The Irony of Finance

This week, I blew up my trading account. I went from nearly quintupling it over 3 weeks, to losing everything in one. It's depressing, but it shows a funny side of making money.

A month ago, I picked up options trading. As mentioned earlier, it went well, much better than expected, to the point where I almost made 500% on my account. But WAIT! Before you click off this post thinking it's the same old wall street bets story, trust me, it's not.

I started off reading the news, watching streams and digesting articles on the market, focusing on what I knew best, tech companies. I started trading small lots, one at a time and making 100-200% returns on each of trade, with a win rate of about 80%.

This went on for a week or so, where I used the same strategy, being patient and biding my time.

Eventually, I started getting complacent, and hence a little greedy. I was ramping up my trades, buying more lots than my account could handle and taking trades I really should not have. This led to me losing 10%, then 20%, then 50%.

At the end of it, my account was right back to where it started. Just about 20% of what it was a week ago. The funniest thing was, I made much more money when I wasn't exactly chasing it. I made more money when I was patient, when I was conservative, and when I was humble.

It's a tough lesson, but an essential one. There's nothing I can do now but rethink and repent.

A Crash Course on How to Earn Passive Income and Achieve a Greater Work-Life Balance

When you ask anyone about financial freedom, the first phrase that pops into mind is 'passive income'. It is a good way to 'grow' your money, and not get outpaced by inflation rates.

I have taken the liberty of ranking these suggestions from safest to the most risky, in my opinion, if you have any strong objections, feel free to leave them in the comments!

Passive income is basically a secondary paycheck that you receive (passively) on top of your day job.

Most of these methods require you to have at least some money, however side hustling can be done for free, and can be extremely lucrative if done well!

 With that said, here are some ways you can start building your streams of passive income.

Side Hustle

I decided to rank side hustling as the safest as the only things you'll need to commit are time and effort. On top of that, it is significantly more difficult to build a passive income stream with this method as compared to the others.

However, if you do successfully build up this stream, you stand to earn much, much more, without any upfront payment(most of the time). 

Some side hustles which you can build to eventually earn passive income are

- Blogs

- Youtube Channels

- Agencies

- E-commerce stores(may require some initial investment)

- Posting covers/songs on spotify

- Writing E-Books

Pension Funds

A pension fund is a fund which allows you to deposit money, but not to withdraw it, until you have reached your retirement age. I know, that sounds dumb, but it's not as bad as it seems.

A pension fund, according to google, is a plan, fund, or scheme which provides income for retirees. A pension fund grows as you and your employer contributes to it. 

In my country, we have what's called the Central Provident Fund(CPF), which is compulsory for every citizen and permanent residents(PRs).

Every month, a percentage of our salary is pooled together with contributions by our employer, and added into this fund, which can earn an interest of 2.5% to 5% a year.

Other countries have different funds which can be opened by individuals. For example, the United States has the ROTH IRA and 401k which works similarly to my country's CPF, however, it is not compulsory to contribute to them.

Pension funds are known to be extremely safe, especially those managed by a country's government.

Fixed Deposits

A fixed deposit is something quite similar to a pension fund, you still have to wait, but you don't have to wait till retirement to withdraw your money.

Fixed deposits have a maturity date - a date at which you will be able to withdraw the money. Depending on the bank or financial company that you decide to register your account with, this can range from months or decades.

Put simply, a fixed deposit is a bank account which you can put money into, but can't take money out of.

Then begs the question, why would anyone want to use a fixed deposit account instead of a regular bank account? For one simple reason, fixed deposits provide more annual interest than banks - around 2-3% per annum. 

Fixed deposits are relatively safe, and hence do not have the best returns. Nonetheless, it's a pretty decent way to earn passive income, especially when compared to a bank account.

You can start a fixed deposit account by speaking to banks or financial institutions in your local area.

Bonds

The term 'bond' always finds itself floating around in talks about finance and investment. But what exactly is a bond?

Bonds are financial instruments which allows regular people like you and me to loan our money to big companies and governments. 

Bonds usually last for several years before maturing, after which the company or government body will return the principal(the initial investment) to you. 

Bonds have ratings that range from D being the worst, to AAA being the best (yes they have 'AA' and 'A' as well).

These ratings are provided by credit rating industries who analyze the company's or government's ability to repay the bond.

Bonds are known for being much safer than stocks, hence, the change in their prices are generally the opposite of regular stocks on the stock market. The initial amount invested is also quite stable and will not vary much. So you'll not have to worry about losing that. 

The only way you'll lose out is if the company or government is unable to repay your bond, which is quite unlikely if it has a good credit rating.

The interest you can earn from bonds ranges from 1% to 7% depending on the amount of risk you take on, the length of the bond and the amount.

You can buy bonds through a public offer by the company or the government, or through stock brokerages like Interactive Brokers or Robinhood. In fact, there are even Exchange Traded Funds(ETFs) for bonds. 

P2P lending

'P2P' lending, or peer-to-peer lending is an extremely interesting way to use your money to work for you. 

Just like bonds, you loan your money to a third-party. Except, instead of loaning your money to companies and governments, you are loaning money to regular people.

Disclaimer: It is CRUCIAL that the platform you use for P2P lending is a reputable one, as using a fishy one WILL lead to you losing all your money.

 I have ranked this as a more risky investment than bonds as the risk of default(the party being unable to repay the loan) is higher.

Companies and governments have reputations to uphold, and hence the risk of them being unable to repay the loan is low. But with this comes a lower interest rate.

Since loaning to individuals is riskier, you do get a higher interest rate. In fact, it is possible to get up to 10% interest per year if you invest in P2P lending.

Some of the more reputable P2P lending platforms include peerform and LendingClub. 

Dividends

The term that has become synonymous with passive income, dividends are the first thing that pops up into many investor's minds when asked about passive income.

In fact, there is a whole concept of stock market investment centered around dividends - income investment.

Income investment focuses on buying stocks which pay dividends, to generate ..well...income. 

But what exactly are dividends? 

A dividend is a small sum of money paid out by a company to its investors. It serves as a sort of 'thank you'.

These companies may pay their dividends once a month, once a year, once every quarter or twice a year. 

I ranked this as the second most risky method as stocks on the stock market have a chance of dropping in price.

Companies pay dividends that range from 0.5% to 10% a year. Some even pay more than that.

The companies that tend to have the highest and most consistent dividends are Real Estate Investment Trusts (REITs) which I will get to in the next point. 

Real Estate

Real estate. The trade notorious for making millionaires. There are many ways to get started with real estate, but a lot of them do require you to commit large sums of money. Of course there are cheaper or even free ways without any upfront payment like Rent2Rent or squatting(this is a joke). 

So how does one make money with real estate?

When buying a house, investors usually take up loans and service them over time. This loan is usually called a mortgage. 

They then source for tenants who may be interested in renting the property. They will charge said tenant rent which in most scenarios would be sufficient to pay for the monthly interest on their mortgage, and get the house for free, as long as they are able to find tenants.

Once the house is fully paid off, they can continue renting out the house to earn truly passive income each month. 

However, real estate is incredibly risky as it is not easy to find tenants. On top of this, investors have to keep tenants happy, in order to prolong their stay. 

Without tenants, the down payment(initial payment) followed by monthly interest for the mortgage will have to paid by the investor. Hence, it is crucial that you have a stable income before you venture into real estate.

Thanks for reading! I apologize for the sudden hiatus, I just got distracted and there's really no excuse for that. I will continue posting consistent content in the days to come!

 

The most important things I've learnt after losing $2,000 dropshipping

About 2 years ago, I started an e-commerce store, using the dropshipping model as my store's backbone. I have since put that store on hold, after going back to it twice in the span of one year.

Running the store was a character shaping experience, and I did learn a significant amount. (I know this sounds like a reflection essay, but bear with me)

To cut it short, if asked if I would do it again, I would jump at the offer without hesitation. The $2,000($3,000 of revenue-$5,000 of expenses) lost was a small price to pay for the lessons which I learnt.

Facebook Ads

With marketing being the biggest expense of e-commerce, it's understandable that Facebook Ads(my chosen form of paid advertisement) was the most useful skill which I took away.

Again, like any other e-commerce store, my store's biggest expense was marketing. Facebook ads to be exact.

Trying to spend as little as possible, ironic considering how much I lost, I turned to Google and Youtube and learnt everything about e-commerce through them.


I then found that knowing Facebook Ads was actually a highly sought after and highly paid skill. I started doing some gigs, helping out friends and family by driving traffic to their businesses, getting paid in commissions and retainers.

In fact, I've covered the simple steps to run profitable Facebook ads in some other posts you can check out for free, starting with how to create Facebook Interest Ads.

It's all about the customer

Just like every other entrepreneur, I started off just wanting to make as much money as possible. Because of this, I did whatever was cheapest and would allow me to have the least expenses(e.g. free shipping from suppliers). 

Because of this, my customers received a horrible experience, having to wait a whole month before they received their order.

I received countless complaints, charge backs and noticed that my 'returning customer rate' was horrible. I then decided to think from perspective of the customer, thinking of providing value, rather than just taking everything I could.

This led to me providing discounts, paying for higher quality products as well as shipping. Eventually, I managed to increase my 'returning customer rate', as well as the number of customers I got through word of mouth(without advertising).


That's what I've learnt after 2 years dropshipping, losing a pretty significant amount. I know it may not seem like much but it has shaped and changed my mindset, teaching me the basics of business.

How to Improve Conversions on Your E-Commerce Website

I've done several guides on Facebook ads, to provide you with some options to increase your ROAS with Facebook advertising.

However, many people get so obsessed with building audiences on Facebook ads that they forget about building lists on their own websites.

Even worse, some even miss out the essentials which make customers purchase. There's no point wasting your advertising dollars if your website simply doesn't convert.

The question then is, how can you tell whether your website is converting well? You simply monitor your traffic closely when you first start. When you notice yourself not making many sales or getting a ROAS of less than 0.8, take a step back to evaluate your website.

Reviews

After I added reviews to my E-Commerce website, I got my first sale the next day. I know, it sounds like an exaggeration, like one of those 'get rich quick' tactics. But it's 100% true. 

Reviews give your website visitors the final push they need to purchase. It provides them with social proof, which gives them confidence in your product, and hence convinces them to purchase.

Because I was dropshipping, I used an app on Shopify which allowed me to import reviews from my supplier.

If you run your own brand or have your own products and have not gotten your first genuine sale yet, you can ask your friends and family who have purchased to write reviews for you.

You can also 'fake' reviews by writing them yourself, but this isn't recommended due to ethical issues.

Email list

Another important tool e-commerce stores forget to utilize is an email list. Collecting an email list allows you to contact people who have expressed interest in your products by signing up.

This list allows you to send these people promotions and deals so that they would be inclined to purchase.

You can create an email list with email autoresponders. These autoresponders allow you to automate the process of sending out emails, by setting up a sequence which is triggered when someone first signs onto your list.

This sequence can contain discount codes and other promotions. It could also include cross-sells or up-sells to the product which your customer looked at.

The autoresponder which I use is GetResponse.

You can also launch one-time campaigns to send promotions to your existing list.

Customers will be enticed by a pop-up or a blank at the footer saying 'Sign up to our email list for updates!' or 'Sign up to our email list for 5% off your first purchase'.

Product page

Finally, the most important part of your website. The product page. A crucial thing to keep in mind when you're driving traffic through ads is to keep everything consistent.

When you say your product is 50% off in your ad, make sure it displays that on your website. 

If it says 'free shipping' in your ad, make sure it's identical on your website. 

Your product images should also remain similar. Using the same angle, or same model would make customers feel more comfortable, as they would know that they've been brought to the right place after they've clicked the ads.

Inconsistencies cause confusion, raise suspicions and decreases conversion.

These are the things you should know before advertising in any way. Once you know this, and you start advertising, you'll know where to look if you find yourself stuck.

If you have any trouble, do let me know in the comments or contact me, I'll reply ASAP!

Thanks for your time!

How to Create a Facebook Pixel

Facebook pixels are the fundamentals of Facebook advertising. Without pixels, you miss out on the incredibly profitable tools provide by Facebook ads

Facebook pixels behave like cookies. They tag your customers, allowing you to track them and re-target them in the future. Pixels also give you the ability to create lookalike audiences, which is the ultimate goal in Facebook ads.

How to create a Facebook Pixel

1. Create a Facebook Business Manager

The first step is to create your business manager. Simply click here to set up your account

2. Data sources

Under events manager, you should be able to find a section titled 'Data Sources'. Look for the data source named 'Facebook Pixel' and click on the 'Get Started' button.

3. Name Your Pixel and Website

Next, you'll have to name your pixel and enter the website you would like to track.

Click on 'continue'

4. Select a Method to Add Pixel Code

You'll then have to select how you want to install the pixel code. It's recommended that you use the partner integration tool if you used a third-party platform to create your website.

However, if you built your website from scratch, or do not have support for the third-party platform you used, you can use the other 2 tools to help you install the pixel code.

5. Follow the Instructions

Facebook will now take over, and guide you through how you can install the pixel codes for the respective tools that you selected.

If you have any trouble installing your pixel, feel free to leave a comment or contact me and I will reply ASAP!

How to Create Facebook Lookalike Audiences

Lookalike audiences are the single most profitable ads on Facebook. What sucks however, is how difficult it is to get a large enough audience before you can even begin to utilize this tool.

If you do however, have a total of at least 1,000 unique visitors, this is the guide for you.

Lookalike audiences are designed to look for people who 'look like' your audience, hence the name.

They bring down your cost per click, cost per acquisition and hence increases your ROAS.

If you find yourself lost throughout any part of this post, check out my 'Crash Course to Digital Marketing Terms'.

Create an Audience

As mentioned, once you have about 1,000 unique visitors, you would want to create a custom audience based on your website visitors.

 If you're confused as to how you can do this, check out a post I did on 'How to Create Facebook Re-targeting Ads' .

You can also use the custom audience you create to re-target customers who did not convert, as stated in that post.

Unlike re-targeting ads, you don't have to exclude those who have purchased from you.

Create a Lookalike Audience

After creating a custom audience, you can create a lookalike audience by clicking on 'create audience' and selecting 'Lookalike Audience'.(excuse the quality, this was a screenshot)

Next, select your lookalike source(the custom audience you want to make a 'lookalike' of).

The location you select should be from the country which you have received the most sales from. If you are starting on lookalike audiences, you should already have some sales collected in your data.

Finally, your audience size should have a range of 1% per lookalike audience you create(0-1%, 1-2% etc.). You can create multiple lookalike audience by selecting the drop down next to 'number of lookalike audiences'.

And there you have it! Your very own lookalike audience. Lookalike audiences are unique to your ad account, that's why it's so much cheaper to advertise to a lookalike audience than an interest(less competition).

You would use your lookalike audience the same way you use a custom audience in your re-targeting ads.

Hopefully this helps! If you have anything you would like to clarify, do leave a comment or shoot me an email. I'll reply ASAP!

P.S. Once you've gotten about 1,000 counts for warmer audiences like add to carts, initiate checkouts, and purchases, you should create custom audiences and lookalike audiences for those too. Purchase lookalike audiences are the end goal. Work your way up from website visitors and you'll eventually get there!

How to Create Facebook Re-targeting Ads

So you've started Facebook Advertising and have gotten yourself a few clicks and possibly some sales. (If you're not sure how to do this, check out 'How to Create Facebook Interest Ads')

You've got all this data but aren't sure what to do with it. Well, you've come to the right place. 

Facebook pixel data can be used to build custom audiences which you can then use to make your Facebook Advertising more effective. 

Using Facebook pixel data appropriately can help you to increase your ROAS by decreasing your cost per click(CPC) or cost per acquisition(CPA).

If you have any trouble understanding the jargon used, check out my 'Crash Course to Digital Marketing Terms' here!

What is a re-targeting ad?

A re-targeting ad is pretty self-explanatory. It targets your customers again. 

The question here would be, why?

Customers are often differentiated by how warm they are. Warmth in marketing simply means how familiar the customer is with your brand. The warmer they are, the more familiar.

Generally, the further the customer moves down the marketing funnel, the warmer they would be, and the more likely they will convert if you do advertise to them again. In other words, a customer who has added to cart would be more likely to convert than a customer who only clicked on your link. 

This means that re-targeting customers who have added to cart would result in a higher ROAS that re-targeting customers who have clicked on your link.

Create a Custom Audience

Before you can re-target your audience, you need to create one first. 

You can do this by going to the 'audiences' tab of the ads manager, and under custom audience, click on 'Create a Custom Audience'.

Next, you'll have to pick a source to create your audience from. Obviously, you would pick the source you have been driving traffic to.

Finally, choose the criteria to filter your audience by. As mentioned earlier in this post, re-targeting customers who clicked on your link may not be as effective as re-targeting customers who added to cart.

You also should have an audience of at least 1000 people before you start advertising to them. You could start from customers who clicked, buy the more data there is, the better.

Because of this, you should maximize the period of the data collected(the maximum is 'in the past 180 days)

You'll want to create at least 2 audiences, one for the audience you want to re-target, and one for customers who have already purchased. This is so you can exclude the customers who have purchased, so you do not annoy them.

Create Your Re-targeting Ad

Next, you can create an ad using your newly formed audience. 

Create the ad as you normally would, but this time, deselect every country and interest you are targeting. This is because the audience you are targeting already has been filtered down. 

Also, make sure to deselect 'detailed targeting expansion' as that will burn through your budget.

Finally, the budget of your ad shouldn't be more than $5. Advertisers usually set a budget of $3 per re-targeting ads and get wonderful results.

Try it out and let me know how it goes! Re-targeting is extremely powerful in pushing customers who are still on the fence to make the purchase.

If you have any questions, feel free to leave a comment or shoot me an email!