2nd EPF!

The move to allow EPF members to buy only funds with a track record of at least three years has drawn mixed reactions.

Effective August, funds with a less than a three-year performance track record as well as newly launched ones will not be sold to EPF contributors. The new rulings also reinstated a previous move to allow EPF members to invest in funds with foreign exposure, but now with a limit of up to 30%.

The Federation of Investment Managers Malaysia (FIMM) recently said the reason to allow EPF members to invest in performing funds — those that have higher consistent returns for at least three years, was to strengthen trust and confidence in unit trust investment.

That was a fear that with the three-year track performance ruling, members might lose out as good investment “windows” did not last that long especially true for “thematic” investments. Thematic investing is an approach that seeks to identify and capitalise on economic, political, and social trends that are likely to have significant implications on important sectors of the economy and financial markets.

However the move is considered a good one as the three-year performance time frame would help investors choose funds that perform consistently and eliminate those that underperform. Just be warned that the selection criteria may lead members to focus too much on the past performance of a fund which may not necessarily be indicative of future performance.

There are other factors to consider in choosing the right investments, such as risks profiling, time horizon, qualitative factor and others

Diversified From EPF to Unit Trust

Significantly larger number of EPF members withdrew part of their retirement savings for investment in unit trusts.

The amount withdrawn under Members’ Investment Withdrawals in first quarter of 2010 (Q1 2010) increased by 43.26 per cent to RM911.15 million (Q4 2009: RM896.66 million) from RM636.01 million withdrawn in the corresponding period in 2009. Total applications approved under this withdrawal increased to 113,809 (Q4 2009: 114,375) from 87,420 in the same period last year.

The increase in withdrawals for investments is in tandem with the recovery in the domestic economy that began in the third quarter of 2009 and has since continued to gain momentum. The increase was also attributed to the rise in the number of members who are eligible for investment withdrawals.

EPF's Top 30 Equities

EPF will publish its Top 30 equity investments in companies listed on Bursa Malaysia on a quarterly basis. Members could see from the website which companies their savings were invested.

The investment highlights can be viewed at www.kwsp.gov.my. As of March 31, the EPF’s top three shareholdings were 67.33% stake in Malaysian Building Society Bhd, 56.14% of RHB Capital Bhd and 41.54% of Malaysian Resources Corp Bhd.

Ugly Ogling Ogre

Once upon a time, there lived an ugly ogling ogre who had a kind heart. He was a vegetarian. He was in love with Ohoho. Huh? Did I get your attention?

The power of storytelling is something that we fully understood and enjoyed as children, but somehow forgot as we grew older. Our brain waves would change during a presentation when the presenter says the magic words, "Let me tell you a story..." Those about to doze off would be jolted. Unconsciously, bodies lean forward, ears prick up and attention levels jump.

This year, I have the chance to reacquaint with this power as I was roped in to teach. I become a ‘Jataka Penglipur Lara’ to a bunch of 7 and 8 years old kids. Theoretically, it should be a stroll in the park especially since the stories are all compiled in the text book. Lo and behold! It is easier said than done as these millennium kids will have no patience to sit still for an hour to listen to this Generation X babbling away without any visual aid. Traditional way of bulldozing my way does not work anymore! Either I arouse them or I lose them!

I need to crack my head to utilize various props and tools. I need to combine the hardware and software! I can build up the expectation and suspense by parading these gadgets but the last thing I want is to disappoint them with boring contents and delivery.

I downloaded some Jataka tales from YouTube and shared them in the class, using laptop and LCD projector. The kids did not seem excited. Perhaps they were expecting more action packed scenes. I mixed these tales with other short animations. As expected, a few who had this notion ‘computer means games’, tried their luck, “ Teacher, can we play computer games?”. The answer was a no brainer!

The first time when I wheeled in the overhead projector, they were curious and wondered if I were showing them a Transformer! They were totally clueless with this piece of junk.

It was totally different reaction from seeing a computer. They must have been disappointed when the projector was switched on! Nothing transformed and nothing moved. Being smart kids, a few quickly found ways to amuse themselves by shadow playing with their hands!

Personally, the best tool to tell these stories was to get them to role play or act them out! This method would allow them to burn all their excess energy and voila, some hidden talents were unearthed. Initially, they would be coy and preferred to take the role of extras but after a few takes; many would love to be the hero and heroine! Perhaps they could do a better job than Keanu Reeves in portraying our great teacher.

The power of storytelling is too powerful to ignore. It is an effective and fun way to acquire knowledge.

We seldom remember key points stated as stark, bare facts. But we do remember stories and the powerful principles and messages that are subtly embedded inside them. This awesome power of storytelling is something that we can harness and arm these kids with.

Who knows, 20 years from now during the 100 year celebrations, a few will become prominent public speakers and will look back and say, ”..apa nama, I have my first break in BISDS..” The rest is history.

Private Pension Funds

Malaysia is set to have private pension funds by the middle of 2010. This is part of the whole pension fund reform in the country and crucial for building the new high income-based economic model.

Several fund managers have shown keen interest in establishing private pension funds. Therefore, there could be a few, rather than just one.

At present, a relatively large proportion of the economically active population in the formal sector has pension coverage through the Employees Provident Fund (EPF), the public sector pension scheme and Lembaga Tabung Angkatan Tentera (LTAT).

As at the end of 2008, there were over two million self-employed Malaysians remaining outside any formal pension system.

The important issue is sustainability of financial security during retirement.

A survey by the EPF indicated that about 90 per cent of contributors have less than RM100,000 in their accounts. Over 70 per cent would have exhausted their total contributions within three years of withdrawing a lump sum on retirement at the age of 55. This means by 58, an average retiree would have depleted all his retirement savings with EPF.

This underlying trend reflects the sole dependence of retirees on their EPF savings as a safety net, and as such, the inadequacy of sustainable levels of income after retirement.

More Educated, More Greed?

A staggering RM20mil - that is how much Malaysians have been conned by African tricksters in the past few years in at least 11 internationally known scams ranging from Black Money to inheritances which promise non-existent wealth.

The statistics, provided by Bukit Aman, also showed that most victims are, ironically, educated people such as lawyers, accountants, academicians and even politicians who somehow were convinced that they could become instant millionaires by investing with these people despite all the publicity about such scams.

These con men, who preyed successfully on gullible Malaysians, are from Nigeria, Liberia, Cameroon, Burkina Faso, Senegal and Sierra Leone.

Conclusion - educated people are proven to bloody greedy!

How the Black Money scam works

The Black Money scam was reported by Interpol to have surfaced in Malaysia in 1998.
Most of these con artists enter the country on a social visit pass which allows them to stay up to 30 days. They tend to enrol in local colleges, just to obtain student visas so that they could extend their stay here.

They would then send out random emails and SMS, promising huge piles of money. Usually a “processing fee” is required in advance from their targets. In some cases, the victim lost big amounts of money without realising it until the fraudster goes missing. They are such smooth operators that a number of victims took loans from Ah Longs to pay them.

Victims are told about a stash of bank notes which had been dyed black to avoid Customs detection. The money was supposedly kept in a safe somewhere and the victim should purchase a type of chemical to wash off the dye which would then unveil “genuine” US dollars. The victim would be promised a share of the money.

The supposed origin of the riches varied with each new victim. The most popular version is that the money is the lost fortunes of former Nigerian dictator General Abacha which need to be transported out of Nigeria without the Customs knowing it.

Commercial Crime Investigation Department director said the con men, upon meeting their target, would produce a small vial of washing liquid called “Universal Automatic Washer” and ask the victim to select any black bank note at random.
The black banknote would be washed but with a sleight of hand, the con man would substitute it with a real note. Victims are given the “washed” bank notes and are encouraged to verify their authenticity at a money changer.

They would ask the victim to buy the chemical in order to process more money and that the costs of the chemicals are very high. These con artists modus operandi of “layering,” where a different person is sent to each meeting with the victim.
They are also known to use local women to carry out their deception, targeting single mothers or college students and using their bank accounts to conduct their shady business.

Most of these con artists are deported to their home countries as authorities usually lack evidence to charge them. However, a number of them would return to Malaysia under different passports.

As long as there are Malaysians who are fuelled by greed, there will be someone to take advantage of them!

10 Types of Scam

1) Animal vaccine:
These vaccines are ostensibly for farmers to use on their animals to help them breed faster. The demonstrations conducted by the con men are so convincing that the victims do not hesitate to buy the “magic vaccine” despite its high price.

2) Currency exchange:
Customers are offered extraordinary rates when they want to convert their money.

3) Inheritance:
Syndicates would use seemingly authentic documents to assure their victims that a great grandfather or close relative had died, leaving tons of money without an heir.
The victims are told that they would be charged a service fee and that they would then have a share of the riches. Once the money is paid out to the fraudster, he would disappear.

4) Parcel delivery:
Professionals such as lecturers and executives who surf the Internet frequently are often the victims. After befriending the victims through online chats, the conman would send them a parcel purportedly containing a “gift” such as a laptop, a watch or even jewelery.

Victims are told that the parcel had been held up by Customs, so they must pay a processing fee to retrieve the parcel. Once the fee is banked into a local bank account, there would still be no sign of the parcel.

5) Job offers:
Foreigners are dangled job positions in Malaysian hotels, multinational companies and telecommunication firms with promises of good salaries. All the dealings are done via Internet. They would be asked to pay for “visas” and “work permit fees”.

6) Lotteries:
Victims are told that through their email addresses, they have been selected as lottery winners where the prizes come in US dollars or pound sterling. To get the money, the victim has to be a member of a club and would be asked to pay very high membership fees.

7) Jewellery:
A syndicate would offer to sell gold in a form known as “granules”. The dealings often take place in hotel rooms where victims would be shown the genuine stuff initially but they would later discover that all they got is just a packet of metal powder.

8) “Bomoh”:
This usually involves celebrities and the wealthy who are eager to double their riches. The syndicate would use a piece of yellow cloth, a candle and the Quran, besides chantings. Victims are persuaded to leave a certain amount of money inside a bag. The are not allowed to open it until a specific time. Later, they would discover that all the money inside the bag had been quietly taken out and replaced with paper.

9) Credit card:
The suspects would use forged credit cards to settle their purchases at shopping malls, then reselling the items at a higher price later.

10) Drug-dealing:
Local women are made use of to smuggle drugs out of the country in exchange for jobs overseas.

Mistakes Mistakes

Here are some commonly made money mistakes that everyone should avoid:

Mistake #1:
Failing to Plan
Not many of us plan our finances. The most common response that we can anticipate would be the classic excuse “We are just too busy with work and family that we hardly have any time left to do the planning”. As a result, most of us end up paying higher taxes, leave our savings sitting silently in lousy investments for years or overpaying for financial products. Since there are always deadlines to be met at work, we tend to let our finances run its own course, thinking that it is of lower priority as there are no deadlines to meet nor is there anyone to force us to look into our financial plans, unless of course we run into serious deficit.
However, the important point to note here is that PLANNING is typically found to be a strong habit among people who have successfully accumulated wealth, even with just a modest income.

Mistake #2:
Spending Beyond Our Means
We constantly overspend due to peer pressure and consumer temptation that surround us on a daily basis. We are exposed to mild brainwashing with TV commercials, newspaper ads, sale circulars, and flashy shopping malls promoting the lifestyles adopted by the rich and famous, which of course involves having the latest mobile phone models, the latest luxurious cars, latest fashion trend. All these tempt us into spending exorbitantly and unnecessarily. The signals we get from not jumping on the bandwagon are that we will be considered left out of today’s scene. However, in order to do so, we end up spending way beyond our means. We will find that at the end of each month, the net salaries that go into our bank account are usually meagre, after servicing our car loans, housing loans, credit card bills and other utility bills.

Mistake #3:
Spending Future Money
Buy now and pay later! This has become a norm and the credit card has become a must-have item in our wallet. In fact, a lot of us carry more than one in our wallets. No doubt it is a convenient item to have around; however, some of us misuse it and treat it like a vehicle to spend our future money at will. It has become a common phenomenon where, by just settling the minimum payment at the end of the month, you will buy more now. As a result, the credit card bad debt snow-balls to an extent beyond our control. According to the bankruptcy report, the percentage of people declared bankrupt due to default in credit card payment has increased in the last few years especially among the younger age group. Be wise when using credit card. Making minimum monthly payment on credit card debt allows you to buy more now, but it will cost you dearly in the future.

Mistake #4:
Delaying Saving for Retirement
Most of us aim to take up early retirement. In order to achieve this, we need to plan our finances to make sure that we have enough savings to sustain the life style that we desire even after retirement. However, many of us find that even when we approach retirement, we still struggle to meet the savings target that we have set for ourselves earlier. As our income grows, our savings are supposed to increase as well, instead, we more often than not, have big items to spend on, i.e. house upgrading, new car purchase, club membership to keep up with our peers, etc., that prevents us from depositing more into our savings.

Mistake # 5:
Investing in the Wrong Products
There are various kinds of financial products in the market. However, in order for us to identify the right product that suits our risk and return profile, we need to equip ourselves with some basic investment knowledge and do the homework ourselves. Instead, most of us end up investing in some products, simply because we rely too much on the financial advisers, who might have the agenda of pushing higher sales for their products and therefore providing misleading information to us. It is always important to study the product characteristics or the management team track record before investing.

Mistake #6:
Not Saving for a Rainy Day
Some of us think that purchasing insurance is a waste of money. However, we are vulnerable if we and our family do not have insurance to cater for any loss of income. In the event of some unfortunate incident, especially those affecting the family’s bread winner, without any cash reserve or insurance, it will be devastating to the whole family. By then, it would be too late to start thinking of income replacement.

Mistake #7:
Focusing Too Much on Money Matters
All the above tell us to focus on our finances. However, on the other extreme, we must also not be too engrossed in accumulating our wealth to the extent that we lose sight of other priorities in our lives. While we plan our financial health, we must not neglect our own health, family and friends, career satisfaction and fulfilling interests. Without these, even with tons of money, we will not be happy.
Lastly, we need to remind ourselves of the importance of planning our finances. If we are not fully, totally and truly committed to creating wealth, chances are wealth will remain estranged to us.

http://www.min.com.my/min/article.aspx?menu=4&menuAttch=377&sec=article

Tax Planning Strategy - Unit Trusts

Unit holders will be taxed on distribution received from a unit/property trust. The income distributed will include a tax credit which is actually tax paid by the unit trust company. The unit holders can therefore utilise the tax credit available to set off against their tax payable. Any excess of tax credit over the tax payable will be refunded by the tax authorities to the unit holders.

Income distributed out of exempt income or gains made from the sale of investments (shares/property) of a unit/property trust is not taxable in the hands of unit holders.
Unit holders who choose to receive their income distribution in the form of new units are regarded as having purchased extra units and these fresh units are not subject to tax.

Gains realised by unit holders on the transfer or redemption of the units are treated as capital gains and therefore not taxable.

One

"If you are first you are first. If you are second you are nothing." Bill Shankly

This blog is ONE year old! It has evolves from 'the story of my life' and all the jazz to a more investment and economy centric blog.

After close to 200 hundred articles, unfortunately, instead of going and growing stronger, due to work and personal commitments, I have to sacrifice this writing passion on the back burner! No, it is not the end of life but expect a less frequent updates.

How time flies and as we could not turn back the clock, got to prioritize the urgent and important matters that need to be attended in the given 24 x 7!

Branding

There were no surprises in the Reader’s Digest Trusted Brands Awards 2009. The survey was carried out by research firm The Nielsen Co, with respondents voting for their most trusted brands in 43 categories of products and services.

The brands were assessed and ranked quantitatively and qualitatively based on six determining factors: trustworthiness and credibility, quality, value, understanding of customer needs, innovation and social responsibility. The winners of the awards were the top choices of consumers. The ultimate measure of success for any brand was the level of consumer trust and confidence it enjoyed

Malayan Banking (Maybank) and Public Bank won top honours in the bank category. Amanah Saham Nasional Bhd and Public Mutual were the winners in the category of most trusted investment fund companies.

Other notable winners - a) Car - Honda, Toyota & Proton (surprise!) b) Insurance - AIA, Great Eastern. Prudential c) Family tourist attraction - Genting Highland, Langkawi d) Phone services - Maxis

Ice Breaker - Me Myself & I

Chee Wee is a very common name. Few years back, when I was purchasing an electrical item at SenHeng Electrical, the sales consultant did a search and voila, there were 5 Tan Chee Wee in the database! You can also call me Sumana. That’s my Buddhist name.

Should I tell you more on Buddhism? Of course not. My madam mentor cajoled me to talk about myself – nothing else otherwise the ice will not be broken!

Anyway we should not split hair over religion matter. Instead we should adopt the common values, the universal values instead of fighting over the various differences.

This attitude makes me proud to be a Malaysian. I identify myself as having the Malaysian features and can speak fluent Bahasa Malaysia. ‘Tak Percaya?’ Don’t you believe?

Let me relate this incident, in the 80s when I was a teenager, I traveled to school by public bus. One evening, while waiting for the bus at LA, that’s Leboh Ampang, not Los Angeles, a thug approached me. He cajoled me to part with my money! I was this tall & thinner than today – that’s make me an easy prey. I was scared. Damn scared! Well, but not to the extent of wetting my pants, though! Out of the blues, somehow I uttered ‘Apa kau nak’. What do you want? That thug was taken aback! Lu bukan Cina ka? You are not Chinese? Sorry ha! He walked away. Whoosh what a relief! I have many more funny and embarrassing encounters. Embarrassment not to me but to the other parties.

I joined Toastmasters Club in 2007. I remember taking part in Table Topics twice and then went missing in action for 2 years. Yeah that is also the age of my son, Jo Ven! Raising a baby was no easy task. I have to live up to my billing as the doting father! Not a missing father! So I have to sacrifice some of my activities and unfortunately rendezvous with Toastmasters was one of the victims.

I also have an eight years old daughter, Li Ven. There she is – bringing her along as a visual aid. Seeing is believing!

I am a local lad, born and bred in Kuala Lumpur. I spent 7 growing pain but character building years in Victoria Institution, recently proclaimed a heritage school. I was taught to be an all rounder, to excel in all fields. I was actively involved in scouting movement and sports. Among the highlights were leading an expedition to scale the highest peak in West Malaysia i.e. Mount Tahan in 1989 and representing KL Under 23 and Under 20 Cricket team in national age-group tournaments in 1988 to 1990.

From boy to man in the 4 great years spent in Kedah, 1991 to 1995. Initially I was not too happy to leave KL as I have everything in KL. It turned out to be blessing in disguise as the bright lights big city lifestyle was abandoned in favour of the slowdown culture. Came back to KL armed with an Accounting degree in 1995 to start another phase of my life.

As the feet were starting to get wet in the corporate world, Bang! Disaster struck! Asian currency crisis unfolded before our eyes. It was hard time. I got a pay cut. However I survived as I was not exposed to bank loans.

Fast forward to present day. Bang! Global financial crisis. Mother of all crisis. Greater than great depression. No pay cut but with more mouths to feed, I need no cajolement to be prudent in spending. Cash is king – so they said and I need no cajolement in being friendly to this king.

I work in a local IT firm, based in PJ. Accountant by training, Jack of all trades by choice!

However all work and no play make Jack a dull boy. At this stage of life, I do want a work life balance. Every Thursday, I will be in the badminton court, trying to be the next Lee Chong Wei. Every Sunday, I will volunteer my services, trying to be role model to a bunch of 7-8 years old kids in Sunday School. I do maintain a healthy lifestyle and always make sure I am mentally and physically fit at all times.

I end this talk with this motto – Do Good, Avoid Evil, Purify the Mind!

* my maiden speech presented on Saturday 16 May 09 at MIM Toastmasters Club!

Economics for Dummies II

Saving is sin, and spending is virtue.

Japanese save a lot. They do not spend much. Also Japan exports far more than it imports. Has an annual trade surplus of over 100 billions. Yet Japanese economy is considered weak, even collapsing.

Americans spend, save little. Also US imports more than it exports. Has an annual trade deficit of over $400 billion. Yet, the American economy is considered strong and is due to get stronger.

But where from do Americans get money to spend? They borrow from Japan, China and even India. Virtually others save for the US to spend. Global savings are mostly invested in US, in dollars.

India itself keeps its foreign currency assets of over $50 billions in US securities. China has sunk over $160 billion in US securities.. Japan's stakes in US securities is in trillions.

Result:
--------
The US has taken over $5 trillion from the world. So, as the world saves for the US, Americans spend freely. Today, to keep the US consumption going, that is for the US economy to work, other countries have to remit $180 billion every quarter, which is $2 billion a day, to the US!

Who has invested more, US in China, or China in US? The US has invested in China less than half of what China has invested in US.

India have invested in US over $50 billion. But the US has invested less than $20 billion in India. Why is the world after US?

The secret lies in the American spending, that they hardly save. In fact they use their credit cards to spend their future income. That the US spends is what makes it attractive to export to the US. So US imports more than what it exports year after year.

The world is dependent on US consumption for its growth. By its deepening culture of consumption, the US has habituated the world to feed on US consumption. But as the US needs money to finance its consumption, the world provides the money.

It's like a shopkeeper providing the money to a customer so that the customer keeps buying from the shop. If the customer will not buy, the shop won't have business, unless the shopkeeper funds him. The US is the lucky customer. And the world is like the helpless shopkeeper financier.

Who is America's biggest shopkeeper financier? Japan of course. Yet it's Japan which is regarded as weak. Modern economists complain that Japanese do not spend, so they do not grow. To force the Japanese to spend, the Japanese government exerted itself, reduced the savings rates, even charged the savers. Even then the Japanese did not spend. Their traditional postal savings alone is over $1.2 trillions, about three times the Indian GDP. Thus, savings, far from being the strength of Japan, has become its pain.

Hence, what is the lesson?

That is, a nation cannot grow unless the people spend, not save. Not just spend, but borrow and spend. "Saving is sin, and spending is virtue."

*another forwarded mail!

Economics For Dummies

In a small town on the South Coast of France, holiday season is in full swing, but it is raining so there is not too much business happening. Everyone is heavily in debt.

Luckily, a rich Russian tourist arrives in the foyer of the small local hotel. He asks for a room and puts a Euro100 note on the reception counter, takes a key and goes to inspect the room located up the stairs on the third floor.

The hotel owner takes the banknote in a hurry and rushes to his meat supplier to whom he owes Euro100. The butcher takes the money and races to his supplier to pay his debt. The wholesaler rushes to the farmer to pay Euro100 for pigs he purchased some time ago.

The farmer triumphantly gives the Euro100 note to an escort who gave him her services on credit. The escort goes quickly to the hotel, as she was owing the hotel for her room use.

At that moment, the rich Russian is coming down to reception and informs the hotel owner that the proposed room is unsatisfactory and takes his Euro100 back and departs.

There was no profit or income. But everyone no longer has any debt and the people at the small town look optimistically towards their future. ???????

* forwarded mail from a buddy!

Have Fun & Fund When Investing!

When investing in stocks control your greed and fear. We need to know who we are in order to do well in stock market investing - Ooi Kok Hwa, investment adviser

The recent strong market rally caught many investors by surprise again. Most investors predicted that it was just a bear market rally. They have been hoping the market will turn down again. Unfortunately, it has been moving up strong without looking back.

For investors who have not invested during the recent low in March 2009, they are getting very worried as they are not benefiting from the recent rally. They may even wonder whether they should jump in now in order not to miss the boat.

Another group of investors, who have managed to catch some stocks at cheap prices during the previous market low, are also facing the dilemma of whether to lock in their gains now or continue to hold on to their gains. Some even regretted selling their stocks too early last month.

We all know that it is very difficult, in fact impossible, to predict stock market movement. Most investment gurus will refuse to time the market.

Howard Kahn and Cary Cooper published a book titled “Stress in the Dealing Room” in 1993. According to their surveys done on 225 dealers, 73.8% of them suffered from fear of “misreading the market.” Most dealers have the same problem of acquiring and handling information.

We believe that in order to do well in stock investing, we need to know ourselves, especially in controlling our emotion on greed and fear. Due to information overloading, our emotion is highly influenced by the news that we read. Each time we feel that the market is getting bullish and time to buy stock, the overall market will collapse the moment we enter.

On the other hand, the moment we fear that it will drop further and we have decided to cut losses, we will notice the market will recover after that. Most of the time, the prices of stocks that we sold were at the lowest of the recent fall.
In order to control our greed and fear, we need to ask ourselves whether the market has discounted the news that we have received.

For example, many analysts have been bullish lately, having the opinion that the worst may be over for the market based on the recent economic indicators which showed that the overall economy may have stopped contracting or is on its way to recovery.

Nevertheless, the recent strong market rally would have discounted this bullish news. In fact, we need to ask ourselves whether the current stock prices can be supported by the fundamentals for certain listed companies.

In our experience, in most cases, the moment we feel like buying stocks is the best time to sell them while the moment that we feel like selling them is in fact the best time to buy. We can apply this contrarian theory quite successfully in most periods.

Sometimes, if we are taking in too much contradicting information and, as a result, get confused over the market direction, we feel that the best strategy is to stay away from the market until we have a better and clearer picture of the overall market or the economic situation.

We should not be influenced by other opinions. There are times that we need to follow our heart. Sometimes, our hearts try to warn us from taking hasty investment decisions. However, we refuse to follow our intuition but instead, choosing to get influenced by others or the information that we read and ending up making mistakes.
In conclusion, we need to maintain our concentration.

We should not be led by the market sentiments regardless whether it is on the way up or crashing down fast. We need to go back to the fundamental of economic situation and the companies’ performance and future prospects.

One way to minimise the feeling of regret is to stagger our purchase and selling. We will only know the peak when the market starts turning downwards and vice versa. Therefore, by staggering, we will have an averaging effect rather than taking a one-time hit, especially if it is at the wrong timing.

Happy Wesak

“Health is the highest gain. Contentment is the greatest wealth”

“Contentment is the quality of being able to do with what little we have.” ~ The Buddha ~

Contentment is the greatest possession in life. If one have everything but not able to be contented in life, one would not be able to find the real happiness.

A contented person is one who do not have excessiveness, who is self-restrain, who practices simplicity, who is easily satisfy and happy. Being able to do with whatever he has while seeking for better wealth. He would also know how to enjoy what we presently have.

Contentment doesn’t mean being passive or negative. We know we could not have everything in this life. There is no end in one effort in seeking wealth. Contentment measure not how much we have in life but rather how we perceive life.
The opposite side of contentment are greed, jealousy, dissatisfaction, obsession, excessiveness and etc.

Once there lives a simple and joyful poor fisherman. One day as he was walking on the beach, he found a treasure box that consists of 99 gold bars. He was so happy with the discovery. He became the richest and the famous man in the village. One day he became very sad. His friend asked him what make him unhappy. He said “How nice if I can have the missing gold bar to make it 100.”

We always look at what others have that we don’t. We should look at what we have that others don’t. Happiness that comes from comparison (competition) and recognition is not a true happiness. They are just “Egoism.” True happiness comes from simplicity. The more you have in life, the more problems you are expected to face. Know what you want, how much you really need and be happy with what you get.

Do not be influence with obsession. Know where you stand, your ability and capacity. Know where you stand in relation to betterment in life.

In life, there are a lot of beautiful things lying there. There is no harm if we just admire the beauty in life and just go on with life. We should not let these beauties of life create strong desire to gain more. Just walk on. Sometimes even if we could afford to buy it we should considered, is it a necessity in life or just wants to possess it?

Happy Wesak

Happy Mistake Free Investing

"Learn from the mistakes of others. You can't live long enough to make them all yourself." - Eleanor Roosevelt.

Some mistakes are more painful than others. Followings are investing mistakes that you do not want to make and are avoidable.

#1 Don't Let Poor Asset Allocation Make You Poor

Before trying to figure out if the latest share tip is worthy of your investment dollars, you need a plan. How much should you put into shares? How much into bonds? How much should just be in an emergency savings account fund?
Four rules of thumb are:

Rule 1: If you need the money in the next year, it should be in a high interest savings account.

Rule 2: If you need the money in the next one to five (or even seven) years, choose safe, income-producing investments such as gilts or bonds.

Rule 3: Any money you don't need for more than seven years is a candidate for the stock market.

Rule 4: Always own shares.

Remember to be honest with yourself about how risk-tolerant you are. When times are good, it's easy to take too many risks with your portfolio, and vice versa.

#2 Don't Invest In Anything You Don't Understand

Buying shares in a company you don't understand is a bad move. If studying individual companies isn't your thing, there is no shame in buying and holding an index tracking fund.

Don't trust an "expert" just because they use terminology you don't understand.
If you have no clue what the risk is in the risk-reward balancing act, you're better off putting your money elsewhere. Yeah, it's possible to take an insane risk and make your fortune in a year. It's also possible to win the lottery … but I wouldn't bet my retirement on it.

#3 Never Buy On Margin

Just don't do it. Using margin (i.e., borrowing money from your broker to buy shares) is a very dangerous game. You are not in control of your own destiny – using margin transfers your financial destiny to the whims of the stock market and of your broker.

Don't Hate … Participate!

Here's a bonus tip: don't procrastinate. It's never too late to start taking control of your financial future … but it's never too early, either.

Happy, mistake–free, investing.

Baby Step To Financial Freedom - Comments

My mate, Kayage Class 88 commented on the article, Baby Step To Financial Freedom posted on Monday 4 May 2009. He has his points and thought it would be a waste if I did not share his thoughts. Here we go - lock stock barrel...

Whilst knowing how to invest is a good thing, I do not think it is a 'must'. Looking back at our parents' time, were there mutual funds schemes during that time? I dare say 'No' or very limited.. and even if/when there was some kind of funds being set-up, it was flawed with cheating cases where someone ends up absconding with a large portion of the investors' funds (eg. Kojadi at one point of time - my dad was part of the statistics as he invested some of his hard earned cash there)..

So, question - How in the world did our parents made it thru without needing to know how to invest, what more investing during their younger days?

BTW Chee Wee, i think your formulae lacked an important variable. I.e. our kids.. No, I am not saying that we should expect our kids to finance us when we are older. However, knowing our asian mentality, where family bonding is the root of being a family, that is the situation we, highly likely, would be in, in the future (this is provided we are married and have kids, ya?)

Anyway, sorry for the side track, yes, we need not know how to invest. However, if we do know how to invest, it would give us more buffer in our spending in our later days. Chee Wee, another factor that i think you might have missed out is the inflation factor. There is no point of placing one's cash somewhere to generate 3% while the inflation rate is above that. Thus, following your sample, if the current inflation is at 4% and the FD return is at 3%, the investor is actually losing $$$ in a long run. He is better of holding on to the cash or placing it where it can generate a higher returns.

A prudent investor does not place all his eggs in a basket and investment does not only mean FD, Shares and mutual funds alone... Properties, gold, collector's items should be considered too.

Let's take a look at gold, if you study the pricing trend, you would notice that gold is one commodity that had been steadily going up in price thru out the time, thus investment in gold makes a good option too.. Well, next question, where do I store all these gold that I had bought.will be buying? No fret.. These days, golds are sold w/o the need for physical transfer. Instead, the gold can be safeguarded in a bank with the bank issuing you a certificate. Thus, at any point of time you want to liquify your gold, all you need to do is bring along the certificate.

Price for strategically located properties will continue to appreciate. Thus, buying a bungalow for RM100k in PD hoping that the price would appreciate would be a wrong investment idea. Instead, a D-story in BU today might cost RM700k, but in 10 years time, it would probably cost more than RM1mil - Statistics had proven (from trend study), less tahan 5 years ago, the D-story house in BU only costed RM450-RM500k!. So, if you do the maths, RM300k (profit) divide by RM700k (cost of purchase) multiply by 100 gives you a return of about 40-50% for the 10 years investment - So much better than FD, no? and during that 10 years, you could possibly make some income via rental.

Lastly, collectors items (eg. proof coins, stamps, old coins & notes, antique items). These have high resale value as time goes by (provided you are collecting the 'right' set of items). Again, for that investment, you probably would make 5-10 times your cost. Again, this depends on what you foresee in the future as items in demand ;)

If you are not awared, these days there are these thing called. Collectable trading cards.. they come in the category of common, uncommon, rare and super-rare. I.e. you can collect them as a hobby, use them for leisure games or competitive games (yes, they even have world meet and superbly good price for the winners) then later on sell them off for a good price. A super-rate (out of print card) could possibly fetch USD2-3k these days.. So, imagine the opportunity for investment here.

I have a friend who collects comics (Marvel and DC).. and yes, I dare bet you read in the papers not too long ago how much an auction of the 1st ed. for Superman fetched the seller, ya?..

Chee Wee, sorry for being so long winded, and no intention to hijack your posts :P.. Just want to share other possible investment options besides the capital market :P

BTW, do keep away from HYIS (High Yield Investment Scheme). I do advice against this mainly for 2 reasons:

#1. your returns are from fellow family and friends you hoaxed into the scheme. So, this investment scheme are only for those w/o concious as you have to have the stomach to see your friends' losses at ur benefit.

#2. if you really ust enter into a HYIS, do so only if the scheme is less than 6 months old.. entering one which is about 1 year old is shaky. Most HYIS life line is 2 years. i.e. the initiator will chao-low (run-away) before the end of 2 years!!

Happy investing ;)

Planning To Retire!

"If you can't make decisions in life, you're a bloody menace. You'd be better becoming an MP!" Bill Shankly

Young parents Viveka and Ananda have been putting aside a fixed sum every month into their savings accounts as part of their retirement nest egg after deducting their household expenses. The ‘journey’ taken is lauded but perhaps they need to re-examine the mode of ‘vehicle’. The common belief is that keeping our money in the bank is the best way to preserve our capital. However this instrument may not be good enough given that interest rates of bank deposits can hardly outrun inflation.

The rising cost of living and medical expenses could be a major financial burden.
According to Great Eastern Life Assurance, only 34% of Malaysians are putting aside money regularly for their retirement funds. Longer life expectancy, delayed marriage and having children later would leave the retirees in a vulnerable position as they also need to set aside medical funds for themselves and education funds for their children.

Although Employees Provident Fund savings is one of the main channels to provide for retirement, 99.9% of the contributors would withdraw these savings in one lump sum once they reach 55 years of age and 70% would use up all these savings in just three years post-retirement.

Another alarming note is that those who do save do not have a concrete plan on how to build their retirement fund. They just save as much as they can and hope they will have enough to cover their retirement needs. They do not segregate their savings for retirement and lump everything as general savings. To make matters worse, they would use the money should other needs arise.

In addition, 73% do not seek advice from financial professionals – a behaviour that compounds Malaysians’ poor retirement planning ability further.

Instead of relying solely on EPF and personal savings, Malaysians should consider early financial planning, which would save them the stress of dealing with insufficient retirement funds or seeking prolonged employment to ensure financial stability.

There are a variety of choices available when it comes to building your retirement fund.

Depending on your risk appetite, investment horizons and affordability, you can invest in properties, equities, unit trusts and investment-linked insurance to name a few. The key is to have a sound investment strategy that is the ability to balance risks and returns effectively according to the desired investment tenure.

Nevertheless, it is always advisable to contact a professional financial advisor or a wealth planner who can provide advice on how to best go about securing your retirement based on your financial circumstances, priorities and needs.