for, I hope, evident reasons.) The executive who keeps her nose in the Wall Street Journal, Fortune and Business Week is likely to be better and more accurately informed - money being the unpolitical, unsentimental and cant free thing that it is - than the rest of us.

In short, legally gotten gain from the stock market requires better of a person than does legally-gotten gain from the race course, which is why brokers go to the races to relax. The question that is coming to be heard more frequently, however, is whether the stock market insures that capital will be channeled to uses which will create the most jobs, most efficiently advance technological progress, reward the deserving and the virtuous, increase the standard of living, or other, equally commendable, purpose. It is not a question the stock market should be called upon, or should attempt, to answer. Those who cherish the stock market also wish that its representatives at the New York Stock Exchange would not shill for it in the guise of being midwives to a new social order called People's Capitalism, or some variety thereof. The notion excites the unwary to expectations of the day in which everyone will be living off the fruits of invested capital, and latrine attendants will be the highest paid class in society as an inducement to keep them working. As reality begins to fall short of expectation, the critics will begin asking again whether some sort of mechanism is not possible that will make sure that the highest rewards go to those who most deserve it. We have been through that argument before, and it was nearly the undoing of the stock market.

Home Ownership

The purchase of a home might be the largest single expenditure that you make, but this expenditure differs from other expenditures that you make. Few people have enough cash to pay the entire cost of the home. Instead, they make a down payment and borrow the balance from a financial institution using the home as collateral on the mortgage loan. Securing a mortgage loan from a financial lender requires that the borrower has the financial means to be able to repay monthly amounts of interest and principal, as well as to be able to cover insurance, real estate taxes, and maintenance on the property. Home ownership offers significant tax benefits and opportunities to increase wealth and capital appreciation. Over long periods, most homes appreciate in value, and prices tend to keep up with inflation. Tax benefits come from being able to deduct both interest expenses on the home mortgage and real estate taxes from taxable income at the federal level. These deductions result in lowering taxable income and taxes paid to the federal government. In addition, interest expense on a home mortgage is not subject to inclusion in the computation of the alternative minimum tax (AMT). Because a portion of each monthly mortgage payment is applied to the repayment of the mortgage loan, the home owner is reducing the mortgage balance with each monthly payment and increasing his or her equity position, which is another form of saving.

The disadvantage of home ownership is that if house prices decline and you have to sell your house when the property market is depressed, you could end up losing money. Home ownership also can decrease your mobility in that it might not be easy to sell your home and move to another location in a short period of time.

Income Tax Benefits

Interest paid on a home mortgage loan is a tax-deductible expense, that reduces taxable income at the federal level, thereby resulting in savings on taxes paid. For example, in the taxable year, if interest on a home loan mortgage is $12,000, taxable income is reduced by this amount. Consequently, the effective rate of the cost of the home loan is reduced by the tax saving:

Effective interest cost = mortgage rate X (1 - marginal tax rate)

For example, an investor in the 35 percent marginal tax bracket with a 6 percent mortgage loan has an effective (after tax) rate of 3.9 percent on the mortgage loan.

Effective interest cost = 0.06 X (1 - 0.35) = 0.039

The second tax benefit to home ownership is the deductibility gains tax results in an increased return on after-tax profits from the sale of a principal residence when compared with the sale of other investments such as stocks and bonds.

These tax benefits generally make it advantageous to buy a home rather than rent. There are times, however, when it becomes advantageous to rent rather than buy. of property taxes on the home, which reduces taxable income and taxes paid.

The third tax benefit from home ownership occurs when the home is sold. The profit on the sale of a principal residence is not taxable if the gain is less than $250,000 for a tax payer filing a single return and $500,000 for a taxpayer filing a joint return. To qualify for this exclusion from capital gains taxes, the homeowner must have lived in the home for at least two of the five years, and the exclusion applies to only one sale every two years. Home prices have risen over the past 50 years. Consequently, this exclusion from capital

Imagine, you are private investor and have been downloading share prices from www.marketeye.com and then preparing your own charts. That site has now closed and the only other organization which would supply this information would charge me $10,000 for the privilege whereas marketeye was free!

So runs the most popular query of all. A slew of traders prefer to download stock prices into the spreadsheet program Excel so they can draw their own price charts. Without them they don't have buy and sell signals, and without those, they can't trade.

But why don't they just let specialist software do the work for them? I prefer using software such as Metastock (Equis.com and Paritech.co.uk), the costlier Tradestation, and OmniTrader 2000. All work with both U.S. and U.K. data. Each generates trading signals based on tested criteria and scans stocks according to your own requirements. Whether you choose end of day data or the more expensive intraday real-time data for the above software depends on whether you are a short-term trader. There is no shortcut to visiting websites and trying the software demo disks. Other popular well-regarded software includes Synergy, FairShares, Indexia, and Sharescope.

Whether you only want share price data or need company data too depends on how you pick stocks; whether you examine just price charts or company valuations too. I prefer having both price and company data for the fullest stock picture.

An alternative to software for plotting prices are websites. Consider Advfn which provide charts and plots company data in visual form for easier and quicker analysis.

For U.S. charts visit my favorites, the free, Quote.com, and BigCharts.

Despite the choices for plotting price charts, if you still prefer data you can plot in a spreadsheet program, visit London Stock Exchange, and Paritech.

For U.S. data visit Reuters Data Link. The novice will prefer starting with charting websites, which tend to be cheaper than software, then trying software demos and only finally investing in software.

Another question is: “Is it possible to get data, for example a table/spreadsheet on all companies including their essential fundamentals such as EPS, p/e ratio and profit?” This is a popular query as traders become increasingly weary about the time spent scouring for good stock picks. Imagine a marketbeating annual 10% return with five hours research a week on a $50,000 portfolio. For a higher rate taxpayer, the return is a mere $11 per hour. Of course the return beats the minimum wage. Our trader wants such data to both increase returns and reduce time spent producing those returns. For U.K. fundamental data try ShareScope software and Hemscott . Both are excellent sources of company data and save hours scouring for stocks. The U.S. web-based equivalents are the exceptional Yahoo and Multex.

More experienced traders often ask about trading psychology:

At the beginning of this year I had a string of losses which knocked my confidence. Checking these trades I found I had allowed extraneous emotions to enter the equation resulting in overreacting, for example, to intraday data and getting out of the trade too early and often at a loss. Do you know of any reference material to help one deal more comfortably with trading stress.

Indeed trading psychology is so important that Bill Lipschutz, in The Mind of a Trader, explained it was “the most important factor in trading success.” Other sites about preventing your emotions from sabotaging your trading include Trading On Target, TradeShare.com , and Dr Relax.

Finally, there is a whole category of questions which begin: “I bought [insert name of formerly popular technology stock] at [insert overinflated price] and now it trades at only [insert 0.1% of previous figure]. Is there any hope?”

Despite the dot-com collapse, innovation on investment websites has accelerated. New products to make all aspects of trading and investing simpler, more efficient, and hopefully more profitable are being launched at a faster pace than even in 1999. The problem is, without the huge marketing budgets of 1999-2000 behind the launches, you could easily have missed some of the latest online tools to make investing a whole lot easier. The value of any tool should be measured by one criterion: does it solve a long-standing private investor problem. These next generation tools all do, moving well beyond providing just stock prices, news, simple charting, and company data.

Have the clouds lifted and are the crises a thing of the past? Although there are a lot of bad loans still in the bank's portfolios - mortgages that are either in or near default, credit card debt of people in bankruptcy, and loans to builders that may not be paid, the banks are nevertheless making money on new loans. The yield spread (the difference between short-term rates paid on deposits and long-term rates received on mortgages) is very favorable for the banks currently. Wells Fargo (ticker: WFC), although taking a large write-down on non-performing loans, just announced a profitable quarter and increased its dividend. Even Citibank (ticker: C), which was threatened with insolvency before raising capital last year announced a profitable quarter and maintained its dividend. Both banks are paying in excess of a 5% dividend.

Here are the positives for bank stocks for the next three-to-five years: the worst news is already out and included in stock prices, the large bolus of adjustable rate mortgages has already moved through the adjustment cycle with just another six months of these large monthly volumes of adjustable rate mortgages getting reset, the steep yield curve contributing to profitable current operations, and the Federal Reserve Bank not taking steps to increase interest rates. These trends point to banks working their way out of the crisis back to profitability. Strong banks with good management will survive, their stock prices will increase, and dividend yields will shrink. Wells Fargo (WFC), Citibank (C), Bank of America (BAC), Regions Financial (RF), and Wachovia (WB) should survive the storm that hit the banking sector and provide favorable long-term returns.

One such example of public privatisation may be happening in London's Chinatown right now. A firm called Rosewheel intends to reconstruct a part of the urban attraction. A new Chinese-themed shopping mall will be known as the "Chinatown Gateway". Part of the reconstruction will involve disassembling the famous red pagoda and rebuilding it as the centrepiece of the mall. The pagoda is strategically placed to maximise feng shui and moving it may affect its power - if you believe in that sort of thing. It is rumoured that Rosewheel also want to make a private road out of that stretch of Charing Cross Road which touches Chinatown, and enclose the adjacent Newport Court. This scares me.

As well as tourist districts like Chinatown, tourist locations such as the Scottish Highlands could be up for grabs. Take what is happening in America's national parks; in the past couple of years, visitors have increased dramatically whilst the National Park Services' budget has been cut. The Bush administration has privatised 1,700 positions in the park service; the administration believing that private businesses can more cheaply do the same tasks performed by the park rangers, scientists, and maintenance staff. Sainsbury's Lake District anyone?

Following on from the O2 Millennium Dome and the Emirates Arsenal Stadium, San Francisco's Golden Gate Bridge could be one of the first landmarks to be branded. It is facing an $87 million deficit and San Francisco is turning to alternative sources of funding. One of the potential sources includes sponsorship. Mary Currie, spokeswoman for the Golden Gate Bridge District says that “This is not a naming rights deal; it's more of a behind-the-scenes, low-key corporate partnership, much like the Proud Partners Program in the national parks”. The Golden Gate Bridge could become the McDonald's Golden ArchesBridge. One can only imagine the possibilities and premium the Empire State Building or Tower Bridge would generate.

Blair branded England “Cool Britannia”, in New York there are “air rights” determining how high you can build, and we already have branded water. We may not be so far from “you are now arriving at Shell London”.

1. I'm too old to get rich

   Ray Kroc, creator of the McDonald's franchise was over 50 years old when he earned his first millions. He was a simple food machineries salesman when he bought the small burger house from the McDonaldbrothers in New York City, the brothers incurred huge debt that they decided to give up their burger store and venture in another business. Ray Croc reinvented the food store into franchising and began expanding his territory all over the US and then-to the world. Now Mc Donald is one of the most admired companies in the world with more than 200,000 outlets. Dr. William Welch, the founder of Welch 100% Grape Juice was a rural health physician who switched to dentistry. He was 60 years old when he realized that he can earn huge money by extracting juice rather than pulling teeth. At first, while maintaining a dental clinic in Baltimore, USA, Welch utilized his time in reading books about fermentation process (introduced by French Bacteriologist Louis Pasteur) with his wife. Then he started the draining process of extracting Grapes in their kitchen.
   
   He first introduced his product to their Methodist Church to use as a ceremonial drink, the words spread to neighboring towns about the goodness of pure Grape Juice. Eventually it flourished and Dr. Welch decided to leave his profession to devote more time in his juice business. He then bought a piece of land to plant Grapes, now the plantation is well known as Concord. Today, the product boasted recognition when American Heart Association endorses the Welch 100% Grape Juice as an ideal drink which helps prevent heart problem because of Resveratrol (an antioxidant known for the prevention of cardiovascular disorder present in the Grapes).
   
   John Grisham, Hollywood's blockbuster writer became multimillionaire when he was 45 years old, that's when he left his job as a criminal lawyer and concentrated on writing suspense books. His published paperbacks managed to be included in the best-sellers record of New York Time Magazine and became instant hits among Hollywood producers. Grisham's first movie blockbuster hit was “The Pelican Brief” starring Julia Roberts and Denzel Washington followed by “The Firm” which starred Tom Cruise. Grisham used his expertise in legal profession to make his writing works a truly believable plot.

2. I'm too young to get rich

   Bill Gates, the second richest man in the world (for a record of 10 years, Gates, hold the distinction as World's richest man, until fortune Magazine published in March 2008 that the number one spot was dominated by Mexican billionaire Carlos Slim Helu, a telecommunication moguls in Latin America), was only 23 years old when he started his Microsoft business. By the time he dropped out from the prestigious Harvard University where he took up Commerce, William Henry Gates Jr. already made up his mind to concentrate in his information technology empire. He first teamed up with another computer wizard Paul Allen, but later on decided to establish his own business. Paul Allen, however, remained his partner and became a self-made billionaire; he is currently in the top 30 list of richest people in the world.
   
   Lee Ka Shing, Hongkong's wealthiest man was 21 years old when he began making money. His family moved to Hong Kong when the civil war in China broke up in 1930's. When he was 14 years old his father died living his younger siblings under his care, he accepted different odd jobs, when he turned 20 he joined a direct selling business, it prospered and the boy who once did door to door selling to earn a living became a millionaire at 21. He did not go to college but his eagerness to leave a mark in the business industry fueled his desire to compete against well-educated individuals in the business world. Presently, he is the richest man in South East Asia and ranked number 9 in the world, based in the 2008 listing of Forbes Magazine (note: he is the only person from South East Asia who is in the top 10 ranking of world's richest people in Forbes).

3. I have no capital

   Did you know that Lucio Tan, the Philippines richest man was a poor boy from China? His family migrated in the Philippines when he was 4 years old. He was a working student at Far Eastern University, Manila, where he took up Chemical Engineering and part timed as janitor in nearby oil company. He was diligent and industrious who valued time, after passing the chemical board exam he worked full time as a chemist, then he started his own company. According to Panorama Magazine (1994 issue), Mr. Tan's secret ingredient to success is hard work. He personally worked in his business until wee hours. He is a simple person who wears only barong during important business functions even after he transferred to the glitzy subdivision-Forbes Park. His business empire includes Allied Bank, PNB, PAL, Asia Brewery, La Tondeña Distillery, Pentagon Electronics, Virginia Tobacco, among others. He is listed as the 415th richest man in the world by US based business magazine Forbes and ranked 12th in South East Asia.
   
   Philippine's second richest man Henry Sy (14th richest man in South East Asia), is a son of a poor Chinese immigrant, so poor that when he first set foot in the Philippine soil he was Shoeless, when he became of age he went to Manila and lived with Chinese traders. He first worked as assistant in a shoe factory then put his own shoe shop, with perseverance, his shoe shop prospered, later became Shoe Mart which known SM CITY today. His business empire grew so fast that he competed with Asia's traditional businessmen in establishing shopping malls, the latest addition; SM mall of Asia is the 3rd largest mall in the world thrilling behind West Edmonton Mall in Alberta, Canada and Golden Resources Mall in Beijing, China.
   
   Another poor man who captured the world's imagination was Benjamin Franklin, American statesman, writer and inventor. He was the youngest child in the brood of 16. Though his parents owned a candle shop in Boston, Massachusetts, the mean income could not support comfortably with the whole family. Young Benjamin did not think much of food and what to eat because he had been told not to do so, he hardly eat delicious food. His older siblings had large appetite and would jam the table even before Ben could occupy his chair. When he realized that his father could no longer afford to send him to school, he decided to work in his brother's printing shop. Much of his earnings went to books. He adored poetry and short stories. Amidst poverty, young Ben dreamed big things; he practiced writing, though he did not know the very basic of that profession. Then his brother started beating him cruelly, this prompted Ben to run away, with little bucks left in his pocket, he stole down to Boston harbor and went to New York City. Ben had nothing except clean t-shirt and the pants he wore. In New York, he was not accepted for any work, so he went to Philadelphia, because he had no money to pay for the transportation, he endured the long miles walking the rocky roads and sleeping at the fields at night, by the time he reached Philadelphia he was tired, dirty and hungry.
   
   Benjamin accepted odd jobs and work day and night until he earned enough money to support his schooling. Later in his colorful journey, he founded his own printing shop, invented the first gas stove, published stories and became America's most celebrated statesman.(trivia: When Benjamin owned a company, he noticed a young man, 14 years his junior, who was prone to failures despite his aggressiveness in work, though this young man armed with undisputed talent, intellect and strengths, he was easily intimidated and discouraged with slightest mistakes. Benjamin decided to train this man and making his own struggles in life as example, he taught him how to conquer odds, the result was remarkable, this man became an asset of the company which later on made him a successful professional, he later on quit his job and joined politics, but the great lesson Benjamin Franklin taught him never fade in his mind and he used it as his springboard as he soared high in his career. That young man was none other than James Madison, who became the fourth US President. It's amazing to know that his great teacher in life was a poor stow away boy from Boston who once endured walking a rocky road, tired and dirty just to reach his dreams.
   
   J.K. Rowling, Blockbuster writer of The Harry Potter series, made her humble beginning as a college secretary then a French language professor at the Edinburgh University in Scotland. By the time she was divorced from her first husband she had lost her job, she and her only child, a daughter, lived in a small cottage in Edinburgh City and would often ate in a charity kitchen. One time she traveled to Manchester City in England through a rail way transit and saw young children playing in the suburb area, this inspired her to write the initial plot of Harry Potter. Her manuscript rejected 12 times until Bloomsbury, a small publishing company in suburb England accepted it with one condition-that she will changed her name from Joanne to J.K(stands for Joanne Kathleen-Kathleen is her grandmother's name) to camouflage her gender.
   
   In a male dominated society like Britain, women usually endure a painful discrimination getting youngsters market. The publication feared that the target market of Harry Potter might not patronize the book if they'll find out that it's written by a female. Jo Rowling created such impact that it became an instant hit, by the time the reading public knew the true identity of the writer it had gone a long way to the best-selling list of the international poll for new generation books and signed up to a British major movie outfit. Presently, J.K Rowling is listed in Forbes Magazine as the wealthiest author in the Entertainment Industry (she currently ranked 700th richest person in the world). She is considered also as the richest woman in Great Britain (Queen Elizabeth II had been excluded in the poll, because her wealth is tied up to her position as the current ruling monarch). Money does not count in the beginning, what matter most is one's ability to pursue specific goals.

4. I'm not educated

   Great American inventor Thomas Alva Edison did not go to college and so Alfred Nobel, a Swedish born scientist who invented dynamite, in fact Nobel had no orthodox training in chemistry when he started experimenting home-made bombs. He was a son of a Swedish Engineer who maintained a laboratory for explosives. The Late Greek shipping tycoon Aristotle Onassis who almost owned the world in mid 60's with his vast fortunes, had no formal college education. South Asia's richest man Li Ka Sing was a high school drop out. Though they were not educated in the real sense of the word, they were personally knowledgeable on the field they excelled.

5. I'm not gutsy

   Alfred Nobel was often described by his family as a shy, grown up man who is afraid of meeting people. He didn't marry, however, there was one legend that tells that Alfred Nobel once proposed to a sweet Swedish girl but was turned down because she preferred another man, a Swedish great Mathematician, Nobel took the rejection terribly that he decided not to propose to any woman again (the story remained a legend). He won't join the group and would confine in his father's laboratory for the rest of the day (his father, an Engineer, owned a laboratory who experimented explosives), before his death in December 10, 1896 he instructed his most trusted secretary to split his millions to various charity and founded Nobel Prize, the highest award giving body for human achievement in the world.
   
   (Trivia: Alfred Nobel's hatred for that mathematician rival lasted for a life time. When he drafted his last will testament, he strongly pointed out that no mathematics field shall be included in the Nobel Prize Award. The 20th century great mathematician, Albert Einstein won the Nobel Prize in 1921, because there was no mathematics category, he was awarded in the Physics division for his resilient work in photo electric effect. It made controversies however, because at that time his famous work was the Law of Relativity, but the Nobel Prize Award committee doubted this theory because of insufficient evidence, he was advised to prove more work on Relativity [which he perfected many years later]. The committee played safe by giving Einstein recognition in Photo Electric Effect instead.)
   
   King George VI of England was tremendously shy, he suffered nervousness and often stammered in public which irritated his father George V. The timid monarch, who was known to his family as Bertie and The Duke of York before his surprise accession in 1936, never attended parties except for important royal functions. He once confided to his wife how much he hated social gatherings. When his older brother, David, told him that he planned to abdicate, Prince Bertie, who dreaded the idea of becoming King and carry the weight of the crown under his fragile shoulder, rushed to his mother's room Queen Mary and broke in tears, which he recorded in his diary as “I cried in my mother's lap for an hour like a poor child” (source: The Royal Sisters by Anne Edwards)
   
   He became king on the abdication of his brother King Edward VIII on December 11, 1936. Edward, who was known to his family as Prince David, chooses to marry the twice divorced American woman Wallis Simpson. The British constitution prohibited the monarch from taking a divorce woman as consort. Edward VIII voluntarily rendered his unforgettable abdication sending his shy brother to the throne. King George VI (he died in his sleep on February 1952 from coronary thrombosis) reign for 16 years and with the help of his gallant Prime Minister William Churchill and his Queen consort Elizabeth Bowes Lyon (known as the Queen Mother after her daughter's accession in 1952), surpassed World War II with amazing victory. Great Britain became known as one of the most powerful and richest nations in the world. The British subjects adored and praised George VI honesty and leadership over his stammering habits and shy nature.
   
   Even the world's most adored fairytale writer Hans Christian Andersen was a shy man who had inferiority complex. His inferior nature was rooted in his childhood. When he was a little boy growing up in a Danish village, he suffered many rejections among his playmates who sometimes bet themselves if Hans was a male or a female. Even his own family had little hopes for him. Hans would hide among trees and barns to write stories and eat alone. Amidst the rejection, Hans determined to become famous.
   
   When he was 19 he went to Copenhagen, the capital of Denmark, he auditioned to become an actor, but the theater owner rejected him for not being good looking, he didn't lose hope and tried several times but the result was the same. Thinking he would never qualify as a performer, he switched to another passion: writing. His effort paid off, one of the playwrights gave him a chance and accepted his plays. During Hans' time playwrights were valued more than ministers and businessmen and they were often invited to royal palaces to entertain aristocracy and royalty. This paved the way for Hans's greatness, in one of his plays; the King's counselor offered him a scholarship and a place in the palace. Many years later Hans Christian Andersen became famous through out the world. His very popular fairytale story “The Ugly Duckling” many said, was the fairytale of his life. His fairytale books are known today as “stories that never grow old”.

6. It's too late

   According to a Psychology expert, the phrase “too late” is the most terrible concept that ever landed in every human's brain. There's no such thing as too late, he said, because you can start at any point in your life, after all, success does not depend on the chronological age of a person; it is based on one's perspective and ability to create a concrete goal. Hollywood Actress Jane Fonda once said, “Never too late to start, never too late to begin”, she was 52 then and had just married CNN Tycoon Ted Turner. Italian astronomer Galileo, the father of modern physics who discovered the law of pendulum and falling bodies, published his last book at the age of 70 four years before he contacted blindness (important note: Galileo died in the birth year of another great physicist Isaac Newton, known to the world as the father of modern science).
   
   Hollywood actor Paul Newman leads his team to victory in a car racing event in Italy when he was 82 years old. American writer Steve Berry; became a best-selling author at the age of 45. His first published book “The Amber Room” suffered 80 rejections before it was finally accepted on his 81st submission. The book became a best-seller. Yes, it is possible…and we don't need to rob a bank, kidnap a millionaire, or be slave abroad just to earn money. What we need is the ability to learn and adopt new things and be equipped with 2 basic business functions-marketing and innovation, plus the principle of US President Theodore Roosevelt-Determination and Persistence.
   
   But if these things fail despite your effort to succeed, don't you ever think that wealth is everything. While aiming big money is fine there are still best things in life that cannot be reciprocated by any amount: true friends, love ones, family, satisfaction, happiness, fulfillment and peace of mind. All these things operate outside the world of money. Some of the loneliest people in the universe are those who have billions in their accounts. While money plays an important role in our survival, self-belongingness and genuine happiness always count most in the over-all sense. Wisdom often leads us to greatness.

Need for Life Insurance

Today, there is plenty of investment options for a person to choose from. Modern day investments include gold, property, fixed income instruments, mutual funds and of course, life insurance. Life insurance is a unique investment that helps you to meet your dual needs - saving for life's important goals, and protecting your assets.

Let us look at these unique benefits of life insurance in detail.

Asset Protection

From an investor's point of view, an investment can play two roles - asset appreciation or asset protection. While most financial instruments have the underlying benefit of asset appreciation, life insurance is unique in that it gives the customer the reassurance of asset protection, along with a strong element of asset appreciation.

The core benefit of life insurance is that the financial interests of one's family remain protected from circumstances such as loss of income due to critical illness or death of the policyholder. Simultaneously, insurance products also have a strong inbuilt wealth creation proposition. The customer therefore benefits on two counts and life insurance occupies a unique space in the landscape of investment options available to a customer.

Goal Based Savings

Every human has some goals in life for which they need to save. Suppose for a young, newly married couple, it could be buying a house. Once, they decide to have children, the goal changes to saving for the education or in later days marriage of their children. As one grows older, planning for one's retirement and how to maintain same lifestyle after retirement will begin to take precedence.

Clearly, in your different life stage and therefore your financial goals change, the instrument in which you invest should offer corresponding benefits pertinent to the new life stage. And for that life insurance is very good investment. Life insurance is the only investment option that offers specific plans for different life stages. It thus ensures that the benefits offered to a customer reflect the needs of the customer at that particular life stage, and hence ensures that the financial goals of that life stage are met.