Financial Management Manual for Dumbo (7) The Marching Song: Part 2 (Year 2005-2015)

From 2005 onwards, we have moved into the second phase of our financial management. We used some of our saving in hand to purchase a used car for commercial use and kept the balance for our business venture. Our business venture became the main investment item in our financial management portfolio while the rest of our asset is actually a house for home occupancy!

With that my hubby concentrated fully on expanding his business while I helped out in office administration and sending quotes to clients. Thanks to the golden opportunity to work in partnership with our present partner and our hard work which eventually paid off in increased business volumes and profits, so much so our business was on track just after three years.

Our business advancement has led to increase in both our income and saving which in turn helped us to open up to more investment opportunities. At the beginning, we were more into the property estate investment, but largely was buying and selling our own  house while juggling our loan with interest rate to keep our risk at the lowest possible level! It was then a robust market where we made handsome profit margin through buying and selling property. The only catch was the hassle of shifting house. During that time we did not invest in any property for rental gain because we did not want ourselves to be under too much borrowing pressure which might incur too high a risk ! It was because most of the property for rental actually suffered from negative return after deducting bank loan installment. Some could even run into serious monetary loss because of tenants defaulted in paying rents and utility bills! Risk aversion is always our guiding principle which we lived by in property investment !

Of course we had learnt to invest in stock though we had paid our share of tuition fees to the stock market in the process! The hard earned lesson was never to invest in speculative stocks but only in blue chip stocks. Never invest in companies which you do not know, neither when you do not have a 5-years capital buffer. Also never invest in companies which  are too complicated in operation and carry high risk !  Certainly never to invest in stock by borrowing from bank! For us, investment in stock is a long term investment with relatively high risk , therefore it only occupied a small portion of our financial portfolio. We had participated in it for the purpose of risk sharing and diversification for our financial portfolio.

Another important component in our financial portfolio is cash flow! It is important for us to maintain healthy cash flow for our business and family needs so that we are equipped to meet any contingency and to have ready cash for near future plan ! Therefore saving and fixed deposit are the important component of our financial portfolio.

In view of our business which ran on loans that we stood as guarantors, we were undoubtedly exposed to tremendously high risk! In order to protect our children and our family, we subscribed to additional insurance coverage as when we could afford it.

After 20 years of hard work, we thanked God for the wisdom He has bestowed upon us for now we understood that good business management lays the foundation for successful  financial management! The ideas , habits , strategies, acumen, creativity, courage and resilience derived from our business venture are the needed elements for our financial management! We have been faithful in little things, so shall we be faithful in bigger tasks. Ultimately success will come our way one day and we will be able to hold on to it!

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