Soaring Amidst Financial Crisis

1. During the recent financial turmoil, many investment banks have collapsed and their investors make losses of their investment.

2. The interest rate was very low and many people were able to buy new homes. As the demand for homes increased, the price of home also increased.

3. The low interest policy was designed to ease the credit and help people get new homes. However, they did not realize that many homeowners could not afford to repay their loans to the banks. As a result, at the forth quarter of last year, the banks started to feel the credit shortages and were forced to take back their mortgages. In order to get credit, the mortgages (or asset) might be sold off at a cheap price. They eventually did not get back the investment return they intend to make. They called it 'sub-prime mortgage' credit crisis.

4. In the first place, where did the banks get the money to loan out to the home buyers? From the public, or from other banks. They do it through selling bonds to them. In Singapore, the investors bought 'mini bond' of Leighman Brothers through local banks.

5. As the cash liquidity problem surfaced due to the 'sub-prime' crisis and the banks cannot afford to pay back their creditors (creditor is investor who buy their bonds or investment products hoping to reap a return), they filed for bankcrupcy to protect themselves legally and declare they could not pay back their creditors. As a result, the public make losses of their investment.

6. What is the lesson I learned on investment and money management through this financial crisis?

a. There is risk in whatever investment we make. The banks or financial planners are well trained and equiped to persuade people to buy their products but they never emphasize on the risk involved. Therefore, when I decide to invest, I have to study the financial product they offer thoroughly to make an informed decision.

b. I read Matthew 25:14-28. This passage teaches me some very important principles in terms of personal financial management.

• Our money does not belong to us. They are God's asset. (v.14) This is a very important understanding and value we should uphold.
• God gives us money according to our ability. Some get more and some get less. (v.15) This is God's sovereity.
• God wants us to be faithful to reap a return for His money. We do not please Him (v. 26) if we are lazy and do nothing about our money. (v.16-30)

c. The followings are my personal monetary policies and I want be a faithful servant of God's asset:

• Rom 13:8 teach me to let no debt remain outstanding. I will aggressively to pay off my tuition fee loan by year 2009 or earlier.
• I will give to God faithfully. The money I give to Him will be used to run the church's operation and extend His kingdom.
• I will spend to bless people and do God's ministry.
• I will continue to support my family financially and pay the home-loan installment.
• I will save money to invest and grow myself hollistically to be an effective servant of God, e.g. I will save money to go for Thai Camp '09, Adult Camp '09 to refresh myself spiritually. I will save money to go for short term holiday in Thailand after the camp to relax and build friendship with people I travel with. I will spend to buy a digital camera for blogging purpose. I will buy books and whatever that is useful to help me grow.
• I will review my saving / investment in financial products soon.

7. What are the things you learned through this financial crisis? What kind of investment you think will reap good return in future? Gold, property, etc...? I would like to hear from you.