Moneymaking classes can impart strategies but can't buy you time or teach self-discipline.

Wed, Oct 07, 2009
The Straits Times

It is difficult to ignore the many advertisements in the newspapers these days offering different ways to create wealth from the stock and property markets.

That millionaires seem to have made their money in such ways is a big draw for many.

One advert claimed: 'Our graduate made 7,700 per cent profit and turned $1,000 into $78,000 from forex trading in two months.'

Another said: 'How to create wealth in the stock market 30 minutes a day.'

Well, I'm sure many of us can spare 30 minutes a day, but most people don't realise that it takes more than just interest and a desire for wealth to reap the fruit of such courses. This is especially so if you are new to the scene.

Critical success factors include discipline and ensuring you can set aside time to put into practice the knowledge imparted to you.

Here are some considerations before you sign up:

Discipline

If you are too lazy to read an annual report now, would you have the discipline to plough through the techniques you have learnt once you are left on your own?

Be realistic

If you're planning to quit your job immediately, you would do well to think twice.

Course trainers typically advise participants to keep working and aim for a small, steady investment income before going into it in a big way. Among other things, pressure to succeed immediately is likely to lead to costly mistakes.

Setting aside time

There is no point attending a course if you cannot find time to practise what you have learnt.

Track record

Check the track record of the training firm and trainers. Talk to past participants and find out if the course includes hands-on sessions and allows follow-ups.

Don't invest more than you can afford to lose

Investments do not always turn out right. Even the best investors pay 'tuition fees' from time to time. But as long as you have enough ammunition, you are still in the game and can start again, hopefully wiser from your investment mistakes.

I realised these considerations only after I had enrolled for an options trading course along with about 500 Singaporeans recently.

Our objective was simple: We were eager to learn how to make money outside our regular jobs. The more ambitious were dreaming of making millions, while the rest of us simply aimed for an extra few thousand dollars a month.

I realised that some had no or little experience trading stocks and absolutely no idea what options trading was. Some signed up for the course because their friends had recommended it.

The course I attended was organised by education firm Wealth Mentors. It stretched over four full days and cost some of us more than $5,000. Others had discounts because they enrolled in pairs, and some were past students allowed to attend for free as a refresher course.

We started out with the basics, learning the differences between call and put options and how they differ from stocks.

In a nutshell, an options contract confers the right to buy or sell an underlying asset - a stock or an index - at a specific price on or before a certain date.

But just buying an option doesn't mean you are obliged to carry out the transaction. In fact, professional option traders buy and sell just to earn the difference in premiums and not for the purpose of owning the underlying asset.

After the basics, the American trainer began teaching us strategies including option trading on US shares and US indexes. In all, about four strategies were taught.

By day four, I felt that my mind was bursting from information overload. We registered for options trading accounts and were advised to start trading virtually for a while before putting our money in.

Maybe it's because I was not hungry enough or I was just too busy with my work and family. It did not help that I fell ill immediately after the course.

But the result was that I was unable to follow through with the strategies I had learnt. And before long, the memory of how to apply them had faded.

To be fair, Wealth Mentors still invites me for refresher talks and is willing to sit me through a one-to-one mentor programme, but I cannot find the time.

Not long after, I was invited to attend another course, this time on making money by selling on eBay.

I attended the free two-hour briefing session and was astounded to learn that there are people who make selling on eBay a profession.

The session was a curtain-raiser for a two-day course on how to look for hot products to sell, followed by strategies on how to list products so as to get the best prices.

This time, I pondered more carefully when asked to pay the fee for the course, which can cost almost $3,000. Having learnt my lesson from the last course, I decided that I shouldn't be enrolling for such classes until I have the necessary discipline and time.

It is easy to part with money in the hope of making more money, but the reality is that you still need discipline. And that is something that cannot be taught.

Tuition fees

Investments do not always turn out right. Even the best investors pay 'tuition fees' from time to time. But as long as you have enough ammunition, you are still in the game and can start again, hopefully wiser from your investment mistakes.