Feb 252014

There have been some pretty depressing news coming out of Ukraine lately. But today I’d like to focus on a more positive note. This is the real life story of Jan, (pronounced “yawn”), who was born in a rural village outside of Kiev, Ukraine.

It wasn’t easy being Jewish at that time and place so in 1992 sixteen-year old Jan and his mum moved to California with little more than some Soviet issued pens and notebooks so that Jan could go to school. They were probably so poor they couldn’t even afford to buy a vowel 😀 #SorryBadJoke

To make matters worse, Jan’s mum was soon diagnosed with cancer 🙁 and the two of them lived off her disability insurance and food stamps. Life was tough but Jan taught himself computer science with manuals from a used book store. Now that’s frugal 🙂 During one of Jan’s college years Yahoo! offered him a good job which he gladly accept 😀 Just when things appeared to be going well Jan’s mum passed away 🙁

In 2009 Jan applied for a job at Facebook but was turned down 🙁 Not to be discouraged Jan used one of his old Soviet notebooks to draw up plans for a new smartphone app he wanted to make. He and one of his close friend whom he met while working at Yahoo! developed a text messaging application that allows anyone with a phone to message anyone else in the world.

Their app became so popular that earlier this year in 2014 they received a call from Mark Zuckerberg, the founder of Facebook! One thing led to another, and last week Jan and his partner made a symbolic trip back to the social services agency where he and his mum used to wait in line for food stamps. And it was there that Jan signed the papers to sell his company WhatsApp, to Facebook, for $19 billion! Mostly in FB stocks, with a small amount in cash.

Today Jan Koum is worth $6.8 billion. Not too shabby 😉 considering how he came to North America broke as a church mouse.

I don’t use WhatsApp because I don’t have a fancy smart phone yet 😛 But it’s apparently very popular worldwide. It’s not just a random app people download, use once, and forget about. WhatsApp has 450 million active users! It’s also amazing how quickly they were able to acquire such a massive user base.

14-02-whatsapp whatsapp

I think the lesson we can all learn from Jan is that you can make a lot of money if you invent a popular app and sell it to a big company. If someone like Jan can do it, then so can anyone else right? So I’m going to try and do the same. Maybe I won’t become a billionaire, but we’ll see what happens. Here’s my general plan. Stage 1) Develop an awesome app. Stage 2) Get lots of people using the app. Step 3) Sell the app and profit 😀

How hard can it be? I have started stage 1 today. I just Googled “how to make a smartphone app.” From my preliminary research it appears I should learn how to program, which I currently know nothing about. I may have to go back to school to learn computer programming but that may be difficult since I don’t want to take time away from either of my 2 jobs. Looks like I have more planning to do.

Sep 122013

Apple recently revealed their new iPhone 5s and iPhone 5c. Some folks are saying the “s” stands for Same and the “c” stands for Cheap, 😆 But joking aside I think the mobile market will be one of the best places to make money in the future for those who invest today.

Step 1: Research

This is when you read media releases, statistics, analysis, and other information about mobile phones to gather facts and decide whether you want to invest in this space or not. Over 6.6 billion mobile phones will be in use by the end of 2017, according to CCS Insight. Most of them will likely be smartphones. Tablets are also expected to grow in sales over time. Mobile advertising will inevitably also benefit from this trend. The global ad market for mobile devices is estimated to be $11.4 billion this year, and is expected to be $24.6 billion in 2016, according to statista.com13-9-mobilegrowth

A common misconception is all the future mobile phone growth will come from emerging markets since developed countries have already reached market saturation. Fiddlesticks! A report by Google shows that only 56% of Canadians have a smart phone today, which is an amazing increase from 33% in 2012, but there is clearly more room for growth 🙂

Step 2: Take Action and Profit

Once you’ve decided to invest in the mobile market it’s time to pick a strategy. Personally I like the idea of holding three particular stocks: Apple, Google, and Qualcomm. And slowly increase my positions in them over time. Apple’s iPhones and iPads represent a large part of the market. Google is very deeply entrenched in this space as well. With the purchase of Motorola, and its close partnership with Samsung Google’s Android platform has become very popular, very quickly. Google will also benefit from the ad revenue growth. In 2011 iPhones were super popular and AAPL shareholders were very happy. This year however Android devices are the hip thing to buy so AAPL has gone down, and GOOG has outperformed brilliantly. Continue reading »

Feb 172012

Saving is important. Without savings, one cannot even invest. Most of my net worth today is thanks to my special saving method. Actually, there’s nothing special about it, but it works for me. Below is a chart of my after-tax income and spending history over the last 3 years. The difference between my income and expenses, as you can imagine, is what I save and invest. The trick is to increase my income faster than my expenses. The bigger the difference the bigger the savings!

Ignoring my part time job for now, I was making about 35 to 40 thousand gross from my main employer in 2009. Due to tough economic times, I managed to live off about 70% of my take home pay and saved the rest for emergencies. 30% of net income may seem like a big savings rate to some, but according to our government, the average Canadian in my age group (20-24) only made $20K per year or less. After reviewing my needs vs wants, I budgeted my spending in 2009 based on a $25K salary. Because if the average young individual like me is able to live off $20K a year, then there’s no reason why I can’t live off $25K. Since I was actually making more though, I just saved the surplus. If I don’t need the extra money right now, it’s probably best to invest it so I can spend it in the future on something important. However since 2009, my expenses have gone a bit.

Career changes, marriage, moving, increased social status, and starting a family are great reasons for lifestyle inflation, but none of those things have happened to me yet. I support lifestyle inflation when it adds value to our lives, but simply making more money shouldn’t be an automatic signal to increase spending. Sometimes we need to step back, and look at the world from a wider perspective to understand the bigger picture. Many “assume” that most people’s cellphones are smart phones today because you see them everywhere. But studies show the adoption rate is only 30% world wide, and maybe closer to 50% in US and Canada. It only seems like everyone has a smart phone because people with old cell phones like me don’t use ours as much in public, (^_^;). When I step back I also realize that my friends are not “average” because they earn and spend more than the typical working class citizen.

If we zoom out further and look at my situation from a global perspective, do I really have the right to complain about being underpaid when I have friends and relatives from over seas working longer hours than me but making just a fraction of my pay? Billions of people make less than $2 a day and have to grow their own food. I’m fortunate to have won the geographical lottery and live in Canada. That was pure luck and had nothing to do with my own decisions. But if I have a home, a car, internet, cellphone, clean water, delicious local eatery, and the freedom to pursue happiness, then I think my lifestyle is already pretty extravagant relative to most people in the world. Even compared to other Canadians, I have a pretty average life, and there’s nothing wrong with being average right?

image from friend’s tumblr blog

And that’s my saving strategy, basically just a reflection of the points below. It’s not a secret, just a simple mind set to follow. There’s no right or wrong to justifying a purchase, but your perspective makes it so.

  • Spending habits should be dictated by one’s values, not income. If people spend too much, they should tweak your values.
  • Don’t give in to lifestyle inflation unless it’s for the right reasons (which will be different for everyone)
  • View situations from different perspectives and only buy things that will add the appropriate value to your life.
  • Look at the bigger picture and understand where your lifestyle fits nationally, and globally