How to build wealth.

Saving is a skill you can learn!!!

 Saving plan is an essential part of your financial plan. Without a plan, you will not be able to achieve your financial goals. When you have saved the total amount of money that you had planned, transfer the whole sum into a fixed deposit or some other "vehicles" that can earn more return.

Set your investment GOALS!!!

 Once you are saving on a regular basis, you will need to start making important decisions on how to invest your money. Easy, state your investment goals by asking yourself:-

a)What are your financial goals?

b)Why save and invest your money?

c)How much you need to save and how much to invest to achieve your goals?

d)How long you need to save or invest to achieve your goals?

e)How much risk are you willing to take?

f)How much return do you expect?

To build wealth, start saving and investing now!! 

Cheers,

Patrick

Medical Card - Linked Investment vs Stand Alone .. What say you?

 Happy Labour Day!! Hope you guys have a great holiday and to everyone who is traveling back to hometown do drive safely. First post in May 2011, I'll just start off with insurance because few of my friend talk to me about this.

So why we buy insurance?
 Simply because we don't have a crystal ball to let us know what is going to happen in the next second or so. By having an insurance policy we can transfer the risk of uncertainty (i.e, death, critical illnesses, accidents and etc.) to the insurance company.

 Then why I'm blogging about this when insurance has become everyone needs. Please let me share you my point of view humbly and I'm not going to talk about what is "inside the insurance policy" has to offer as I believe there is always different pro's and con's for each policy, for different insurance companies.

Let's have a look what I have upload for you guys:-

Insurance Policy A

Insurance Policy B

 Total Amount Saved = A New MYVI
Insurance Policy B - Insurance Policy A

 As you can see, insurance policy A is paid at a fixed amount of premium every year where insurance policy B premium is increased according to your age. So have a look, and see what is the difference for you.

Cheers,
Patrick Rich.

Invest In Blue & Growth For Stability !!

This is the remaining stock that is not covered in the last post and will be the last post  too for April 2011. Hope you guys enjoy reading it and have a nice weekend ahead.  

Large, Mid & Small Cap.

 Another post for the month of April, just a general guideline for the following types of stocks. The term Cap is the short form for capitalisation, which is the market value of a stock.

That's all for this post and see you again. 

High And Low Of Interest Rates.

Just read an article about The Rise And Fall Of Interest Rates, this is some of the points Loonie would like to share out:-

Definition
 

Interest rates is the rate of which interest is paid by a borrower to the lender for the use of money.

   

 The use of interest rates by central banks to influence economic activity is know as monetary policy. It should be noted that the main objectives is to maintain price stability.i.e,stable inflation rate and the secondary objectives is to support economic growth.

What will happen by adjusting the interest rates? Look below,

 

a) A lower interest rate
 

 Will results in strong demand of loans and will lead to increase in economic activities, as consumer borrow more to spend .i.e, big purchases like car / real estates, and businesses borrow to expand their operations. And at the same time stock market usually will goes up too. 

 But when a policy of keeping interest rates artificially low for an extended period and below the rate of inflation could lead to asset prices to rise well above their fundamental values. Over time, this will inevitble lead to a sharp retracement in asset prices and may have an adverse effects for the overall economy and may potentialy cause volatility in financial markets.

b) A hike in interest rates  

 Why there is an interest rate hikes? 1) Is to aimed at normalizing interest rates and 2) to contain inflationary pressures.

 What happen next? An interest rate hikes will increased the cost of borrowing thus reduce loans growth causing investment and economic activities to slow down.

Conclusions

 The interest rates movement is one of the many economic indicators that investors can monitor to help them make a better investment decision.

Just before I signed off, I would like to wish all christianity friends a Happy Easter Day.

Loonie Explain The Ringgit Cost Averaging Strategy.

HOW DOES IT WORKS.

 Ringgit cost averaging is a strategy you invest regularly by adding a similar amount of money over a medium to long term period. Therefore, you can remove the need to forecast the market and can reduce your cost per share below the actual average cost of share over the period you invest.

 In a simple manner, when the price is Low you acquired More units and when the price is High you acquired Fewer units. Let’s take a look at an example below using ringgit cost averaging. It’s a breakdown of monthly payments for 2 years:-

You can apply this on Stock or Unit Trust Investment.

Your cost per unit, is lower compared to Dec Year 2

 TAKE NOTE:-
 There’s no guarantee you’ll make money with ringgit cost averaging. If the fund price declines and doesn’t bounce back eventually, you could lose some of your investment. But in general, ringgit cost averaging can reduce the risk that you’ll invest all of your assets at the market peak.
 

Savers are Losers!

Money Save In Banks, Work Hard Enough For You?

 One of the most reform idea of famous Rich Dad Poor Dad author Robert Kiyosaki is that SAVERS are LOSERS!

 One must know how to invest their money to fight inflation.The very goal of investing is to have an additional income because the value of our money decreases as an effect of inflation. The value of your money today is not the same as the value of your money one month ago because of inflation.

"Savings is good, But how you switch your savings into asset is another thing".

 Savers are losers because they only know how to save money in the bank through bank deposits which give them very little interest income not even enough to outgrow inflation. One must build several assets that are income producing to become passive income earner. Therefore, savings should be used to invest in assets. By assets, I mean those investment vehicles that puts in money into your pocket. We should know how to properly invest our money to have passive income and use this passive buy our wants, preventing ourselves from deprivation.

*Edited on 23 April 2011.

 

What Good About Unit Trust.

With a well managed portfolio, you could minimize your risk.

So here, I list down the benefits investing in Unit Trust:-
a) Professional Fund Manager are employed to manage the assets of the fund at an affordable (shared) cost.

b) Diversification process through providing small investors with an avenue to pool their savings for the purchase of a diversified portfolio of stocks and bonds.

c) Liquidity, investors may redeem their investment on any business days.

d) Capital gains.

Types Of Unit Trust Funds & Risk

Example of risk and return.

There are many different types of unit trusts but, in general, they can be categorized as follows:
a) Bond and money market funds are funds that invest in fixed income securities (which are long-term debt) and in short-term debt respectively.
b) Balanced funds a mix of equity and bonds.
c) Islamic / Shariah  funds
d) Equity funds are basically funds which invest is stock which are listed, either locally or offshore.

IS IT RISKY?
 "There is no free lunch in this world. The lower the risk the lower the potential return. The higher the risk the higher the potential return."

When it comes to investment there is always element of risk. This is only a summary Loonie did it.

a) Equity Funds (Local) - Market Risk, Stock Risk, and Liquidity Risk
b) Equity Funds (Local & Overseas) - Market risk, Stock Risk, Currency Risk and Country Risk
c) Bond Funds - Interest Rate Risk, Credit Risk and Liquidity Risk.
d) Islamic / Shariah Funds - Risk of Non-compliance with Shariah requirements.

How Does Unit Trust Work.

STRUCTURE OF UNIT TRUST

The investors invest money in the unit trusts to gain income and capital gains. The trustee owns all the assets which the fund invests in and also ensures that the fund manager acts in accordance with the investment mandate in the trust deed. The manager, on the other hand, is responsible for the day-to-day management of the asset, and also for the distribution of income to investors. The calculation of unit trust prices is also under the purview of the manager.

Note that the fund assets are held in the name of the trustee - this separates the assets of the unit trust management company from those of the fund itself. This is to safeguard investors' interest.

That's all for now and thanks again.

Why You Need To Start Investing.

First of all, I personally believe that Financial Freedom can be achieved through Investment. So here  is what Loonie going to talk about:- 

WHAT IS UNIT TRUST.
Apart from equities and stocks, a popular form of investment is unit trusts.

Unit Trust, is an investment that allows investors with similar objectives to pool their money together to be invested in a single portfolio of securities.

In simple term for this, as an individual investor, unless you are an accredited investor (or a high net worth individual), you may not have sufficient capital to invest directly in the stock market and to have a balanced portfolio.

WHY YOU NEED TO INVEST IN THE FIRST PLACE.
So where do you usually save your money? Most probably you will save your money in saving/current accounts or maybe fixed deposits. And do you know, how much is the interest rates for savings/current account and fixed deposits? The interest rate for saving/current account is range from 0.10% to 1.51% per annum and for fixed deposit the interest rate is from 2.75% to 3.00% per annum. Well if you think 3% is enough, think again, with inflation rate average at 3% what is your actual effective rate of return? Possibly 0% to negative.

With savings, one puts money aside without risk and earns interest on savings. With investing, there is potential for one's money to grow faster, but the returns are not guaranteed.