Savings...

"It doesn't matter how much you earn, it is what you save that matters."

My grandfather is an extreme saver. He saves everything. I don't think he's ever thrown away anything. A few years ago, he gave me a watch that he bought when he was around 20 years old. That means my watch is about 70 years old.
Maybe it's because he grew up during The Great Depression. I have no idea how much money he saved, but I do know that he has been in retirement and hasn't worked in over 40 years. lol

Who are the world's best savers?

China wins hands down.

How about the worst?

Kiwis (New Zealand)

However, Europeans are the most consistent savers. As most would expect, Americans (The United States of Consumption) hardly save a dime. I didn't realize Aussies were so bad at saving. I thought the Japanese were better at saving... Koreans used to be incredible savers. What happened?

Here are the "Household Savings Rates" from the OECD 2007 Factbook:

	1998	1999	2000	2001	2002	2003	2004	2007
Australia	2	1.9	2.4	1.2	-2.3	-3.2	-3.7	0.5
Austria	8.2	8.8	8.5	7.5	7.7	8.6	9.1
Belgium	11.1	11.1	9.7	11.6	11.9	10.4	..
Canada	4.9	4.1	4.8	5.3	3.5	2.8	2.7
China								24.0
Czech Republic	4.1	3.4	3.3	2.2	3	2.4	0.2
Denmark	-	-3.6	-2	4.1	4.6	4.8	1.1
Finland	0.5	2.1	-0.1	0.1	0.6	1.4	2.4
France	12.3	12	11.8	12.5	13.7	12.5	12.4	12.8
Germany	10.2	9.5	9.3	9.5	10.1	10.4	10.6	10.4
Greece	..	..	-4.1	-5.6	-7.4	-6.3	-5.8	7.3
Italy	..	9.8	9	10.4	10.8	11	11.6
Japan	12.1	10.7	8.5	5.2	4.9	4	3.2	3.0
Korea	24.8	17.4	10.7	6.4	2.2	3.9	6.3	4.0
Mexico	7.5	7.1	10.7	7.7	8.8	..	..
Netherlands	13.5	9.9	7.5	10.5	9.4	8.4	8.1
New Zealand	-4.2	-5.3	-3.8	..	..	..	..
Norway	5.9	5.6	5.2	4.2	9	10.1	..
Poland	12	10.6	8.4	9.9	6	5.3	4.1	8.8
Portugal	..	..	3.6	4.5	4	..	..
Spain	..	..	5.9	5.7	5.7	6	4.6	10.6
Sweden	3.1	2.1	3.2	8.6	9.2	9.2	8.7
Switzerland	12	11.2	13.2	13	9.9	9.9	9.1
United Kingdom	2.1	0.5	0.5	2	0.5	0.7	-0.7	2.7
United States	4.5	2.5	2.4	1.8	2.5	2.4	1.9	0.7
Euro area	10.4	9.3	9	9.5	9.9	9.7	..

I am not as frugal as my grandfather. So, I can't really give much saving advice.

Here are 5 things I do:

1. I avoid Starbucks/Coffee Bean. Why would I pay $5 for something that costs 10 cents?
Would you pay 50,000 won for one 김밥? That's what you're paying for coffee.

2. Eating at restaurants. I love eating at restaurants, but I only do it once or twice a week. Usually, I cook dinner at home. I can make a steak dinner for $7 as opposed to $22 at Outback Steakhouse. And my Italian food tastes better than the pasta at most Italian restaurants.

3. Buy online. I buy almost everything online because it costs less.

4. Clothes. I love clothes, especially brand names like Banana Republic, Calvin Klein, and Donna Karan. However, everything I buy is on sale or from an outlet. I never pay more than $30 for a shirt. My Calvin Klein and Levi's jeans cost $26. If you ever travel to the U.S., I'll tell you exactly where and when to shop.

5. Maximize your air miles. I like to travel, but I don't like paying for airplane tickets. I've had free tickets to the U.S., Shanghai, and Tokyo. In fact, I've flown to the U.S. twice for free.

How do you save money?

Taxes

"In this world nothing is certain but death and taxes."
-Benjamin Franklin

April 14th is an important date for Americans because we have to file our taxes. Most people loathe April 14th, but I actually look forward to it. Yes. I enjoy doing my taxes and reading the copious IRS publications and forms. =) What's not to like?

How much do Americans pay? About 30%!
This is actually below the OECD average of 37%. lol
For some reason, Americans and Canadians think Canada is a high tax country. This is simply not true. Canadians pay around 31%. By the way, Korea is a low tax country, only 17%.

Here are some tax statistics from the OECD 2007 Factbook:

"Taxes on the Average Worker"

	1998	2005
Australia	30.2	28.3
Austria	45.8	47.4
Belgium	56.8	55.4
Canada	31.7	31.6
Czech Republic	42.8	43.8
Denmark	43.7	41.4
Finland	48.8	44.6
France	47.6	50.1
Germany	52.2	51.8
Greece	36.1	38.8
Hungary	51.6	50.5
Iceland	25.9	29
Ireland	33	25.7
Italy	47.5	45.4
Japan	19.6	27.7
Korea	14.7	17.3
Luxembourg	33.8	35.3
Mexico	21.9	18.2
Netherlands	43.5	38.6
New Zealand	20	20.5
Norway	37.5	37.3
Poland	43.2	43.6
Portugal	33.8	36.2
Slovak Republic	..	38.3
Spain	39	39
Sweden	50.7	47.9
Switzerland	30	29.5
Turkey	39.8	42.7
United Kingdom	32	33.5
United States	31	29.1
EU15 average	43	42.1
OECD average	37.2	37.3

Mistakes....Mistakes...Mistakes....

A lot of my students seem to be afraid of making a mistake. This is absolutely baffling to me. Mistakes are part of the learning process.

Here are some quotes:

"Anyone who has never made a mistake has never tried anything new." - Albert Einstein

"Experience is the name everyone gives to their mistakes." - Oscar Wilde

"A man's errors are his portals of discovery." - James Joyce

"Those who never make mistakes lose a great many chances to learn something."- I don't know

"All men make mistakes, but only wise men learn from their mistakes." - Winston Churchill

You probably recognize this guy on the left by now. The world's richest man? Warren Buffet wrote about his mistakes in his 2007 shareholder letter.

Here are Warren Buffet's mistakes:

1. He had the chance to buy a TV station in Dallas, TX for $35 million in the 1970s. However, he decided to pass on the opportunity. Since then, the TV station has made over $1 billion in profit. Ouch!

2. He bought stock in U.S. Air, which has gone into bankruptcy twice. By the way, never buy airline stocks. Even my friend, who is a manager at an airline company, told me never buy airline stocks. Here's Warren Buffet's quote on airline companies: "Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down." lol

3. Dexter Shoes. Have you ever heard of that brand? That's the problem. Buffet traded 1.6% of his company's stock (Berkshire Hathaway) to buy Dexter Shoes. In his words, "I gave away 1.6% of a wonderful business - one now valued at $220 billion - to buy a worthless business."

Finally, he said: "I'll make more mistakes in the future, you can bet on that."

Here are a few of my mistakes:

1. I dated a girl named !$#%!, and wasted a year of my life. If you're a princess, please stay away from me. =)

2. I didn't buy Google stock. The ipo price was $80 a share. Today, Google's share price is around $465. I was considering it for about 10 minutes, but passed. =( Luckily, I completely avoided the "Internet Bubble," but I should have realized that Google had a future. And was not the typical worthless Internet company.

3. MasterCard. Have you heard of this company? Yeah. Me too. Their ipo price was $40 a share two years ago. Today, the stock trades for around $230 a share. I researched this ipo before it came out. My conclusion was dead wrong.

"Life is learning, to fear learning is to fear life." - Andy

What mistakes have you made? =)

Foreign Language TV and Radio

For students learning a foreign language other than English, it may be difficult to hear the language spoken in your home country. One option is free Internet TV and radio.

http://www.multilingualbooks.com/online-radio.html

If you want to improve your business English, here are some free online radio/video links:

http://www.daveramsey.com/tdrs/

Dave Ramsey is a personal finance expert. His radio program is 3 hours a day (M-F) and he gives financial advice to those in need. I listen to the program regularly.

http://moneycentral.msn.com/video/default.aspx

MSN has some interesting videos about business and financial news.

http://www.foxbusiness.com/video/index.html

Fox Business also has a lot of great news videos.

http://www.cbsnews.com/sections/60minutes/main3415.shtml

Most of my students will be familiar with this program. You can watch the videos online here.

Enjoy!

How long does it take to learn a new language?

This guy spoke 50 languages. lol

Kenneth Hale, a master of languages

From The Economist print edition

SOMETIMES Kenneth Hale was asked how long it would take him to learn a new language. He thought ten or 15 minutes would be enough to pick up the essentials if he were listening to a native speaker. After that he could probably converse; obviously not fluently, but enough to make himself understood. To those whose education, however admirable in other respects, had provided only rudimentary language skills, Mr Hale seemed a marvel.

And so he was. He had a gift. But he was also an academic, a teacher of linguistics at the Massachusetts Institute of Technology (MIT). He was aware that many otherwise clever people are dunces at learning a second language. He sought to find laws and structures that could be applied to all languages. As well as studying the common languages, French, Spanish and so on, the search took him into many linguistic byways, to the languages of native Americans and Australian aborigines and the Celtic fringes of Europe.…

Unfortunately, not all of us are linguistics professors at MIT. =(

The U.S. Foreign Service Institute (FSI) developed a scale to measure language proficiency.

Level 1 Elementary
Level 2 Limited Working Proficiency
Level 3 Professional Working Proficiency
Level 4 Full Professional Proficiency
Level 5 Native or Bilingual

Here are the number of hours of training and practice it takes FSI students to speak a "hard" language:

360 hours for Level 1
720 hours for Level 2
1,320 hours for Level 3

FSI classifies a "hard" language as Chinese, Arabic, Polish, Russian, etc.

What's the point? Language learning is not easy for most of us. It's a serious undertaking.
If it was easy, then everyone would speak 50 different languages.

So, now you know how long it takes. 1,320 hours for Level 3. How many hours do you practice?

Who wants to be a billionaire?

I've been fortunate to have met quite a few rich people in my life. All of them were self-made. Their wealth was not inherited.

Here are some characteristics they have in common:

1. Frugal/Thrifty - They didn't like to spend money. I met a guy worth $10 billion that sold his old refrigerator for a few hundred dollars and was elated. lol

2. They buy things with investment income.
The rich do not buy luxury items with their salary. They invest their salary in stocks, real estate, and businesses. If the investment rises and they make a profit, then they buy something luxurious.

3. No debt.

4. Slow and steady wins the race. They have a long-term outlook.

5. None of them went to an Ivy League university. I'm not sure why. Maybe it's because they spent too much money for school and have so much debt?

6. They take calculated risks. I have a wealthy uncle who quit his high salary (over $100,000 a year) job to start his own company.

7. Detail oriented. My ex-boss, who had a net worth of about $50 million, was a stickler for details. He would always say, "Andy, details, details, etc."

Do you have any of these characteristics?

"If you want to know why I passed Bill Gates, it's because I spend less. It's a tribute to thriftiness."
- Warren Buffet

What can we learn from the world's richest man?

Mr. Buffett does not carry a cell phone, does not have a computer at his desk, and drives his own car.

Buffett is still living in the same house he bought when he was 28 for $31,000

Here are some of my favorite quotes from Buffet:

"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."

"It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently."

"Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it."

"Time is the friend of the wonderful company, the enemy of the mediocre."

"We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."

"Wide diversification is only required when investors do not understand what they are doing."

"If I was running $1 million today, or $10 million for that matter, I'd be fully invested. Anyone who says that size does not hurt investment performance is selling. The highest rates of return I've ever achieved were in the 1950s. I killed the Dow. You ought to see the numbers. But I was investing peanuts then. It's a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that."

"I always knew I was going to be rich. I don’t think I ever doubted it for a minute."

"If you expect to be a net saver during the next 5 years, should you hope for a higher or lower stock market during that period?"Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall."This reaction makes no sense. Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices."

"The Stock Market is designed to transfer money from the Active to the Patient."

“I’d be a bum on the street with a tin cup if the markets were always efficient.”

"The fact that people will be full of greed, fear or folly is predictable. The sequence is not predictable."

"The best way in my view is to just buy a low-cost index fund and keep buying it regularly over time, because you'll be buying into a wonderful industry...If you buy it over time, you won't buy at the bottom, but you won't buy it all at the top either. If you have 2% a year of your funds being eaten up by fees you're going to have a hard time matching an index fund in my view."