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Showing posts with label Investment. Show all posts
Showing posts with label Investment. Show all posts

Wednesday, December 16, 2009

Tips on how to choose unit trust funds

Personal Investments - By Ooi Kok Hwa


UNIT trust funds offer an attractive alternative to retail investors, especially those looking for the benefit of diversification with a small pool of capital while enjoying the possibility of earning higher returns compared with conventional savings.

However, a lot of people have the misconception that the diversification nature of these funds means that the risk of investing in unit trust is low and they can just close their eyes and simply pick any of the funds that come along.

This misconception has led to many paying high prices in learning that as in any type of investments, investing in unit trust funds requires some basic understanding and research before we commit our hard earned money to it.

In general, we can classify the unit trust funds in the market into two major categories: income funds and growth funds.

·Income funds usually are characterised as providing consistent income to the investors. These funds invest in income-producing stocks or bonds or a combination of both. Bond funds, equity income funds and money market funds are included in this category.

·Growth funds generally are more aggressive than income funds but have the possibility of earning higher returns by focusing on the objective of long-term capital appreciation rather than income producing or short-term gain. Examples of growth funds are small-cap funds, commodity funds, index funds and gold funds.

Before we start evaluating the funds to invest in, there are two main considerations which are our investment objectives and risk tolerance level.

Every investor invests for his own purpose. If you are investing for your retirement and are already close to retirement age, you should look for income funds that are more predictable.

However, if you are still young and want to save for your children’s higher education, which will be 10 or 15 more years, you may want to look for growth funds that generate higher return but with higher level of risk.

Once we are clear on what we are looking for in the investment, we can narrow down our selection to either income or growth category and move to the next step of identifying the most suitable funds within the selected category.

Here are a few key factors to look into when evaluating unit trust funds:

·Investment strategy, policy and holdings: Every fund has its own investment profile. Investors should have a clear understanding of the investment strategy taken in each fund that they are considering to ensure it is consistent with their personal investment objective and risk tolerance level.

Even the funds within the same category may have significant differences in risk exposure due to the difference in the investment holdings.

For example, the risk exposure in large-cap growth companies is definitely much lower than for penny stock funds.

·Past performance: Investors may look into the past performance trend of the fund to gauge its future performance.

However, do bear in mind that good past performance may not be repeated in the future and we should not be overly excited to see one year of good results if the fund is only newly established.

A good fund should be the one that has been consistently out-performing its peers, be it during good or bad times.

·Cost: Investors must be aware that when they buy or sell the funds, there are fees and expenses embedded in every transaction.

For example, the expense ratio of a small fund tends to be higher than a large fund while a regional or global fund usually will carry higher costs compared with a domestic fund.

·Fund management: The fund management is very important to ensure continuity and consistent performance.

If a fund changes management too frequently, it will be very difficult for us to gauge the performance of the fund as different managers will have different styles which may affect the performance of the fund.

For example, if the manager tends to have higher portfolio turnover, then the expense ratio of the fund may increase even though the nature of the fund holdings remains the same.

By having good understanding of the above factors, we may be able to make meaningful comparisons among funds that we are interested in to identify the ones that suit us most.

Source: the Star online

Sunday, November 22, 2009

What is the real value and use of gold?

WHAT is the real value of gold? Gold has industrial uses, especially in the electronics industry where it is used for electrical wiring due to its high conductivity. However, close to two-thirds of its demand is for jewellery, particularly in India and China.

Increasingly, it is being used again as a store of wealth as investors lose confidence in paper money, hedge against inflation or worry about economic and political turmoils. Other than buying physical gold, investors can invest in gold exchange traded funds (ETFs). SPDR Gold Trust, the largest gold ETF with a market capitalisation of over US$41bil, holds over 1,100 tonnes of gold.

Money could as well be in the form of sea shells and indeed Pacific islanders used sea shells as money. Before paper money, what constituted money came in many forms – sea shells, salt, leather, copper, silver and gold. Money was used as a store of wealth which could be used to purchase goods and services without resorting to barter trade. It was in the world’s oldest civilisation, Mesopotamia (in modern Iraq), where metal coins were introduced around 2500 BC. Gold is valuable only because it is perceived so in the collective psyche of the human race, hence its value is subjective and relative to other alternatives. To be valuable, something has to be rare and desired.

In all of history, only 161,000 tonnes of gold have been mined, barely enough to fill two Olympic-size swimming pools, according to a January 2009 National Geographic article. To be valuable and used as money, it has to be something durable. That would exclude fair maidens as their perceived value in the eyes of lustful men may diminish with age. Still, without the demand of gold from the fairer sex, its value would be much lower.

In Einstein’s theory of special relativity, time is relative to speed but if we apply the theory of relativity to the perception of value, the relative value of goods and services is determined by comparing the desirability of one versus another just as we compare the relative attractiveness of bonds, real estate, gold and stocks.

Even within the same asset class like stocks, we apply the relative yardstick – should we buy DiGi or Maxis? The relative attractiveness is determined by supply and demand, interest rates, growth and dividends for stocks, personal preferences and many other factors. The fact that the prices of stocks, bonds and commodities quoted on exchanges are so volatile is a reflection of not only genuine supply and demand but also human psychological factors which cause irrational exuberance or pessimism.

The Chinese introduced paper money during the Tang Dynasty (618-907) and with that they also invented hyperinflation when a large amount of paper money was introduced.

How does printing money cause inflation? In a simple hypothetical world where US$100,000 of paper money can only buy you a bar of gold or a house, doubling the paper money to US$200,000 does not create new wealth but merely causes the value of the bar of gold and the house to rise from US$100,000 to US$200,000, an inflation of 100%.

Wealth transfer

Printing of money merely results in a wealth transfer from the saver (who can buy less with paper money) to the government (as it can use the freshly created money) and borrowers (decline in the real value pf debt). Gold is perceived as an inflation hedge and a store of value. (See chart) Its price spiked in the late 1970s when the US and world inflation surged. The price is surging again due to diminishing confidence in paper money.

World governments are all undertaking fiscal stimulus to counter the economic slowdown. These large budget deficits eventually have to be financed by higher taxes but with unemployment in the United States at over 10%, politicians with an eye on getting re-elected may be tempted to print money to finance the budget deficits and bailouts.

Hence it is not surprising that with the United States, British and Japanese governments printing money, investors are flocking to buy gold or commodities which are a better store of value as their supply does not grow as fast as printed paper money.

The printing of money by the US government also puts other currencies at risk as over 60% of foreign reserves are held in US dollars. As the gold standard has been abolished, paper money cannot be converted to gold. No wonder the Indian government has decided to sell some of their US dollar reserves for gold. Perhaps the currencies of larger countries like Australia are relatively safer as they are sitting on large yet-to-be-mined gold reserves even as their US dollar reserves lose value.

So, should the fair price of gold be relative to paper money? Though the value of gold may be subjective in the minds of investors, the reality is that the amount of gold in the world is finite, but there is no limit to the quantity of paper currency which can be issued.

Therefore it is not surprising that the value of gold is at a record high as more money is being printed. All this is premised on the assumption that we will continue to treasure gold, which is likely to be the case as we have done so for millennia.

Choong Khuat Hock is head of research at Kumpulan Sentiasa Cemerlang Sdn Bhd

NEW YORK: Gold prices finished higher for a sixth straight day Friday, rising even as the dollar strengthened.

The December contract added $4.90 to settle at US$1,146.80 an ounce on the New York Mercantile Exchange.

For the week, prices gained 2.7 percent.

Gold has been on a record-setting climb since early September as investors looked for an alternative investment to a falling dollar.

Gold is considered a good hedge against a weak greenback because of its stable store of value.

The dollar, however, has shown some strength in recent days.

On Friday, the ICE Futures US dollar index, a widely used measure of the dollar against other currencies, rose for a second day in a row, gaining 0.4 percent in afternoon trading.

As investors grow more cautious over the sustainability of the economy's recovery, they have begun to shift money out of risker assets like stocks and commodities and back into safe-haven investments like the dollar and Treasurys.

Gold is also considered a safe-haven asset, so prices have held up amid the dollar's strength.

"When the dollar rebounds, I don't think it's a safe assumption that everyone will run from gold," said Jason Toussaint, managing director of investment at the World Gold Council.

There are investors who are holding gold "for preservation purposes," he said.

Some analysts have expressed concern that gold could see a sharp correction after such a rapid ascent.

But the consensus seems to be that gold prices have more room to run.

"We still expect to see attempts at higher levels," said Jon Nadler, senior analyst at Kitco Metals Inc. in a research note Friday.

Other metals were little changed.


source: the star online

Monday, November 9, 2009

How to invest in gold

HISTORICALLY, gold is perceived to be a safe haven during uncertainties and economic crises as it is considered more stable than other asset classes. It is generally an effective hedge against inflation and fluctuations in the US dollars.


Gold is an investment tool for preservation of wealth and a store of value in times of market volatility. It is an asset diversifier that could lower the overall risk in an investment portfolio.

In the previous article, we discussed the benefits of investing in precious metals and particularly gold. This article will focus on different ways to invest in gold.

Gold and gold-related funds


Gold and gold-related funds are unit trust funds that allow individuals, corporations and institutions with common investment objectives to pool their money for investment in gold and other precious metals. Professional fund managers then use the pooled money to acquire assets which will help meet those objectives.

Generally, a gold fund invests in gold mining equities and/or gold bullion accounts, while a gold-related fund invests in gold and other precious metals including platinum, silver, rhodium and palladium.

"By investing in such funds, investors benefit from diversification in their investments as fund managers buy stocks in more than one gold mining company or more than one type of precious metal," said Datin Maznah Mahbob, chief executive officer, Funds Management Division of AmInvestment Bank Group.

The funds also provide investment opportunities that allow investors to benefit from the investment expertise of fund managers who manage the funds.

In Malaysia, the only gold fund is opened to high-net-worth individuals with the minimum investment set at US$150,000 (RM513,000). For gold-related funds, investors can invest as little as RM1,000 to enjoy diversification in their investments and take advantage of professional fund management.

Gold exchange traded fund

An ETF is a unit trust, listed and traded on a stock exchange. It is an open-ended fund that tracks or follows the performance of a benchmark index.

An index is made up by a basket of securities and usually reflects the movement of an entire market. This gives ETF investors the opportunity to invest in a pre-packaged basket of securities of an index rather than just an individual security.

"Gold ETFs allow investors to buy and sell gold ETF units just like how they trade stocks on a stock exchange. Generally, gold ETFs track gold indexes or the price of gold. The ETFs invest in gold mining stocks to track the gold index," she added.

Gold ETFs, which track the price performance of the gold bullion, enable investors to participate in the gold market without taking physical delivery of gold. This is because it is 100 per cent backed by physical gold held mainly in allocated form. Allocated gold refers to the gold kept in a vault under a safekeeping or custody arrangement and the investor has total ownership to it.

The first gold exchange-traded fund Gold Bullion Securities listed on the Australian Stock Exchange since March 2003 is fully backed by gold, which is deposited and insured.

For SPDR Gold Shares listed on the Singapore Stock Exchange, the underlying gold is stored in the form of 400 ounces London Good Delivery bars in a bank vault.

"Gold ETFs are considered a passive investment. This means that upward movement of gold prices or gold indexes will be followed by the appreciation of ETF unit prices," said Maznah.

There is no gold ETF offered in Malaysia yet, but local investors can invest in Singapore-listed SPDR Gold Shares which are available closer to home. They need to have a foreign trading account offered by a local securities firm to trade the ETF. On top of that, their investment is subject to currency risk since the gold price is quoted in US dollars while the ETF is in Singapore dollars.

Physical gold investment

Some investors prefer to invest in physical gold including jewellery, gold bars and coins to have physical possession of the assets. Gold is an asset appreciated for its intrinsic qualities and beauty.

Investors have the option to buy gold bars in a variety of weights and sizes, ranging from one troy ounce to 400 troy ounces from some banks and jewellery shops. For instance, a local gold trading company offers gold bars and coins of 20 grams at RM2,415, 50 grams at RM6,010, 100 grams at RM11,964 and 1 kilogram at RM119,644 as at September 15 2009.

Investors can also invest in bullion coins offered in different weights of 1/20, 1/10, 1/4, 1/2, and one ounce. The actual value of bullion coins is based on the daily gold price and the gold content. They can buy bullion coins including the American Eagle, Australian Kangaroo Nugget and the Canadian Maple Leaf.

"To make direct investment in physical gold, investors need to set aside a bigger sum of investment compared to buying units in gold funds and gold ETFs. It is not as convenient as they have to think about safe storage and insurance for the precious assets," added Maznah.

Mining stocks

Mining stocks or equities are shares of ownership of a precious metals mining company. The stocks entitle the investor to receive profits from the operations of the company, usually by payment of a dividend, and to any voting rights attached to the stocks. Factors affecting the appreciation potential of a gold mining stock include market expectations of the future gold price, the future earnings and growth potential of the company, mining costs, and the likelihood of additional gold discoveries.

In general, prices of gold mining equities are more volatile than gold prices, thus some gold mining company equities decline when gold prices increase. The short-term volatility of the equity prices could be due to some gold mining companies hedging their future output using gold futures contracts. In the long-term, generally prices of gold mining equities could match the longer-term price trends of gold bullion.

"Investors do not enjoy diversification in their investments when they buy stocks of one gold mining company. They need to allocate more money to buy stocks of different companies to diversify their holdings," explained Maznah.

Gold passbook account

Another option is investors can buy gold in 999.9 fineness using a gold passbook account. Whenever they buy and sell gold, the transactions will be recorded in a passbook provided to the account holders. With the account, they can buy and sell gold at daily quoted gold prices for 1 gram in Malaysian ringgit. The account is normally backed by physical gold.

There are banks in Malaysia that require investors to deposit and trade a minimum of 5 gram of gold. The bank allows investors to make withdrawal in either physical gold or cash credited to their deposit accounts. They will incur a conversion charge inclusive of the shipping and insurance for the physical withdrawal.

One of the disadvantages for this type of investment is account holders do not get any interest or dividend for their investment. They generate profits only if they sell the gold at a higher price compared to their initial investment. The banks normally impose a charge of up to 5 per cent based on the gap between the selling and buying prices to cover administrative and storage expenses.

Conclusion

Now that you have understood the different ways of investing in gold, you need to compare them in terms of diversification, affordability and the advantage of professional management. On top of that, you should consider and select the investment options based on your risk tolerance as well as investment goals and objectives.

source: Business Times

Monday, June 8, 2009

How Long Will It Take To Double The Value Of My Investment?

Many of my friends started asking how long will it take to make their money from their investment, or to be exact - how long will it take to double the value of their investments? It is important to have rough idea of what we are going to gain (or lose) at the end of an investment period. This will help us to make better decisions on where to invest our hard-earned money.

First, we must understand that there are 3 most important factors that will affect our investment returns.

  • Impact of Inflation
  • Result of Compounding Interest
  • Impact of Taxation

Having this in mind,theoretically, there is a very simple rule that can be used to answer our question. It is known as 'The Rule of 72'. Basically, 'The Rule of 72' can help us to estimate:
  • how long will it take to double the value of their investments at a given rate of return
  • the loss in real value of a given amount of funds with a particular inflation rate
Since it can be used to calculate the no. of years whether to double your investment or the loss in real value of your investment, the formula is given as:

72/given rate of inflation or return = No. of years

Example 1:
Mr. A has RM 150,000 and wants to know how long will take to halve its real value with an inflation rate of 3.5% per annum.

72/3.5 = 20.6 years

This simply means that the RM 150,000 will not have the purchasing power it has currently. Even though you have the same amount of money, in 20.6 years, it can only make purchases worth today's RM 75,000.

Example 2:
Mr. B has RM 100,000 and would like to know how long will it take to double his money, given the rate of return as 7.5% per annum.

72/7.5 = 9.6 years

This is quite straightforward, in 9.6 years, your RM 100,000 will become RM 200,000.

Being equipped with this basic info on investment, I hope you guys can look out for investment tools that can cater for your needs. Just one more point to add - usually this calculation is used for in mutual funds. However, you must always remember that the rate of returns are assumptions that is based on past performance that may not hold true for the future.


The safe way to double your money is to fold it over once and put it in your pocket. ~Frank Hubbard

Friday, May 22, 2009

Making Money With High Returns

Just received an sms from a long lost school time friend. It reads like this:

"Hi mate, I know you are busy making money to sustain monthly operations, enjoy life to the fullest and save for the good OLD days yet to come. So, 18 to 30% per year returns. Solid, secure & safe. Oh yes, legal, ethical and simple. Money makes money. 1.5 to 2.5% monthly return. Minimum RM2500. Think about that. Try moving from a 2.5% per year FD saver to a 2.5% per month investor. You are still young, you can't afford not to."

What do you guys think about this? As for me, it is another one of those get rich quick schemes. Somehow, these guys have very good marketeers and convince others easily. Pay attention to the words "...Solid, secure & safe. ... legal, ethical and simple". All the words needed for you to part with your money. But at the end when you realise that you have been conned, these words won't mean anything to you, will they?

Wednesday, May 20, 2009

Pointers For Unit Trust Investments

Please understand that Unit Trust (U.T.)/Mutual Funds is for long term investment only. It not for getting rich quick, neither it is for getting huge returns. However, it can be used as a very good tool against inflation.

Below are few pointers that you should keep in mind before making your decision:
  • never allow your emotions to control you when making investment, whether the market is doing very well or very badly.
  • you should be prepared to wait for AT LEAST 5 years to see your returns from your investments.
  • as the market now is quite volatile and many people are losing their jobs, make sure that you have at least 6 months of salary in savings,to prepare for rainy days (just in case..)
  • always add in whatever amount you can afford on a regular basis into your investment to get a better average pricing of your units-also known as Dollar Cost Averaging (DCA).
Whether you are opting for the high risk or low risk fund depends on the duration you have for investment, objective of your investment, etc. Generally speaking, people who are nearing retirement should go for the lower risk fund as compared to younger investors. But still, this can change as each individual's risk appetite varies.

Monday, May 18, 2009

Want To Get-Rich-Quick? Think Again..

When talking about about good investment tools, I should not forget to mention the growing number of ponzi or get-rich-quick schemes that is coming in all sorts of forms. These masterminds that create them use different kinds of techniques and strategies to get people involved in it. Somehow, in between the legal investment machineries, these schemes manage to squeeze in and play with the emotions of its victims- GREED and FEAR.

For the last months, I've been hearing about some Gold Investment Scheme, supposedly backed up by some established goldsmith in town. They are giving 3% a month, which totals to 36% annually. You also get to keep the gold you purchased. But the catch seems to be they only give you the gold after 2-3 months.Why that long? Figure out yourself...

Then comes another scheme - with envelopes. You buy 5 postal money orders and send out to the company, and within a few weeks, you will get back more postal money orders that you can cash in.

Another version that I heard was even better. This guy used the idea of selling each pixel on his monitor (the idea that made the original person to be an instant millionaire from the use of Internet), but incorporated some get-rich-quick philosophies into it. So, you get to have a pixel on the company's website and then when you get downlines of your own, you are paid certain amount for your effort to bring in those victims!

And I'm sure more and more schemes such as these will be mushrooming soon as the economy is still in a daze and people are looking out for ways to make money. As I mentioned earlier, we succumb to our greed and fears, especially when we are in a desperate situation. Again, we have to discipline ourselves not to fall for any of these tricks. If you do, you are sure to lose your investments!

Thursday, May 7, 2009

Good Investments in Times of Uncertainty

Everywhere I turned to the whole of last month there was talk of the Malaysian Government's additional units of Amanah Saham Wawasan and Amanah Saham Malaysia being launched (unit trust).


In these times of uncertain economic conditions, good investments have been a little hard to come by. The Government, in an attempt to raise funds for various projects came up with a variety of financial instruments and in return to its people, a reasonable rate of returns. Anyway, the current FD rate still stands at a measly 2%.Another benefit of this special unit trust schemes are that they are capital protected. So, if you invest 10K now, you will definitely have a minimum of 10K when you decide to withdraw your investments. And in the past few years, the trend shows that they are giving out 7%-8% of interest.


Most of the allocated units were snapped up during the first day of its launch. Luckily or not, since the government has set a quota based on race (yeah, it stinks to read this, I agree!!!) only the allocation for the Chinese were completely sold out. For the Malays and Indians, it took a bit longer to convince them to invest. Maybe the Chinese community has been better exposed to financial education all along, so they quickly grab the opportunities that come their way.

Considering all these factors, who wouldn't want to invest in an attractive investment vehicles such as this?

Monday, April 13, 2009

Stretching your $$$ during bad times

Last month, the government seemed to have reduced the interest rates. This was done in an effort to promote spending and therefore to revive the economy.

I noticed that Fixed Deposit (FD) rates that was at almost 4% is now at 2% per annum only.Since FD is the most simplest & safest method of making your money grow, most people would stash away unused cash in a FD account. But looking at the current situation, it is not as attractive to lock your cash in a FD account somewhere and let it lie there almost doing nothing. So what are the options that you have now? Either take some cash and spend it (main intention of the government) or start investing or pay off some your debts that carries higher interest rates. I opted for the 3rd choice after doing some homework.

The home loan I was servicing had interest rate of 5.99% per annum. After the Base Lending Rate (BLR) was reduced by the central bank, most banks cut theirs. The bank now has offered me an interest rate of 4.6% per annum. With this new rate, if I religiously continue to pay the monthly amount I'm currently paying, the loan would be settled within 12 years, instead of 24 years. What a difference it makes!

But no bank will call you an make their offers. They certainly would not want to reduce their profits that they make from you, would they? You will have to make the call and ask for a reduction. Most often, you will find that they are more than willing to accommodate your request. If you are no more within the lock-in period, then you have a better bargaining power on your side, as you can always do a refinancing with other banks.

Opportunities like this doesn't come very often. So, make good use of this bad economic times to your advantage. I believe I've made mine.

Tuesday, November 25, 2008

Vital To Start Planning For Your Retirement Early

Since this blog talks much about retirement planning and saving for the future, I thought it would be good if I could also put in articles published in the papers. This article was published sometime last year. And I have to agree with the writer, Malaysians as a whole are not prepared for their retirement.
Can you imagine that the money saved for more than 30 years gone in 3 years?

Many young people feel that 'there is still long way to go', or 'let me enjoy my money first'. What they don't realise is that this attitude of theirs is going to cost them dearly in their future, especially when they don't have the earning capacity any more.


COMMENT BY V.K.CHIN

RETIREMENT is meant to be a rewarding experience when those who have toiled for decades to raise families and contribute towards nation-building can relax and take it easy.

Retirees are supposed to spend whatever time they have left to do the things they have always wanted to but did not have the time as they had to earn a living.

But the opposite is true in many cases as the majority of retirees are in fact facing a nightmare in just trying to support themselves with the basic things in life.

Their main torment is finance or lack of it. It is estimated that at least 70% of retirees and pensioners were just not prepared to stop work because they could not afford to.

Most of those in the private sector depend on their Employees Provident Fund (EPF) contributions for their retirement. This is almost the only money they have to look after themselves. Unfortunately, it has been proven by none other than the EPF that most of the money would be gone in three years after its withdrawal. This is indeed a very sad state of affairs and the workers have only themselves to blame for their plight.

Very few people have proper planning for retirement. They do not save enough for this purpose until too late. Though everyone starting work should be saving for this purpose as early as possible, they only realise the seriousness of their situation in their 40s or 50s.

Without their compulsory EPF contributions, many of them would have been even worse off with almost nothing to their name. Many have their own homes and if they are lucky, they would have settled their mortgage by then.

Life insurance is still frowned upon by some as not being urgent and in any case not many earn enough to put money into shares, bonds or other saving instruments.

Saving outside of the EPF is not a culture as people may have difficulty in coping with their monthly family and personal commitments financially. EPF contributions are also being drawn to meet the demand for funds for housing and health. This will further limit the money meant for retirement.

Too many are expecting their children to look after them when they retire.They are prepared to use whatever assets they have for their children’s education. Many of them would have been left penniless by the time their children complete their studies.They would then be completely at the mercy of their children. If the kids are filial, then the parents would have a comfortable retirement. If not, then the last few remaining years would be extremely difficult for the retiree.

Some children can be extremely selfish and may insist on going to study overseas though their parents may not be able to afford it. Parents may have to mortgage their house or borrow a sizeable loan for this purpose. They may end up bankrupt if their children refuse to repay the loan.

There are countless such sad stories and these are serious social issues where not much can be done to help. It is impossible to tell those nearing retirement that they should keep some money for themselves instead of using it all to educate their children.

Parents should be practical and realistic. If their children are not academically good enough for university, they should opt for vocational education where they would be able to obtain a skill to earn a decent living.

It is worth repeating this message so that hopefully the message will sink in and those approaching retirement would take measures to protect themselves financially.

source

Monday, November 17, 2008

How Much Can I Save From The Current Reduction In Food Price?

How much do you think you can actually save from your daily food? Would you be surprised if I said that whatever little money that you saved from breakfast and lunch today could actually provide you with a comfortable retirement? Enjoy going places and relaxing in your own home after retirement with sufficient money for your daily needs. Isn't that wonderful?Maybe you can make use of the current situation. Read on.

Restaurant owners have agreed to reduce the price of 'roti canai' and 'teh tarik' by 10 sen and a plate of 'nasi kandar' by 20 sen, or at least that was what reported in The Star Online. (By the way, 'roti canai' is a Malaysian favourite pancake eaten with some curry and 'teh tarik' is actually a special concoction of tea, milk and sugar and stirred in a special way) This generosity arises from the reduction of petrol prices by the government, which business owners had used as an excuse earlier to hike up the price of almost everything under the sun.

For an average person who has been practising eating out for breakfast and lunch, it means a reduction of 30 sen for breakfast (assuming they have only 2 pieces of roti canai and a glass of teh tarik) and 20 sen for lunch, if he has nasi kandar for lunch. In total, savings for a day amounts to 50 sen.

If working days is considered 5 days a week, then in a month he'll be working 20 days. Therefore, using simple maths, 50x 20 = RM100. Not bad. I didn't realise it can reduce our expense by that much.

Some people are still wondering what to do with their money now. RM 100 savings can easily be used in an investment vehicle such as unit trust or mutual funds. They should make use of the opportunities given, especially now, because the market is all low and is good time to invest. Save a minimum of RM1000 for the initial investment and use the RM100 as the automatic deduction to do dollar cost averaging on your investment.

As for me, how much extra can I save in this particular case? The answer is none, because I usually pack my lunch & breakfast from home itself and I've been saving more all the while. Cheaper and healthier at the same time!

Sunday, November 9, 2008

How Warren Buffet Made His Billions

Warren Buffett is a man who has made millions but he also started working at his father’s brokerage when he was 11 years old, that’s an age when most other kids were playing hide-n-seek and didn’t know how to spell ‘brokerage’..

This financial wizard is by recent estimates, worth $46 billion but how he got there is the fascinating story.

It all began in the family grocery store back in Omaha. Buffett’s great grandfather started the store in 1869 and it was in the Buffet family until 1969, till his uncle finally retired. But it’s at this store, where he began going around his neighbourhood selling gum. This was before his stint at his father’s firm.

Warren Buffett told CNBC’s Liz Claman, “My grandfather would sell me Wrigley’s chewing gum and I would go door to door around my neighbourhood selling it. He also sold me six Coca Cola for a quarter and I would sell it for a nickel each in the neighbourhood, so I made a small profit. I was always trying to do something like this.”.

From small beginnings come bigger things and so after selling gum, soft drinks and working with his father, by age 14, he had bought a 40 acres farm in Washington, Thurston County..

But he confesses that he never enjoyed the farm as much as he enjoyed investing in stocks. But the first stock he bought was “Citi Service preferred stock. I had three shares and made all of $5 on it. I had bought it at $38.25 and then I sold it around $40, it went down to $27 in between and after I sold it at $40, it went to $200!”.

From that poorly timed stock sale in 1944, he learnt a lesson that became his legendary investment strategy - which is essentially - patience pays, so buy them and hold them. He figured out two other critical things about himself in the 1940s - what he is good at and what he likes to do.

This pivotal moment in his journey came in 1956, when he was just 25 years old. This man who was rejected by Harvard and now armed with contributions from family and friends and $100 of his own money starts a limited partnership with seven people.

Over the next nine years, Buffett turned a $105,000 into $26 million - a stunning 24,000 per cent increase! He had invested mostly in textile companies, farm equipment manufacturers and even a company making windmills.

Thirteen years later, Buffett forms another partnership that becomes one of the greatest teams in the history of investing. He convinces longtime friend Charlie Munger to quit his investment partnership to join Buffett as his Vice President of Berkshire Hathaway.

And now with the 82-year-old Munger, Buffett sits on top of the greatest holding companies ever.

So, it’s understandable that this man is looked up to for investment and business advice all the time. But what’s the secret gift he’s got? How does he pick the right investments all the time? He explains, “I look for something that I can understand to start with, there are all kinds of businesses I don’t understand.”.

“I don’t understand what car companies are going to do 10 years from now, or what software or chemical companies are going to win/do ten years from now but I do understand that Snickers bars will be the number one candy company in the US - like its been for 40 years. So, I look for durable competitive advantage and that is hard to find. I look for an honest and able management and I look for the price I’m going to pay.”.

While Buffett’s big acquisitions have made headlines; wise investments in companies like Coco Cola, the Washington Post and Gillette have provided the capital to make those acquisitions possible. Since taking control of Berkshire in 1964, the company has acquired 68 subsidiaries. In March of 1964, Berkshire acquired its first insurance company National Indemnity.

In 1972, See’s Candies for $25 million, in September of 1983, Nebraska Furniture Mart and Borhseim’s in 1989. In 1998, Berkshire acquired Dairy Queen and Geico in January, Net Jets in August and General Re Corp in December. In April of 2002, Fruit of the Loom and most recently Buffett is looking abroad for new business.


Recently, he bought 80 per cent of the Israeli Metal Works Company and he did it without even seeing it. He was approached by the promoter via a letter and what was in that letter convinced him that ‘this was the kind of the person I wanted to do business with and it is the kind of business we wanted to own.’ How does this ‘daring bit of investment fit in with his usual careful way of investing?.

He explains, “I had to size up the business but that’s a background of being in stocks. If you put your whole net worth in stocks when you are 20-21 years old - you have not visited the businesses but you are really analyzing their financials, you are trying to assess whether they have durable competitive advantage, assess the quality of the management and the integrity of the management and then you try to figure out whether you are buying it at a reasonable price and that’s it, that is all we do.”

He’s never had anything lacking - his acute business brain has made him a lot of money. He also feels that the youth of today are living better than John D Rockefeller. His own style remains the same - he lives in the same house for 48 years, carries no cellphone, has no computer on his office desk, does not move around with an entourage.

As he puts it, “I have had everything I wanted all my life. At 20, I was having the time of my life doing what I did. Today, I’m eating the same things I always eat - burgers, fries and cherry coke. Only my clothes are more expensive now but they look cheap when I put them on!”.

At 76, he married his long-time companion, Astrid Menks at a low-key ceremony at his daughter Susan’s house. He is also amazingly healthy for someone on a burgers-coke diet. He’s also surprisingly down to earth. He moves around freely unencumbered by a security detail. He does have a few guards with him during the annual shareholders meeting but he says he doesn’t feel the need to put himself in a cocoon.

Which probably explains, why he wasn’t nervous about visiting a factory in Israel, which is close to the Lebanese border. He says of that visit, “Our plant there is about 8-10 miles from the Lebanese border and there were maybe a rocket or two that hit the parking lot or something like that but it can be dangerous being in this (US) country as well.”.

Buffett is comfortable in Omaha in part because people leave him alone with the exception of a random fan or two. This billionaire doesn’t even have a chauffeur - he drives himself around in a 2006 Cadillac DTS, recently purchased after he auctioned off his old Lincoln Town Car, which was famous for its Thrifty license plate. And no, he does not want a yacht or many mansions. He just wants to be left alone to enjoy a good football game in his sweatsuit on a big screen television - with popcorn.

It’s really no surprise that America’s most prominent investor chooses to live far from the nation’s wealthy-elite in New York, Los Angeles, Chicago and Miami. He says that when he was in New York, he had about a 100 ideas about where to invest but it was over-stimulation.

In Omaha, he needs one good idea in a year and he feels he can think better and with less distraction. He feels there is a sense of community in living there.

His investing theories have been talked about ad nauseum by almost every business/finance writer and is a cottage industry all by itself.

But one he finds closest to reflecting his views is a book written by Larry Cunningham - ‘The Essays of Warren Buffett - Lessons for Corporate America’ is required reading in a one of a kind course start at the University of Missouri School of Business.

The course is called Investment Strategies of Warren Buffett. It turns up Buffett is hot on campus too. The class now in its eighth year and is the brainchild of Buffett’s friend Harvey Eisen.

Harvey Eisen recalls, “This course is a breakthrough in terms of reality meeting academics. I said why don’t we have a course like this and the academics scratched their head and said ‘well we don’t’ and I said ‘why don’t we’ and then we got it done.”.

Dean of the University of Missouri School of Business Bruce Walker bought the idea. He says, “We want our students to be exposed to many different approaches to investing.”.

The Buffett playbook is taught, analysed and written about but it is best summed up like this.

Harvey Eisen explains it, “
Number one - Don’t lose the money and
Number two - don’t forget rule number 1!

Number three - look for unique companies that are hard to replicate - he calls
that a moat around the business.
Number four - he talks about the circle of competence, which means in simple
English, do what you know..


“Everybody in the stock market knows about the economy or about the Federal Reserve. Warren focuses on what he knows and he has made enormous successes at that.”

He does not want his managers to report in at any committee meeting of any kind and he lets them get on with the business of running their businesses. But there is one thing he requires of each CEO. Buffett says, “I asked them to send me a letter, that I would keep in a private place that will tell me what to do tomorrow morning, if they are not alive in terms of their successor.”

But what about his own successor? He says, “The succession plan is very simple. Our board met a few days ago and we talked about that every in single meeting and we have at least three people inside Berkshire, who in many respects will do my job better than I do. I can’t give you the names but the board knows which one of those three they would pick, if something happened to me.”.

Warren Buffett has also given away $31 billion of his fortune to the Bill & Melinda Gates Foundation and he ‘hopes it will accomplish just what they have set out to accomplish. I have observed their Foundation very carefully and Bill & Melinda decided initially they were spending about a billion a year. They have decided they were going to try and figure how they are going to save most lives, relieve the most human suffering.’

Ultimately, that’s what money is really meant for, isn’t it?


Source : http://www.rediff.com/money/2006/dec/26buffet.htm

Tuesday, October 28, 2008

How to Measure Returns

Azizi Ali, one of our famous local millionaires not only accumulates wealth for himself, but also help others achieve the same by training and imparting his knowledge. I found this topic quite interesting as I get questions or statements from friends and family members who say that market is down, so don't invest! or I'd want to monitor my fund performances on my own (mutual funds, to be exact) so that I know how much returns I'm making..

Special Report: How to Measure Returns
by Azizi Ali

"I made fifty thousand in the stock market in 99!" an acquaintance proudly declare. In fact, it was so loud, he was practically screaming in your ear. Which kind of make you feel inadequate because you only made ten grand. So you quickly change the conversation subject to the mating rituals of extinct Sagittarian Mongolian bisons.

But hold on a second. Though it's true that you made less money than him, it does not necessarily mean that he is one up on you. Because we are only talking of straight figures so far. And that is not how return on investment are calculated.

The correct way of measuring returns is in two ways: in percentage form and on an annual basis.

Return must be expressed on a percentage term

Return expressed in straight ringgit/dollar/yen has little meaning. This is because straight ringgit amount do not reveal the amount of money that had to be invested in order to earn that return.

For example, is RM10,000 a good return? The answer is that it depends on the amount invested. If RM50,000 was invested, then RM10,000 would be an excellent return as it is a 20% return. However, if the original investment was RM500,000, then the return is a measly 2%. If his layout was five million instead, then he would have cried as his return is...0.2%! Pass the tissue paper, please.

Return must be expressed on an annual basis

But the job doesn't end there. Even after expressing the return in percentages, it must also be expressed on an annual basis. This is the universally accepted way of stating a percentage return.

Following the earlier example; if the RM10,000 return from the RM50,000 was realized after just 6 months, then the annual return is 44% (The return is 44% instead of 40% due to the compound effect). And even if the investment was cashed out after that six months, we would still consider the return as 44%.
If on the other hand, the RM10,000 was realized at the end of two years, then the return is only 9.54%. (Again, the 9.54% return instead of 10% is due to the compounding factor).

So now you know that the return of x % in y number of years - often quoted by fund managers - is not the right way of indicating return on investment. A 50% return in five years may look good but that is only 8.44% annual return.

Then we can compare

Once we have the returns expressed in percentage form and on an annual basis, only then we can compare the various returns from different investments. Only then the comparison be fair and sensible. Orange to orange, durian to durian.

Coming back to the beginning example, if the guy made RM50,000 from investing RM500,000, his return on investment is 10%. Not bad. Something to crow about, I suppose.

But since you made the ten grand by investing only RM20,000, your return is a fabulous 50%! Whaddaya know - You are the winner!

Now you can go back talking about sex and dead Sagittarian Mongolian bisons.

Sunday, October 26, 2008

Impact Of Goal Setting

Another inspiring story that was delivered to my mailbox. Though the topic is on Impact of Goal Setting, the example given in on the world's greatest investor,Warren Buffet. I guess it would be useful to all investors out there, especially to those who look up to him as the Investment Guru.

In 1952, there was a research study done on the impact of goal setting on the graduating batch of students at Yale University. When asked how many of them had clearly specified and written down goals, only three percent responded. The remaining ninety-seven percent, despite being highly intelligent and hardworking, had no road map where they would be five to ten years after graduation. Twenty years later in 1972, a follow up study was done on the class of 1952. What they discovered was shocking; the combined income of the three percent who had clear goals was greater than the entire income of the ninety seven percent combined! Was it just a coincidence or does having clear goals really have an impact on a person’s personal and financial success?

One classic example is investor Warren Buffet. Does his ability to come about by chance? Absolutely not. From a very early age young Buffett was obsessed with making money and had a very clear dream of becoming the world’s greatest investor. Born during the depression when his father was close to bankruptcy, Warren learnt about the value of money and the importance of being financially secure at an early age.

Even before his teens, Warren knew that he wanted to be rich. As early as elementary school and later on in high school, he would tell his classmates that he wanted to become a millionaire before the age of 35 (when he turned 35, his net worth exceeded $6 million). It was because of his goal that he constantly thought of ways to make money, while most other kids his age would be spending their parents’ money.

He even memorized a book called ‘ A Thousand Ways to Make $1,000’. At the age of six, he started buying coke bottles at 25-cents per six-pack and selling them at 5-cents a bottle, giving him a 16% gross profit, as he would tell himself. At the age of 13, he got a job delivering newspapers and through innovative marketing and distribution strategies, he served five hundred customers a day. At the age of 11, he took all his savings and started investing in the stock market. His first investment was three shares in a company called ‘City Service’. While most kids his age were reading comic books, Warren spent his time reading company annual reports.

By the age of 14, he started a pinball business and was earning $175 a week, as much as the average 25-year old was earning in 1944. Would he have taken all those actions if he never set a goal to be rich in the first place? Of course not. It was clearly because of his focus of energy and actions that allowed him to become the best in what he does.

Tuesday, October 21, 2008

Can You Continue To Invest In China?

There was a BIG hype before the Beijing Olympics, major financial news indicating that the share prices of China and the Greater China were to soar higher. To a certain extent it was true. When the global economic slump began, China was one of the worst to be hit. In the below table, you can see the market returns of many countries/region.

Market Returns from 2 January 2008 to 30 September 2008.

Market

Index

Returns

India

SENSEX

-44.9%

China

Hang Seng Mainland Composite

-40.0%

Asia ex-Japan

MSCI Asia ex-Japan

-38.3%

Korea

KOSPI Index

-38.0%

Thailand

SET Index

-36.0%

Emerging Markets

MSCI Emerging Markets

-34.2%

Hong Kong

Hang Seng Index

-32.3%

Indonesia

Jakarta Composite Index

-31.3%

Taiwan

TWSE Index

-29.6%

Malaysia

Kuala Lumpur Composite Index

-29.5%

Europe

DJ Stoxx 600

-29.5%

Singapore

FTSE STI Index

-29.0%

Asian Tech

Bloomberg Asia Pacific Technology

-27.5%

World

MSCI World

-22.5%

Tech

Nasdaq 100

-20.4%

Japan

Nikkei 225

-19.0%

US

S&P 500

-17.3%

Returns are in RM terms

Source: Fundsupermart

Now, the question is : Can You Continue To Invest In China?

According to Fundsupermart's research, '..should be prepared for short-term volatility. China equity funds are single-market funds which may exhibit greater volatility than regional funds in the short term – we suggest investors place China or Greater China equity funds in the supplementary portion of their portfolio, which usually takes up no more than 20% of an overall portfolio.'

Rick Aristotle Munarriz in his article, 7 Reasons to Remember China at The Motley Fool, mentions that '...as long as all seven of these companies keep growing, they will be big market winners in four years.'

'...China has the largest population in the world, and it has had economic growth in the last nine or 10 years of at least 9%, 10% or 11%. If the bubble bursts, maybe the economy grows at 7% a year. That's still greater than other economies in the world...' this should be noted as another strong point why China should be a good place for investment during bad times, as written on Street.com's China: 'The Best Place to Invest in the Next Five to 10 Years'

It will happen eventually, the question is when? So, in order to be on the safer side, never put the money that you would be needing in less than 5 years for investment.



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Sunday, October 19, 2008

Which Industries Should You Invest In At Times Of Recession?

Below are the list of some industries that remain healthy, if not doing too well in an unhealthy economic conditions:
  • Pharmaceuticals
  • Healthcare Companies
  • Tax Service Companies
  • Gravediggers
  • Waste Disposal Companies
  • Discount Retailers
  • Sin Industries
Read more about Industries That Thrive On Recession at Investopedia. They've also got tonnes of other articles on investing and finance. A very good place to start off for beginners.

Tuesday, October 14, 2008

What Should You Do With Your Money Now?

The most common questions running on everyone's head now would be:
  • where to stash my cash?
  • is it a good time to invest now?
  • should I sell off my investments (stocks, mutual funds, etc) and keep liquid cash?
So, wanting eagerly to dig out the information from my head for the benefit of mankind (ha ha ha), I started this post. However, as I continued with my research, I found that there were already some very good analysis done on this topic and posted on the net by some very experienced finance guys/gals or just let's call them financial gurus. Cancelling of my earlier idea, I decided to let you all to have a go on their opinion instead.

James B. Stewart has written piece recently on this matter in smartmoney under the title : Crashes, Like Bubbles, Call for a Level Head

I liked what he said: -

"I didn't need to waste much time thinking about what to buy. Everything was beaten down. There didn't seem to be any point in stock-picking. As I've said before, at a time like this what you buy is less important than that you buy something."

"...is the predominant emotion, which is fear in a panic, greed in a bubble. Psychologists tell us fear is a more powerful emotion than greed."

He's also written another excellent article, For Long-Term Investors, Now Is Time to Buy. This simple title by itself should tell us what we should do now in terms of investments.

We can also make use of one of his valuable tips in investment as I found below:

"....I follow a disciplined system of buying on 10% declines in the Nasdaq, and selling at intervals of 25% gains. These are based on historical averages for corrections (an average 20% decline) and bull markets (an average 50% gain.) The goal is simple: Buy lower and sell higher."

The Silicon Valley Blogger in her latest update has poured out her opinion, even though that is not the main topic of the day:

"...that it would be a total waste of a bear market if we ever miss the chance to dollar cost average even just a teensy bit into it. If we’ve got money to spare, it’s going into our core index funds."

For a more comprehensive read, she has also given ideas on Best Places To Put Your Money When The Stock Market Tanks.

Over a cup of tea with a friend, a question popped out. "If the average person is selling, then who’s buying?" As I was searching for an answer, I stumbled upon a very good article by J.D at getrichslowly. I was quite surprised to find the exact words that we used were actually in his article! Maybe then, it is possible that we were not the only ones discussing about this topic now.

At the end of the day, after listening to the experts, you decide yourself what do you want to do with your money. It is your money after all.

What is Dollar Cost Averaging?

Dollar-cost averaging (DCA) is a wealth-building strategy that involves investing a fixed amount of money at regular intervals over a long period. Now, most of the time, we hear this term being associated with mutual fund investment. Is it only good for that?

Dollar-cost averaging is simply an investing method of a fixed dollar amount at pre-determined intervals.It can be used in stocks investments as well as mutual fund investments or just any other kind of investment. Yes, you can apply it on real estate investment too, if you want. However, the problem would be the amount of cash that you would need to apply this strategy. For example, let's just say you bought a property at 200,000. Can you invest the same amount on a regular or monthly basis? That would be ridiculous!

But it would be an excellent strategy to be used on mutual fund investment or in the share market. The amount of money invested at each interval remains the same over time, but the number of shares purchased varies based on the market value of the shares at the time of a purchase. When the markets are up, you buy fewer shares per dollar invested due to the higher cost per share. But frankly speaking if the market is on the uptrend, it would not be advisable to invest, right? However, usually investors in mutual funds are known as passive investors, therefore they just let their investment grow over the years and probably they don't have the time to monitor their investment as well. When the markets are down, the situation is reversed and you purchase a greater of number of shares per dollar invested. It's a strategic way to invest because you buy more shares when the cost is low, so you get an average cost per share over time, meaning you don't have to invest the time and effort to monitor market movements and strategically time your investments.

It enables even low-wage earners and folks with tight budgets to invest a minimum amount that they are comfortable with on a regular basis.It cultivates investors to get into the habit of saving, and these small amounts can really add up over the course of a lifetime thanks to the power of compounding.

Now, the next common question would be - 'Can't we do lump sum investment for mutual funds or in the stock market?'. To learn the pros and cons of each strategy, there's an excellent research done by the Silicon Valley Blogger on thedigiratilife.

Thursday, October 9, 2008

10 Top Things To Check For When Buying An Apartment/Condominium

As I just moved into my own apartment, I'd like to share some of my experience as well as the mistakes I made when I bought it. Hope it would be beneficial to others.

Security
One of the main reason people move in to apartments these days is security. So make sure that sufficient security officers are at duty. You can even try to enter the apartment and see how difficult/easy it is to gain access. From there, you can judge on your own the efficiency of the security in that apartment before you decide to purchase your unit.

Piping system
Living in an apartment is a lot more different from living in a house. In a house all repairs have to be taken care by the house owners themselves. However, in an apartment you are responsible for your neighbours too. For example, if your neighbour right below your apartment unit complains of leakage from his ceiling, you have to take action to rectify this problem. If not, he can even sue you! But be careful, as you won't be able to detect leakage in your own walls if the property is painted with a new coat of paint.(as I am facing now!)

Distance
Ensure that the property is close to whatever facilities you require such as shops, school, workplace, mother-in-law's house, etc. mmm...maybe you want it to be really far for this last point..:)

Parking
If you own a car, make sure you get an allocated parking space. If you need additional parking space,(maybe your spouse owns a car too) check for the charges and whether they are covered or not.If you expect frequent visitors, then you have to consider visitor's parking as well. Some apartments are really facing problems in this area and resort to double parking (as I've faced before especially in the heart of the city) and this makes the area really congested and not an ideal place to live in.

Public transport
Some people depend on public transport very much. For those in that category, make sure you can get your preferred transport easily. And if you have to travel a bit to the nearest train station, consider the amount you have to fork out for that near distance as well as time taken to get there. However, expect lots of noise and pollution in a place where there is good public transport system.

Occupancy rate
Please check with the management office about the occupancy rate. An ideal situation would be occupancy rate of between 80%-90%. Higher occupancy rate means that the value of the property has a fair chance of appreciating in the future. You will also find it easy to rent out your unit in case you decide to do so in the future. (I made a mistake here too.)

Neighbours
Know your neighbours and love them! Make sure your neighbours are the exact kinds that you would enjoy or comfortable living with.If you are in a multi-racial society, ensure it has a well accepted ratio of people from all communities. If you have kids, ensure that it will be a healthy environment for them to grow up.

Position
It is very important to consider the position of the apartment (whether it faces north, south, east, west) as well as the arrangement of the living room, toilet, kitchen and hall in it. As more have started believing and practicing the ancient geomantic sciences such as Feng Shui and Vaastu Shastra, you will find it easier to sell later on if you have adhered to these principals as well.

Lift/Escalator services
Ensure that there are sufficient number of lifts and they are serviced periodically.In case you are looking at an apartment without these services, try to get a unit on a 1st or 2nd floor. Ground floor would be too noisy and climbing up 5 floors daily wouldn't be a comfortable experience!

Age of building
By knowing the age of the property you are going to invest in, you can roughly estimate the repairs that you have to do such as wiring, plumbing, etc. Apart from that, if the property is a lease-hold, you know how long you can continue living in the same place and after some time, if you plan to mortgage the house to take loans, you have a rough idea from now itself the ease/difficulty that you will face.

If you have any experiences you would like to share, I would love to hear from you.

Fast money anyone?

Almost everyone that I know of wants to be rich fast. No patience in waiting to grow their wealth. Well, probably that includes me too, when I was much younger.However, after dabbling with various websites,blogs, magazines, books,classes and seminars, I've managed to slowly crawl out of my shell.

The group that falls mostly in this category are the ones aged between 20-35. At least that's what I find when I talk to my friends of that age group. I figured that while less than 20 would not have worries or plans about their financial future (because most probably they are still depending on their parents for survival), those above 35 must have had their share of life's experiences for them to have a different opinion.

During that age(20-35), as I recall clearly, me and my friends used to sneak into casinos and illegal gambling spots that kept mushrooming in the city to fulfill the needs of high adrenaline rush in youngsters like us. And make money we did!

My personal favourite was the Russian Roulette and Horse Racing (computer animated). We used to do all crazy stuffs, especially when it was pertaining to bring us luck. After a while lady luck seemed to get bored and decided to leave us.

Then, slowly we began to 'graduate' and move on to more serious ventures known to many as 'Get-Rich-Quick-Schemes' or 'High-Yield-Investment-Products'. Those agents/con-men that we met were really convincing enough for us to part with our money. The main reason people are still throwing in their money in these kind of schemes despite reminders and warnings from the authorities is plain greed. People just can't let go of the idea of being rich overnight and are willing to take BIG risk for that.

There are plenty of those schemes out there, both local and foreign ones, but I'm not going to list them here. Some deals are done face-to-face while others make use of the technology where they come up with really professional looking websites and systems to attract their potential 'victims'.

Then as I grew more matured (or so I thought),I started going into the stock market, without the slightest knowledge about the vast financial world out there. The result? Burnt my fingers of course! But it was a worthy experience, since I learnt it at quite a young age, now I can restrain myself from going into the stock market just by relying on 'tips' from friends.

So, now whenever I advise people to invest in a more reliable and trusted source (such as mutual funds,etc.) and they don't seem to agree or understand, I just remain silent. After all, I've been in their shoes before!