“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
Friday, May 8, 2009
Thursday, May 7, 2009
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.
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.
Wednesday, May 6, 2009
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 ;)
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 ;)
Tuesday, May 5, 2009
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.
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.
Monday, May 4, 2009
Baby Step To Financial Freedom
Assume you start investing at the age of 25 and intend to retire at 55. By saving RM100 per month and invest the money into fixed deposits (FD), assuming the FD can provide about 3% return over the next 30 years, your investment portfolio will reach RM58,274 when you reach 55.
However, if you can generate 5%, 7% and 10% returns, your investment portfolio will achieve RM83,226, RM121,997 and RM226,049 respectively.
The EPF may be able to provide us about 5% whereas unit trust investments may be able to give us 7% to 10% returns over a very long-term period.
We treat the 3% FD return as our risk-free rate. Any extra returns above this rate will be the risk premium for the additional risk that we are prepared to face. Thus, we need to understand our risk tolerance level before considering any type of risky investment. We should know if we are willing to accept the uncertainty of return that is inherent in those investments. Besides, we need to understand if we can afford to have our savings tied up for a long period before we can achieve our investment targets.
When we earn more money, we should have more money for our investments. We should save and invest more. Unfortunately, the word should seem so far away as some investors just do not have the discipline to save even though they earn high salaries.
If we can cut down on our expenses and live below our means, we should have more money to save. We should always ask ourselves whether we want to spend money on unnecessary luxury items to keep up with the Jones or spend less to achieve financial freedom earlier.
However there is no straight-forward answer to how to generate high returns. For a start, we can equip ourselves with strong financial and investing knowledge. Read up investment books. Digest the financial information and do some research in investment.
Once we have built up the knowledge, start practicing. There will be some roller-coaster rides or wave riding. The important thing is to learn along the way. All these rides will help us in making better investment decision that will eventually translate into better returns.
Happy Investing.
However, if you can generate 5%, 7% and 10% returns, your investment portfolio will achieve RM83,226, RM121,997 and RM226,049 respectively.
The EPF may be able to provide us about 5% whereas unit trust investments may be able to give us 7% to 10% returns over a very long-term period.
We treat the 3% FD return as our risk-free rate. Any extra returns above this rate will be the risk premium for the additional risk that we are prepared to face. Thus, we need to understand our risk tolerance level before considering any type of risky investment. We should know if we are willing to accept the uncertainty of return that is inherent in those investments. Besides, we need to understand if we can afford to have our savings tied up for a long period before we can achieve our investment targets.
When we earn more money, we should have more money for our investments. We should save and invest more. Unfortunately, the word should seem so far away as some investors just do not have the discipline to save even though they earn high salaries.
If we can cut down on our expenses and live below our means, we should have more money to save. We should always ask ourselves whether we want to spend money on unnecessary luxury items to keep up with the Jones or spend less to achieve financial freedom earlier.
However there is no straight-forward answer to how to generate high returns. For a start, we can equip ourselves with strong financial and investing knowledge. Read up investment books. Digest the financial information and do some research in investment.
Once we have built up the knowledge, start practicing. There will be some roller-coaster rides or wave riding. The important thing is to learn along the way. All these rides will help us in making better investment decision that will eventually translate into better returns.
Happy Investing.
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