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Sunday, 31 October 2010

The yearn for financial independence

Have you heard from Robert Kiyosaki, the author of Rich Dad Poor Dad?

"Have you heard from Robert Kiyosaki, the author of Rich Dad Poor Dad?.." I heard this many times and this has ALWAYS been the starting line to introduce some MLM (Multi-level marketing), land banking or other 'alternative' paths to financial independence quickly. I get to hear this again just a few days ago. My wife's friend offer to share with us, over breakfast, a business scheme that will bring us to financial Independence in 2-5 years. Her only prerequisite for participants who want to benefit from this business is to sacrifice several hours a week. My alarm bell went off immediately when she mention 2-5 years and rang even louder at the weekly effort required to succeed in the business. Anyway, it didn't take long before she got to the point, being a sales agent for Amway... and of course, nothing fruitful emerge at the end. Anyway, it seems to me that my wife had an affinity with acquaintances, friends or colleagues dealing with MLM business. Recently, while accompanying my wife to meet up with her piano blog reader on a premise for some discussion (she thought it has to do with piano or music in general) that turn out to be a presentation on e-spring water filter system, which also happen to be another product from, yes Amway again.

As far as MLM's business structure is concerned (quoted from wiki):

"Multi-level marketing (MLM) is a marketing strategy in which the sales force is compensated not only for sales they personally generate, but also for the sales of others they recruit, creating a downline of distributors and a hierarchy of multiple levels of compensation. "

Coupled with their products (few are wildly popular items), it seems to me that out of many who tried, probably a much smaller percentage will ever make it big. But the success of the latter is sufficient to entice people to try. Thus I am absolutely puzzled how one can generate sufficient sales (personal effort or combined downstream effort) to get enough commission to attain financial independence in 2-5 years.

Why not insurance or property?

If one has the sheer mental grit to persevere in such a low hit rate sales environment such as MLM, won't it be more rewarding to try being an insurance or property agent? It is almost no brainer Singaporeans are generally under insured (just taking an inaccurate empirical consensus amongst my friends), they want the payout when things happen but dreaded the costly premiums (especially the riders) that are 'wasted' if they don't claim. As for property, whether downgrading or upgrading, agents get to earn commission from each transaction.

Looking for a short cut

There is a common trait I observed amongst all of them who tried MLM, not only do they want success (financial independence), they want it safe and they want it fast. Working and saving is too slow. Venturing out to do business is too risky. Although it is simple logic that risks are inversely proportional to returns, many continue to believe logic-defying novelties. Take land banking for example, one of my wife's colleague got into this (yes, I also wonder why my wife got so many such lobangs). He's a sales agent from Walton International, a company involved in land-banking. The objective of land-banking is to purchase raw land and hold them until its profitable to sell. It is again sold as a low risk high return venture as raw land is cheap and once selected for development, the returns is huge. However, the problem here is how much do the investor know about the land they are buying? How do they assess their potential? How sure are they sure that they are getting a good deal? Even in land scarce Singapore and Hong Kong, there are reserve land to last many years.

The slow way to success

As the saying goes, anything that sounds too good to be true probably is. Unless we are extreme lucky to strike lottery, most of us either have to trade skill or time for money and ultimately hard work pays off. The more enterprising ones can take on more risk to venture into business and reap enviable rewards if they succeed. Lazy or risk-adverse people like me will prefer to reap what others sow by buying bits and pieces of listed businesses and make our money work harder. But whichever way we choose, it really takes much longer than 2-5 years to achieve financial independence, and I'm perfectly fine with delayed gratification.



Blogger Musicwhiz said...

Hi Market Uncle,

Yes, I agree! Add the get rich quick schemes you see in the newspapers these days and you will be shocked at how many of these "financial independence" touts there are out there who promote instant riches instead of good old fashioned values (work hard, save, invest, delayed gratification).

Sad but true. Oh well.


31 October 2010 at 18:43  
Anonymous Anonymous said...

My wife and I have taken about 23 years to be "financially free".
We were very "lucky" to buy almost everything without debt.
At that time, we paid only $123,000.00 for a HDB masionette.
We pity the working-class young people of today.
They have to take a 25 to 30 years mortgage to pay for a 4-room HDB flat which cost about $400-$450K.
We think this young generation of today may never be "financially free".
Maybe only a few can, who take great risk running business successfully.
That is why Our Yament want to increase retirement age to 68.
Of course, all the "Elites" want to work as long as possible.
They are all "Big Fat Cats"
We ordinary people are all the little, little rats.

31 October 2010 at 21:14  
Blogger Market Uncle said...

Oh yes, get rich quick schemes... even faster path to 'success' :)

1 November 2010 at 21:48  
Blogger PanzerGrenadier said...

Hi Market Uncle

Human beings are driven by greed and fear. Greed for financial freedom quick and fast and fear for losing out.

Personally I hate MLM because it preys on people's greed and fears and uses cult-like approaches to brainwash the recruits. Only those who are at the top or start MLMs really make money. The rest are sucked into the system to generate monies for the upline.

Be well and prosper.

2 November 2010 at 18:28  
Anonymous Anonymous said...

Is retirement something we earned?

Or something we are entitled as our birthright?

2 November 2010 at 22:48  
Blogger Market Uncle said...

Hi PanzerGrenadier,
I can't agree more. Sad but true.

3 November 2010 at 22:15  
Blogger Market Uncle said...

Retirement occurs when working becomes an option, i.e. one CHOOSE to work (for pleasure or passion) and not HAS to work.

There are those who continue to chase the pinnacle of their material comfort as they progresses in life, enslaving themselves to ever increasing debt. How to retire?

3 November 2010 at 22:24  
Blogger Lauryn said...

I have heard much about Robert Kiyosaki and his investment strategy and I have to agree he has a very brilliant thought about making more money in every possible situation. So if he is good enough, how can be binary trading be included in his ways of investment?

12 July 2013 at 09:23  

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