Is there a secret formula to getting rich? (Wealth is attracted or repelled by habits.)

WARNING (Added on 6 Jan 17):


If you are a "jin satki" (very capable) person, you might want to skip this blog because you might find AK's peasant mentality to wealth building distasteful. 

You have been warned.




As my blog becomes more popular, it disturbs me that people think that I am some investment guru. 

Of course, I am not. 

I might be a bigger retail investor than most of my readers but I think that is where the difference mostly ends.

Regular readers know not to expect magic from AK. 

I don't even have a working crystal ball. 

Well, I try to get my bowling ball to talk to me sometimes but I haven't had much success, have I?





Is there a secret formula to getting rich?

To me, there is no secret formula to getting rich. 

Honestly, to be financially secure and, then, financially free later on, it all starts with being financially prudent and that is where a big part of my level of rather attainable wealth by the common man has its source. 

It is about being sensible when it comes to personal finance matters. 

A dollar saved is a dollar earned and, believe me, it adds up.

Dinner for $2.80.

Even as I make more money in life, I try my best to keep my needs simple and my wants few. 

I try not to be frivolous with money. 

If we do a good job of this, money will stay with us. 




In the last five years, I have heard from readers who changed their habits including one who gave up having Starbucks coffee every day and one who convinced the whole family to cut back on restaurant visits. 

They saw how, in just a matter of weeks and months, the changes they made in their money habits improved their personal balance sheets.




Wealth is attracted or repelled by our habits. 

If we want to attract wealth, then, we have to make sure we have the right habits. 

The results might seem magical but, really, magic is not the reason. 

Discipline is.



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Added on 6 January 2017:

I saw on Facebook and I had to kaypoh.

The statement above which I took issue with:

"Skipping Starbucks to get rich is really bad advice, my view. It give (sic) you a poverty mindset that I can't afford it..."

OK, I must say I rarely comment on other people's FB wall or even blogs.

If people want to drink Starbucks kopi, it is their choice. 

I might nag but it is their choice.

However, when I read the claim that skipping Starbucks kopi to get rich is bad advice because it gives us a poverty mindset, that, to me, was a judgement which I could not agree with.

A frugal mindset is not a poverty mindset.

We can make a lot of money but if we are careless with money, it will only set us back if we are working towards financial freedom.

Related post:
How to recession proof your life?

QAF Limited: $1.14 a share is cheaper than 93c a share?

One year ago, when QAF Limited's stock was trading at 93c a share, I observed that the PE ratio was 16.6x and I said that to buy in at that price would be making an assumption that earnings could improve dramatically in the future. 

There were pertinent concerns such as rising costs of doing business as well as the weak Australian Dollar and how these could continue to weigh down performance.



Video added in November 2016.

Well, for the full year 2014, QAF Limited has exceeded expectations as earnings per share (EPS) improved 46.4% from 5.6c to 8.2c, year on year. With the Australian Dollar having weakened further against the Singapore Dollar, how did this happen?

There was a one off contribution by Oxdale Dairy through the sale of its dairy business. Group operating profit, thus, received a boost of $1.6m. This will not be repeated, of course. However, considering the fact that Group profit improved some $15.7m (before tax), not having this one off contribution in the current year would still mean that QAF Limited would do very well, everything else remaining equal.

All business segments did well but the lion share of the improvement came from Rivalea, an Australian business segment. Operating profits improved threefold although revenue stayed flat because of higher selling prices, better product mix, productivity gains and lower raw material costs.

Lower finance costs also helped QAF Limited to do better in 2014 as borrowings were pared down. Interest expense decreased $0.9m from $4.1m to $3.2m last year.

Today, QAF Limited's stock closed at $1.14 a share and based on an EPS of 8.2c, we are looking at a PE ratio of some 14x. Even if we remove the one off divestment gain by Oxdale Dairy, we would be looking at a PE ratio of 14.5x, thereabouts.

So, although QAF Limited's stock is priced higher now, compared to buying at 93c a share a year ago, it is actually cheaper at $1.14 a share. This is what I meant when I said that a stock could actually be cheaper although its price could be higher. It is about value, not price.

QAF Limited has made their first foray into China in October 2014. With operations in Singapore, Malaysia, Philippines and Australia stable and doing well, if their Chinese operations should prove successful, we could see things looking even better in the next few years. After all, the Chinese market is huge and bread is an accepted staple as well as convenience food.

A final dividend of 4c per share has been declared for a full year DPS of 5c. This DPS is probably sustainable and I look forward to receiving free bread again in future.

Related post:
QAF Limited: Rising 5c to 93c a share.