Aug 27

…found this interesting article in Singapore’s ‘Today’ newspaper last week. It’s written from a Singaporean perspective, but the validity is truely global.

It goes in the same direction as “Retire young, retire rich”; that it’s best to not (only) have a salary, but let your (and other people’s) money work for you – thus earning rent, interest, dividends and having value appreciation of your assets as ‘other’ streams of income.

In this way you can reach true financial freedom and independance from any employer or nasty boss. This concept is especially important for us Nomads, no? ;-)

Having Only One Income Stream Is Not Enough
by Valerie Law

Dr Clemen Chiang is the chief executive of Freely Business School, the first private school in Singapore to offer an options diploma course. Dr Chiang shares about ways to create multiple income streams.

Why should a person have multiple streams of income and how popular is this concept in Singapore and Asia?

I believe it is a very popular concept. In a typical household, fathers were the sole bread-winners in the past. Nowadays, both the husband and wife work.

Sometimes, even the combined income is still not sufficient. Having multiple income streams is critical in today’s landscape because of uncertainties in the world. In 2000, there was the dotcom crash; in 2001 the terrorist attacks; then in 2003, the Sars crisis hit Singapore’s economy very hard.

Today, there are also job uncertainties due to China’s and India’s emergence.

Creating a secondary source of income does not necessarily require you to migrate. You can be mobile yet remain in the same country – that is the essence of creating multiple sources of income.

Why do you believe in using options trading to create the first alternative source of income?

It is a question of seed capital – how much money you have today. Say your starting capital is small – less than $10,000, there are not much things you can do to build a business.

So you shift your focus to investment instruments by asking: “Which instruments will grow the seed capital from a small sum to a big sum?”

If your capital is small, you should focus on one instrument first – options. In the United States, there are 3,000 option-able stocks out of 30,000 tradable stocks, and these options come from the very best companies.

Options allow you to trade when the market moves up, down or sideways.

When you reach your target, you may then take that lump sum cash to invest in real estate in Singapore as another source of income.

How feasible is it for an employed adult to have multiple sources of income in Singapore, given that today’s jobs may require long hours?

The employee must know how to mange his/her time, and passion to create multiple sources of income. Nobody is stopping you from investing your own money.

Most individuals have the traditional mindset towards income generation, thinking you must appear physically at a place at fixed hours. For me, earning an alternative source of income means being mobile, keeping in touch with the latest products and technology, and becoming a self directed investor.

For investing and trading, you do not have to appear physically somewhere.
You can make money using the Internet, and you do not need to face suppliers or competitors. You just need to face yourself.

So how much time do we need to get to half a million dollars?

There are three variables:

1. How much seed capital do you have?

2. What is the lump sum amount you wish to have?

3. What is the performance target for your capital each month?

Let us use an example based on the principle of compound interest:
Starting with US$5,000 ($7,900) and earning 10 per cent return per month on your seed capital.

It will take 58 months or less than five years to reach a million dollars.
But you must be committed – it is a marathon. You may need to commit 30 minutes per night at first, and later choose to become full time traders.

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written by Chris

24 Responses to “Having Only One Income Stream Is Not Enough…”

  1. dchingNo Gravatar SINGAPORE Says:

    Let get it straight, Clemen Chiang, doesn’t trade options to become rich, he make his million dollars by conducting training seminars, his money comes from the students. Not from his trading account.

    So how can he be qualified to claimed that by using his strategies, you can become financially free from $5K by trading options?

    Unless he can show me his trading account every year to prove that he walks his talk.

    If you go to website, you see many “freely” motto, but I tell you, “To become a Millionaire” is just a marketing strategy, just like selling fake medicine on the street.

    So attending any trading seminars is worse than paying tax to the government, you not only pay a lot of your hard earned money to the trainer, but also to the market !!!

  2. DropoutNo Gravatar UNITED STATES Says:

    The “Telling Other People How to Make Money” business is the biggest scam going on the Internet. Most investment wizards would love to earn a 10 percent monthly return, but can’t.

  3. Have you found that Perfect Beach yet? | nomad4ever UNITED STATES Says:

    […] In Real Estate it’s all about location, location, location. Not here! After all I want to live there for a longer time, without ransacking my life savings, plundering my retirement money or working my *ss off in the tourist industry. We are talking Nomadic Lifestyle, here. Streams of income in hard currency, expenses in weak ones, right? […]

  4. YearinthelifeNo Gravatar UNITED KINGDOM Says:

    I too am suspicious. I have friends in the City who claim to be making 20% returns in emerging markets such as Brazil, but they live and breathe finance, and yet they’re not millionaires. To trade options without doing thorough research would be suicide… I’ll play it safe with my 6% savings account return, thanks :p

  5. josher from Earn1KADay.comNo Gravatar UNITED STATES Says:

    There is definitely money to made in options. But, it requires a lot of risk and hard work. The owner of this blog makes some money from this blog. Like him many bloggers and internet marketers make money using Google Adsense and affiliate marketing methods. Right now, I have a link to to a great site that I belong to that has helped my get closer to my dream of exiting the rat race.

  6. A Freely Ex StudentNo Gravatar UNITED KINGDOM Says:

    well.. juz wanted to say that after paying a good month’s salary for something i thought would change my life, it was not such! well.. i must give credit to the fact that it was a nice introduction to options trading but those of us who are willing to be a bit more hardworking, a lot of the information can be found a click away.

    anyway, the information was good but i did not like the fact that students were psyched into thinking that blind gratitude had to be paid to dr. clemen in order for them to make money. those who challenged him often met with an almighty reply “U DID NOT FOLLOW THE RULE” crap. Then for those who did not follow his sacred rules and made money, he would not hesitate to publish it as his success of teaching.

    finally, it is my firm believe that he does not trade options to make money. I had challenged him to share his trades once and all that was returned was hoo haa on not giving up.

    i am writing this to help create some feedback of the matter and so that those who want to fall prey can do so with a bit more awareness.

  7. jermNo Gravatar INDONESIA Says:

    you could invest $5k on a blog or a small network of blogs and grow that to $5k a month in 2-3 years. by then you should have enough seed capital to invest in bigger things. sound simpler than the reality i know, but it’s still very much do-able considering how young the internet is and how many information hungry folks are out there! ;-)

  8. YarochNo Gravatar SINGAPORE Says:

    I really made a fortune in options. They are a well-hidden secret to infinite wealth.

    The trick, of course, is to charge for every trade. Make the market. Then let the fools in. It helps of course that I love to see them lose their shirts.


  9. A Freely Ex StudentNo Gravatar SINGAPORE Says:

    i agree money can be made in options as there it is a powerful tool.
    Nonetheless… Freely’s way of earnings releases and then betting on market direction is a big load of crap. Furthermore, their 7000% return on this is probably a fluke in a 500 stocks. this is called the “Freely Most Powerful Strategy” cheating scam.

    As for “Freely Powerful” Cheating Scam, it is said that each time a stock gaps up or down… there will be another gap up or down as the novices start coming in… those more experienced traders know again this is a load of CRAP.

    Lastly, “Freely Dynamic” Cheating Scam… or i should say.. increase your loss strategy…. says that a properly selected stock will continue to sink if it gaps down for a 45 degree up up and away chart…. all i have to say is HA HA HA…. sometimes it stays flat and you lose money!

  10. Tony ChaiNo Gravatar SINGAPORE Says:

    Hi Freely Ex-Student :

    I can sympathize with your frustrations. Been there – done that.

    Options are usually high before earnings announcement, that’s 1 obstacle to overcome. Volatility collapse after earnings announcement would be the next one. The crucial obstacle would be anticipating the direction correctly. I admit it’s difficult to predict the direction correctly. I’ve tested with different signals, comprising technical & fundamentals aspect, but they were not consistent in determining the direction of gapping every time. The magnitude of the gapping is also another concern. gapped too little even in the correct direction cannot rescue the situation.

    I don’t trade frequently with this technique nowadays. But I would wager a little if I assessed the premium to be worthwhile going in & the signals are leaning towards a probable direction of gapping.

  11. NewbieNo Gravatar SINGAPORE Says:

    In my opinion, there is no free lunch in the world. This also apply to option market, hahaha u need to put effort in order to make money.

    For me, option is just a business that dealing with volatility (to be exact is probability). I am absolutely agree to Tony, in order to protect the well being of option sellers, the option is already priced with higher premium before the earning announcement, Hence, freely’s method doesnt seems to work well in most of the cases.

    However, human mind is prone to be tempted by “suvivorship bias”. Thus, This type of speakers always making use of human weakness to earn their “million dollar”. HAHAHA

  12. happymanNo Gravatar MALAYSIA Says:

    DR CLEMEN CHIANG IS A SCAM ARTIST .. he never make money in option .. the real sources of CLEMEN is teaching in SEMINAR .. ONE OPTION HARD COVER BOOK AROUND RM150 .. all you need there .. go to bookstore buy a book read .. NO NEED ADVICE from CLEMEN CHIANG .. he is prefect loser teaching something same as a book teach with more than RM6000.. thanks and good bye

  13. MelmanNo Gravatar UNITED STATES Says:

    The secret to options is “knowledge”. You don’t know what you don’t know!!. I’ve been studying options & went to a couple of seminars to learn more. The information was invaluable beyond dollar measurement. I have a Bachelor’s in Finance & an MBA; just because you have the degree or work in a profession does not mean you have the skillset. Wall street professionals are professional order takers; they are not professional traders. They make money from processing orders.

    I’ve been trading options since March & I’m earning $1-3K per month right now in this extremely volatile market. It does not matter what the market does ( up, down, sideways) when you know the techniques, apply them, and manage your risk. Early retirement here I come.

    To the naysayers who think it’s not possible: “Anything worthwhile does not come easy! If it did everyone would be doing it!”

    I’m not familiar with the scam artist others are posting about but I would encourage you to find a reputable source and learn more about options.

    In addition, I’m curious what type of monthly income potential can be attained from a decent blog. Christian, are you able to shed some light on this with regards to your peer bloggers?

    Life is good!!

  14. ChrisNo Gravatar PHILIPPINES Says:

    Melman, interesting thoughts. Also when reading the previous comments of happyman, newbie, Tony Chai and Freely Ex Student. Seems there is a lot of misinformation but also frustration about options in the markets. The reason probably that it works for some, but also people can easily sink a lot of money in them. So definitely no easy way for early retirement?! :-/

  15. SunnyNo Gravatar SINGAPORE Says:

    Hi Chris,
    I think your intention and suggestion are good. It’s in fact necessary to at least 2 streams of income so that one may one day survive on his non-linear income. But your example is a bad one. This Mr Chiang holds an unaccredited PhD, and his method is not a reliable way for most people to gain financial independence. Options investing is a zero sum game. When there is a winner on one end of the trade (eg. the writer of the option), there must be a loser on the other end (eg. the buyer of the option). So, wealth cannot be created for the buyers and sellers of the options. Only the brokers who earn a commission, and the tax-collector who taxes the brokers may become better off.

    Investing in stocks, bonds and property are more reliable ways to grow one’s wealth. When one invests in a stock, he provides the capital for the company whose stock he buys to expand the business, thereby creating wealth. When one invests in a bond, he provides the government or company with the capital to build bridges, factories, etc., thereby creating wealth. When one builds, buys and rents a property he provides a office, accommodation and shop space for people to use, thereby enabling the economic activities of the later, which creates wealth.

    But what about options? They don’t. They are supposed to be hedging tools for risks management. They don’t create wealth (beside for Uncle Sam and the brokers).

    Hence, I would suggest that a better example to follow is not Mr Chiang who doesn’t deserve the ‘Dr’ title since his PhD is unaccredited, but a down-to-earth book such as “The Millionaire Next Door” written by Dr Thomas Stanley who holds an accredited PhD whose findings are backed with solid research.

  16. Tony ChaiNo Gravatar SINGAPORE Says:

    Hi folks :

    I thought this Freely matter thing has settled and now it surfaced again :) I think among all the Freely batches of graduates, I might be the stubborn one who has hang on to this earnings gapping strategy the longest, about 4 years to be exact.

    All the refining, analysis, delving into this techniques leads me to this advice – please give it up.

    However, if you want to risk a bit of your spare money to “buy an option lottery ticket” in the hope to strike 200% or more profit from an earnings announcement event, then this is the “perfect” technique to pump up your adrenaline. But this technique is so close to gambling that I’m sure you know very well that you can’t earn a consistent monthly income from gambling.

    If you’re into forex or index futures trading, I believe your experiences would have “taught” you to be cautious about entering a trade before a major economic report announcement. This is mainly because prices would gyrate wildly after the announcement; and the worst is, you won’t know which direction the price would go to. To top it, prices would sometimes shoot up when poor announcement came out. And that’s exactly the same bullet biting scenario when you trade with earnings gapping.

    So for newbies out there who want to learn options trading, avoid this earnings gapping technique entirely. There are other options trading techniques which are far more sensible and less risky than this technique, that is, if you practise the good discipline in money management (the psychology aspect in trading) & the acquire the good skills in risks management (the technical aspect in trading).


    Tony Chai :)) :)) :)) :))

  17. ChrisNo Gravatar PHILIPPINES Says:

    Tonay Chai and Sunny – yes, I know, Mr Chiang is maybe the wrong example; still the fact remains, that options work for a lot of people. If you think it’s a way for you, try it out with monopoly money and a passive account before you jump into the water swimming with the real sharks. ;-)

  18. SunnyNo Gravatar SINGAPORE Says:

    If you must try your luck in options, then have two portfolios. One that you use to invest in the traditional stocks, bonds and property which, even without help of lady luck, could lead to retirement within a time-frame of 10-20 years. Then, have a separate account of money you can afford to lose fully. Play with it but do not expect to make a profit from it. You may, if you are lucky, though. As I said, this is a zero-sum game, so if you are not the unlucky guy, you may well make some money from it. But whatever you do with this account, your retirement is not jeopardized because your main portfolio in stocks, bonds and property will still lead you to retirement.

  19. PatrickWNo Gravatar UNITED STATES Says:

    Creating that second stream of income is not easy if you are already working a full-time job. You basically have to be willing to put in 60+ hours a week for a few years in a row unless your day job is so relaxed that you can sit at your desk and do other things. Most professional jobs don’t come with that luxury, and the ones that do means your pretty much being put out to pasture.

    Still, I would recommend at least trying to develop that second source of income because otherwise you end up wasting a lot of time watching TV anyways.

    As for trading for profit, it’s not easy. Even with an MBA and CFA and the ability to program in C++, C, Tcl, and Perl, none of my automated trading algorithms have consistently been successful even in back tests. Still, I have been at it for only a few months, so I can see that the problem space is defined, so it’s just a matter of writing more code to anticipate the possible variations.

  20. SunnyNo Gravatar SINGAPORE Says:

    I think it’s better to buy stocks based on sound principles of value investing. Buy stocks of established companies that have a sound business model, sufficient capital, market share, and spend less transaction cost and observe those other principles described by Warren Buffett. You should be able to beat the market by following his principles, because by definition the average stocks in the index should have less sound business model, capital, etc. So by looking at these criteria you can hope to become relatively better than the ‘average’. But can you hope to become James Simons or George Soros? You must remember that there are only one Simons and one Soros. If you can become like them just by obtaining CFA, MBA, or PhD, then the finance professors in the top business school would have all become fund managers. So, do spend some time to learn a little about investing so that you can invest yourself. By so doing there are 2 basic advantages. First, you save on annual fees. Second, you have more flexible asset allocation. Stocks funds must be invested in stocks even if stocks are priced too high. Balanced funds must be invested in a proportion like 40% bond and 60% stocks even if one of them is priced too high. By understanding how to price assets, you can do the allocation yourself. Investing should not become the second business. It should ideally be your passive income. If you have time aside from your main employment, consider to start a business. Do things you are most familiar with. For example, if you are familiar with food, then you might start a food business. Don’t do things that you don’t understand. You must search your knowledge bank and find out what you or your spouse have specialised knowledge in that should give you an edge over the average competitor in the industry. Are you good in making cookies, frying rice, selling computers or what?

  21. PatrickWNo Gravatar UNITED STATES Says:

    Sunny, let’s segregate the invest to match the market fund with the invest to beat the market fund. Though I don’t recall exactly which replies of yours indicated such, but I believe that you advocated the same approach — have the vast majority of your funds in a sensible portfolio with asset allocation based on some sensible asset allocation such as the permanent portfolio or the couch potato portfolio. The invest to beat the market portfolio should be invested based on your ability to identify alpha, however that is achieved through fundamental analysis or through technical or statistical analysis. Heck, if everybody subscribed to the strong form of EMH, then security prices wouldn’t move much.

    The ability and the time required to identify alpha through fundamental analysis, unfortunately, is not trivial. To analyze a single small-cap company from scratch based on financial statements takes the order of double to low triple digit hours. You can do this as full-time employment, but to do this as a side job would yield perhaps two investment opportunities every two months, and that’s only if you diligently applied yourself outside of work by putting in an extra 20 hours every week,and if the market eventually catches up with your assessment, and if your investment portfolio can sustain the draw downs while the market makes up its mind about your ability to identify alpha.

    The thing with most small businesses is that they are not portable, and they require quite a bit of marketing, two traits that make them not suitable for a wannabe nomad. The first is self explanatory enough. The second means that instead of just kissing one miserable boss’s ass, now you have to kiss everyone’s ass because public opinion has a real impact on your business’s ability to prosper.

    For me, the second part of the portfolio is both an intellectual pursuit and a way to generate some spending money. I can retire now on the first part of my portfolio, but realistically, what the heck am I going to do all day lying in a hammock on a beach? While I’m 100% certain that the first 6 months of lying in a hammock will be pure bliss, I’m not so sure about what will happen after the first 6 months. I gave early retirement a try 4 years ago by taking off for 4 months. I can say without reservation that the day I walked out of work, I felt about 20 pounds lighter simply because all the deadlines, all the politics, and all the BS became meaningless to me, but after about 6 weeks of sitting around, despite spending 4 hours a day studying for the CFA, I still felt that I wasn’t entirely fulfilled despite having the MBA to look forward to by the autumn of that year.

    That experiment got me thinking what will I do if I were to take early retirement. Yes, chasing multiples of Asian female hotness will take up 4 hours a day for sure. Heck, just swapping SIM cards to manage the multiples of Asian girlfriends will take an hour, but what about the rest of the the day? Work out at the gym for 2-3 hours, get a massage to relax the overworked muscles, one hour. OK, I guess that is a full work day. Then by the the time evening rolled around, I have already done what most people try to chase with their night lives. Then what?

  22. SunnyNo Gravatar SINGAPORE Says:

    Nope, I don’t advocate constant monitoring and asset reallocation or frequent portfolio turnover for nomads. We can use fixed rules such as the various ratios to decide the relative focus between stocks and bond. We shouldn’t aim to be exactly right every time. We just need to be right 60% to beat the market.

  23. PatrickWNo Gravatar UNITED STATES Says:

    Absolutely. Your primary job as an early retiree/nomad is to enjoy your life and see the world. Hence the vast majority of the funds should be a very fixed asset allocation with once-a-year rebalance. The small beat-the-market fund is there for your intellectual challenge and for generating lunch money. My point is that you need to do something other than pure relaxation because without contrast, even pure relaxation can become bland. That “something” can be fundamental analysis, writing automated trading programs, writing blogs, teaching English, teaching dancing, or whatever engages you, but the task’s number one criterion is portability.

  24. Donald FentNo Gravatar UNITED STATES Says:

    Almost everyone that earnsan income on the internet (even the millionaires) do so through affiliate marketing. Being successful in affiliate marketing involves applying the formula that makes other affiliate marketers successful. For instance, autoblogging. Autoblogging is one of the least well-known forms of making money online for quite some time… mainly because it’s quite difficult to make a good auto-blog. Yet, when done right, it can provide you with a constant passive income with the only real work required being the setting up process. Video Marketing, and several other marketing strategies are all designed to drive traffic to your site, can be incorporated steadily in order to raise the position your site appears in the SERPs when someone searches for a term related to your site. And yet, even this can be totally automated.

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