Give a hand to your favourite bloggers

Many of you probably have a number of favourite blogs that you visit regularly if not daily. How can you help them out so they can keep writing those articles you like?

Leave comments

Leave positive comments and feedback on the blog entries. This tells the blogger that somebody out there reads his blog and likes what he is doing. Words of encouragement that lend psychological support are of vital importance to fl edging bloggers. This is particular true if you are also a blogger. Leave the address of your blog behind so she can visit you back. You will often gain a new friend on the Web, or even in real life.

Click on the ads

Clicking on the ads of a blog is another way to help a blogger. Why do you think a blogger puts ads on his blog? Clicking on the ads costs you nothing (other than a little time), and you send him the signal that you like him enough to see him get a little compensation for his work.

Add them to social Web sites

Whether you use digg, reddit or some others, when you see a story/post/entry you particularly like, spread the news by telling the world about it. If you like them, chances are others will like them too, and will thank you for your actions.

Wind power for the masses

For those who are looking at ways to save money and help save the earth at the same time, putting a wind turbine in your backyard can accomplish both at the same time. Wind turbines are expensive just a few years back, but new advances in technology makes them affordable.

Wind turbines for your home

A couple of new devices targeting homeowners have appeared on the market. The first one, Skystream 3.7, is manufactured by a company called Southwest Wind Power. The total cost to install it in your backyard is about $8,500 to $11,000. It generates about 100,000 kWh over the 20-year design life, so each kW costs from 8.5 cents to 11 cents. That should be quite a substantial savings for your home. More so if you live in a windy area.

The other one is called the Windspire. It has a newer design that looks like a sail, and claims to be bird friendly. The Windspire has a lower maximum output than the Skystream, but the cost is also lower as well.

Both of these devices produce electricity at a lower unit cost than what you pay the power company. More importantly, the power comes from the wind, and not from a firing plant that pollutes the air and generates green house gases in the process.

So you want to start a business? Conquer the lower end!

"To be successful in business, conquer the lower end first" is an idea I borrowed from Paul Graham, a successful entrepreneur who is one of the founders of Viaweb. While his original context were high tech industries, it can be applied elsewhere.

Conquering the lower end

There is a lower end to every business sector. For restaurants the lower end is fast food places, and the people who conquered it are McDonald's. Everybody agrees that McDonald's is a wildly successful company. Other lesser conquerors of the fast food world are also successful businesses: Burger King, Wendy's, etc.

Another example: IKEA. Ready-to-assemble furniture is less expensive and simpler in design than traditional furniture, so it occupies the lower end. By conquering the lower end, IKEA became a very successful business.

The implication of this doctrine is enormous. It means that everybody can be a highly successful entrepreneur. You don't need a brilliant idea, complicated and expensive things, or tons of initial capital. All you need to do is to figure out a lower end and the right way to conquer it.

Why is conquering the lower end such a good idea?

The main reason is these lower ends occupy the mass market instead of the more upscale niche markets. While you can only make a little from each transaction, you are going to get a lot of sales, and ending up with a horde of money. Suppose you manage to convince every single person in China to give you 10 cents (RMB 0.10), you will get 130 million dollars. That's a lot of money.

Maximizing your profits in the property (real estate) market

The property market is cyclical. The price of a house goes up to some maximum point, slides down to a minimum, then start climbing back up again. If you already own a house, how do you take advantage of this cycle to maximize your profit?

The fun thing is this: properties gain or lose value by a percentage, not by a fixed amount. This means a bigger, more expensive will gain more value than a smaller house during a boom and lose more during a bust.

Here's the trick. Sell your house and move into a smaller property during a boom, while sell your house and move into a bigger property during a bust. Here's an example. Say your is worth $500,000. A boom comes and properties gain 50% in value, as a result your house becomes $750,000. If you sale your house now and move into a smaller place that is worth $450,000 (which used to cost $300,000 before the boom), you gain $300,000. That's cash in your bank account. After a few years the property market loses steam and houses loses 30% more than their original value. So your new house, which used to be $450,000, is now only $210,000. Ah, but your older house, which you sold for $750,000, could now be had for a mere $350,000. So you sell the smaller place and buy back the bigger residence for an additional $140,000. With these two sets of transactions you are up $160,000. Your gains will be even bigger if you use mortgages as leverage.

Real estates may not generate any cashflow for you, but they are valuable assets all the same.

Using properties to generate a positive cashflow

One of the ideas I have seen floating around with regards to personal finance is to maximise your cashflow, and properties (real estate) are advocated as a major generator for doing it. How valid is this claim?

The central tenet behind this idea is to leverage your money by using a mortgage. Suppose you purchase a house for $10,000 and got a mortgage on it for $9,000, then all you have to pay is $1,000 (excluding various handling charges). Not only that, but you can rent the house out to cover your payments on the mortgage. All that looks very good on paper.

The Breakeven Point

For the example above, suppose your monthly mortgage payment is $100. You need to rent the house out for $100 to cover this expense. Therefore, it can only generate a positive cashflow for you if you can rent it out for more than $100 a month.

The rental market is a perfectly competitive market, more or less. You are up against others offering similar houses for rent in the same area. There is no brand name or other such considerations here. I realise that there isn't an infinite (or nearly so) supply of houses in any given area, which makes the situation more favourable to property owners. Yet the amount you can rent a house for is still tied to the local and national economy and there is no guarantee that you can even reach the breakeven point.

When the economy is booming, rent goes up and you are likely to generate a positive cashflow from your property investment. On the other hand, During an economic downturn, it is likely that you are going to make a net loss, even with lower interest rates. The whole point of this is property (real estate) is not a reliable cashflow generator as you are at the mercy of conditions out of your control.

Other Factors

Properties are expensive investments. When I checked last time the average price for a house in the United States is $200,000. Even when you can secure a 90% prime mortgage your initial payment is still $20,000. If your objective is to rent the place you probably need to look at areas where rental rate is high, which translates into more expensive price tags.

Return on Investment. Say you manage to rent your $200,000 house for $1,000 a month. That's $12,000 a year, which translates to an ROI of 6%. That's not bad, but you can find better vehicles for the cool $200,000. The calculations with a mortgage is a lot more complicated. You get to pay much less upfront, but you also get much less each month - if any, and you end up paying more.

A mortgage is a loan with interest that you need to eventually pay back. As a result, it is only wise to do so if what you stand to gain is more than the interest you need to pay. The property may appreciate enough for that to happen, which makes any positive cashflow you may get icing on the cake. Then again, it may not. At any rate, this is a different consideration.

Other Vehicles

Ignoring any appreciation you may get in property value, there are other vehicles for generating a positive cashflow.

Stocks. Stocks in public utilities tend to carry a high dividend. Pick your stocks well and you also benefit from long term compounded growth.

Fixed-term deposits. Fixed-term deposits, or their counterparts in the US CDs (certificates of deposit) usually carry a high interest rate. I have seen rates as high as 20% or even 30%!

Conclusion

If you are looking for ways to create passive income, you can look elsewhere. Properties are expensive and unreliable as a source of income. There are better alternatives.

Stick to the blogging schedule only when you have something to say

The title pretty much sums it up: stick to the blogging schedule when you have something you want to share with the rest of the world. Don't do it just because the time is up. I reckon writing a blog on the Web is similar to writing a column for a newspaper, the only differences are there is nobody breathing down my neck and the schedule is not etched in stone. I know that some of you bloggers have a large readership eagerly waiting for your next piece, but throwing up an entry just because others are expecting it is much worse than letting your schedule slip a little now and then.

Just not that long ago I set out a blogging schedule for myself right here on Cents and Senses. Even though it is not difficult for somebody who holds a day job such as myself to find some time from day to day to write my entries, I hit a busy stretch. I bought a new flat a month or two ago and it is now under renovation. I need to look at the progress from time to time, buy things such as tiles, gas stove, bath tub and other things to be installed. My dad is also moving his office this week so I need to help out.

Amidst this chaos I learned a couple of things:

Jog down your ideas. Bring a notebook with you, and whenever you come up with an idea for your blog, write it down. This allows you to start writing a blog entry without thinking about what to write when you have the time. At least put down a tentative title for it, and the title should be clear enough to express the core thought. I use a loose leaf A5 binder to keep my ideas, so it's just a matter of opening a new section for Cents and Senses. To me, the A5 size is small enough to carry around and large enough for jogging notes down. Your mileage may vary.

Build up a reserve. You don't have to write a blog entry when the schedule calls for it. Write them ahead of time. Write a whole bunch when you really have the time and stash them away. This gives you a lot more flexibility to deal with the schedule. You can even pick and choose which article to post. I reckon this is how professional columnists deal with their schedules. You can keep this reserve on your computer, on your USB drive, put them in a scheduled publishing queue, etc.

Another step towards viable LED lighting

According to the Department of Energy, about 25% of electricity used in the US is used for illumination. Therefore, a lot of energy could be saved by using energy efficient devices. CFLs are a good first step, but they contain mercury, which is bad for public health and the environment. As a result, LEDs represent the best alternative we have. Right now, there are a few obstacles preventing LEDs from replacing CFLs as the light source of choice.

The situation right now

So far, LEDs still do not produce as much light as CFLs per watt, and the white light they give off has a harsh blue tint, which a lot of people consider unattractive. Commercial white LEDs are created by coating blue LEDs with a substance that converts the blue light produced into a yellow light. This mixture isn't good enough to approximate sunlight because there's still too much blue.

Crystals to the resue

A team of Turkish researchers at Bilkent University in Ankara found that, by using a different kind of coating, drastically improved result could be achieved. This coating is consisted of very small crystals of two different sizes, one turns blue light into red light and the other turns blue light into green light. Red light, green light and blue light combine to form a very natural kind of white light that is pleasing to the eye.

Another benefit of this new coating is it helps to produce much more visible light - 300 lumens to the watt. This figure is about 5 to 10 times higher than a regular white LED! So this is great news indeed, not only we have a nicer kind of white light, but we also get a lot more of it. It solves two problems at the same time.

Not there yet...

Unfortunately, we won't see these new LEDs on the market for a while, because the crystals used for the coating isn't easy to produce. We are getting there, though. It won't be long before engineers find a way to mass produce them.