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Lessons from HK Billionaire Part 1

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There is an article circulating on Facebook regarding Hong Kong Billionaire Li Ka-Shing and his tips on how to manage wealth (the title is Li Ka-Shing teaches you how to buy a car and a house in 5 years). Li Ka-Shing has a net worth of $31bn, considered one of the most powerful figures in Asia, Li was named “Asia’s Most Powerful Man, Li Ka-Ching” by Asiaweek in 2001. His companies make up 15% of the market cap of the Hong Kong Stock Exchange. Li is also regarded as one of Asia’s most generous philanthropists, donating over US $1.41 billion to date to charity and other various philanthropic causes.

Inevitably, I found the article an interesting read, albeit a long one. Two main sections of the article stood out to me and I will be highlighting them in two parts.

Part 1 is on Fund Allocation

In his article, he advised allocating funds into 5 portions. I tweaked some of the percentages like allocating more into living expenses and investment/savings. His original break down was 30%, 20%, 15%, 10%, 25% 

From 100% of nett income, divide into 5 funds.
(For Malaysians, it would be after you take away the amount for EPF, income tax, (and for some) tithes.

Fund 1 — 40% goes towards living expenses and daily necessities.
This fund is straightforward enough, in my household this would go towards food bills, groceries, milk, diapers, electricity, water, housing loan for the house we are staying in, petrol, car services, etc.

Fund 2 — 15% expanding your interpersonal circle.
This particular fund is what I would call the generosity/networking fund. Li Ka-Shing advocates buying lunch for people who can help you in your career, people who are wiser than you, more knowledgeable, with more experience. Hubby and I have yet to make this a practice, but it is good to note. In the article he mentioned that your phone bill goes under this section. I would then include internet bills under this section as well.

Fund 3 — 10% towards learning.
When you buy the books, read them carefully and learn the lessons and strategies that is being taught in the book. After reading each book, put them into your own language to tell the stories. Sharing with others what you have learned. Also save up to attend a training course. When you have higher income or additional savings, try to participate in more advanced training. When you participate in good training, not only do you learn good knowledge, you also get to meet like-minded friends who are not easy to come by.

Fund 4 —  10% towards travel
Visit new cultures and places, use that experience to recharge yourself so that you’ll continually have passion in your work.

Fund 5 — 35% towards investment
For fresh graduates, this goes into the bank, saving up capital to start a small business or downpayment for a house. For those who have passed that stage, this fund goes into servicing loans for investment properties or to starting a long term business plan. I personally would  include investment linked insurance premiums into this fund as well as dollar cost averaging in mutual funds.

There is no hard and fast rule, but having a plan and being organised certainly instills discipline which helps towards achieving ones financial goals. Part 2 will be on The Successful Attitudes of the Rich and Poor.


Reference:
http://mirror.e27.co/li-ka-shing-teaches-buy-car-house-5-years
http://en.wikipedia.org/wiki/Li_Ka-shing

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