THE POWER OF OPM – WHAT IS IT?

In A Rising Property Market, the Wise Investor Will Tap Into OPM To Exponentially Increase  His Performance & Profit Manifold.  OPM stands for  “Other People’s Money”.

A friend of mine invested in Multiple Properties In Desa Park City, Kuala Lumpur. He saw  that the Properties In Desa Park City have great potential – so he bought & bought, first using his name, then his wife’s name & then his brother-in-law’s name.

You see Malaysian Banking  Rules say that a Person only qualifies for 90% loan for the first 2 properties he buy in Malaysia. For 3rd and subsequent properties, he only gets 70% loan margin for his house. By borrowing up to 90% of the house with 30 years repayment period, he maximizes his investments to the fullest by OPM. At completion, properties like Adiva in Desa Park City doubled in value. He easily  made millions by this strategy.

OPM or “Other People’s Money” has been successfully used by the Banking Industry For Centuries. Millions Of People Keep Their Money In The Banks For 2 Reasons. No. 1 – For Safe Keeping or Protection.  No. 2. To get a yield of interest for his money – example 3.3% to 3.5% For A One Year Fixed Deposit Rate In Malaysia currently.

The Collective Pool Of This OPM By  Million Depositors Is Then Loaned Out Prudently To Borrowers At A Much Higher Interest Rates of Up To 7% per year. The Bankers Only Take Money From Individuals Who Have No Better Idea To Multiply The Value Of His Money & Lend To Those Smart Businessmen Or Investors Who Can Put It To Better Use.

This OPM has been going on For Centuries until now. However,  Another Type Of OPM Appeared On The Scene. OPM can also mean “Other Printed Money”. The Original OPM is the HARD EARNED MONEY BY MILLIONS OF HONEST HARD WORKING MEN & WOMEN – LIKE FACTORY WORKERS, SECRETARIES, TEACHERS, FARMERS, SALESMAN, INSURANCE AGENTS, PROPERTY AGENTS, OWNERS OF PROFITABLE BUSINESS ENTERPRISES & STOCK MARKET BROKERS  ETC   ETC  AND EVERYONE WHO EARN HIS MONEY BY PROVIDING REAL GOODS OR PRODUCTS, REAL SERVICES & REAL VALUE TO SOCIETY.

OPM Which Also Stand For “OTHER PRINTED MONEY” Comes Out From Thin Air. That’s Why It’s DANGEROUS!  THE RULES OF THE GAME HAVE BEEN CHANGED!!!  Irresponsible Bankers Are Flooding The Entire World With “FIAT MONEY” OR “FAKE MONEY”.

The Bible says, “If the foundations be destroyed, what can the Righteous do?”(Psalm 11:3)  The Fundamental Value Of Real Money Has Been DestroyedBy The Injection Of Printed Money Into The World’s Financial System. People Who Follow The Righteous  Path Of Honest,  Hard Work & Saving Hard Earned Real Money Are Suffering The Consequences Of Money Dilution By Irresponsible Central Bankers.

Marc Faber, The Swiss Economist says that we should no longer trust Central Banks That Print Money.  Only Responsible Govt Like Singapore could be trusted. Another Safety Measure He Advocated Is To Be Your Own Central Banker. In This Case He Recommended Gold. Gold has Its Own Intrinsic  Value. Gold is indestructible, portable & has Its Own Store Of Value.

Other Refuges Of Safety   Are In Land, Especially Farm Land, Real Estate like Like Houses, Commodities,  Silver, Antiques,  Shares In Good Companies That Sell Goods Or Provide Services.

To keep hoarding Cash In A Time Of Relentless  QE Or Money Printing AND DOING NOTHING IS ALSO DANGEROUS! Let me illustrate: “The Story Of The Frog In A Pot Of Water”.  If you put a frog in a pot of hot water, the frog will immediately jump out! But, if you put a frog in a pot of water at room temperature. And then light a small fire under the pot and let the temperature slowly warm up, the frog will not notice the change in temperature; gradually the water turns from warm to hot, then hotter &  finally the frog is cooked!

IN THIS SCENARIO,  KEEPING ALL YOUR WEALTH IN CASH IN THE BANK IS NOT WISE. A 3.5% FD Rate Is Insufficient To Protect You From The Ravages Of Rampant  Inflation. Since The Rules Of The Game Have Been Changed,  Keeping Cash In The Bank Is No Longer A Safe Option. While Assets Inflate, Cash Loses Its Purchasing Power!  Just Like The Frog Lost its Life By Doing Nothing, The Purchasing Power Of Your Money Loses Its Value.

Millions Of People Who Own No Assets, Gradually & Inevitably Descend &  Sink Down into Poverty.  Money Printing Is The Mass  Weapon Of Impoverishment Of The Sandwiched,  Innocent  Middle Class. The Effects Of Spiralling Inflation Resulted In The Protests & Revolts  In Tunisia, Libya,  Egypt, Turkey, Brazil and more to come!

Why? What Is The Cause Of This Unfortunate Turn of Event  In World History?  It all boils down to Two Contrasting Theories.

See Next Post For The Explanation. Meanwhile, may you Pursue Knowledge Everyday.

NOTE:

OPM will accelerate profit exponentially in a Rising Property Market Trend.  However, It Is Foolish & Foolhardy To Use OPM In A Falling Market – you will exacerbate  your losses. (See article on “The Reality Of Property Cycle).

Australia & Hong  Kong  is at the beginning of Downturn,  while Singapore, Shanghai & Beijing look Toppish. UK & USA could be A Bear Trap. KL & Penang have seen their best days and have only limited upside.

ISKANDAR Is At The Beginning Of A Multi Year Upside. And If  Iskandar Regional Development Authority (IRDA)  Implement Development Wisely – THE FUTURE GROWTH MAY  WELL LAST FOR MANY DECADES!

Calvin comments: (22nd February, 2016)

It is through OPM that PUBLIC BANK Rose Up To Be A Blue Chip. PUBLIC BANK Collects Vast Amount of Deposits From The Masses at 2% to 3% interest (Using Other People's Cheap Money). And then lending this (OPM) to make good money by lending out to successful & viable Businesses wisely and discretely at up to 7% interest rates.  

The motto of Public Bank is this "NO CUSTOMER NEEDS TO WAIT MORE THAN 2 MINUTES TO BE SERVED NEXT". The Faster the Turnover of "OPM" By Public Bank the better its profits!

Successful Businessman Borrows to Invest In Their Company Business all their time. But remember this: Borrow to invest wisely is the best - the very heart of entrepreneurship. Borrow to consume  will impoverish you. Borrow to gamble or speculative is also a no no.

Note:

In a time of relentless Money Printing the value of money continues to face erosion.

Let me relate a true story:

In year 2013 I bought a medium low cost house in Taman Scientex (Just Beside Taman Nusa Damai). The Sale Was at the Reserved Price of Rm44,000. I was the sole bidder and so I got it at reserved price of Rm44,000.

After buying the house successfully from Johor High Court I went to see the owners still living in the house.

It is an endlot house without extra land. 775 sq ft with 3 bedrooms and 2 bathrooms upstairs. The kitchen downstairs was renovated with table top. Total renovation about Rm15,000. The Original Cost was Rm80,000. So the Total worth is Rm95,000. By being auctioned off at Rm44,000 they lost Rm51,000 or 53% Losses!

Upon inquiry I found out that the husband worked in a factory with RM2,000 salary. But with 5 children they were struggling to make ends meet. School bus fares, uniform, food & expenses took a major part of their expenses. The Overtime pay the husband gets was curtailed due to tough times in the factory. And rising food prices was the final killer.

Unable to pay back bank loans their property went up for auction & sold far below original cost.

Now with 6% added GST I shudder to think how many more of these struggling families will have their houses foreclosed.

OPM (Other Printed Money) Is a Slow and Steady Destructor of Wealth For The Ignorant Masses Who Do not Prepare Themselves By Saving & Investing Wisely.