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

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

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

Illegal Deposit-Taking

Looks like another form of scam in this hard times. One of my friend even was so convinced that this was a legal business that she joined in as a marketer for them and had made sales close to a million. She was trying to complete the 1 million dollar target as that would have earned her 1 thousand dollar every month in passive income alone.

Bank Negara team swings into action against Bestino Group

By LOURDES CHARLES

KUALA LUMPUR: Bank Negara has frozen the assets of Bestino Group Berhad, pending investigations into its alleged illegal deposit-taking and issuance of redeemable preference shares.

It is learnt that a task force had begun a full investigation into the company and its related activities following reports that Bestino had issued preference shares worth more than RM300mil to investors.

Sources said the authorities were investigating if the company had other branches besides those in Ipoh and Petaling Jaya.

It is learnt that investors were initially given gold bars with the face value equivalent to the amount invested.

However, they claimed that after several months of investing with Bestino, they were told by the company that Bank Negara did not allow the company to collect more than RM500mil in cash.

An investor, who declined to be identified, said that when he invested with the company in 2006, he was given gold bars with the face value equivalent to the amount invested.

However, he said those who wanted to invest in April last year were issued redeemable preference shares with a promised return of 3% per month.

source : http://thestar.com.my/news/story.asp?file=/2009/6/18/nation/4142281&sec=nation

Achieve Abundance of Wealth and Prosperity by Using Money Affirmation

Today, I would like to share with you all something different, something that I've come across quite lately and been practising it myself and surprisingly it works! Don't ask me how, I only understand half of it (hopefully) and still struggling to understand the rest of it. So, if you want a further understanding, you should contact Mr. Hari or his team of volunteers from IRAH- HOME OF HEALING who are there just to serve mankind with unconditional love.

Ok, coming back to the topic of today - Money Affirmation.

The self- heal Money Affirmation is meant for all who are seeking for abundance of wealth and prosperity in their lives.This affirmation is also for those who are suffering from financial woes such as debts and constant worries about the lack of money. Frequent repetition will lead to believe and thereby the manifestation of wealth.

I am thankful, for abundance of wealth is flowing into my life.
I am thankful for the comfort, freedom and joy in spending and enjoying money.
I am thankful for money is flowing freely in my life, trusting in whatever ways it comes to me.
Thank you for the abundance of wealth and the freedom and joy to spend and enjoy money easily.
Thank you for Blessing My Life with Love, Joy and Abundance.

Hope you readers benefit from this as well as I did. If I remember it correctly, Mr. Hari mentioned to me that if you think of wanting something, your state of mind will be conditioned to that state permanently and that's what you will be - wanting something.

Instead, try to imagine and affirm that you've already got what you wanted and thank for what you've received. Slowly your mind will begin to believe that you've already got it and that's what you'll have.

Again, if you have the how's and why's jumping up and down your head, better head over to irah-healing and talk to the right people. They would be more than happy to serve you.


When it is a question of money, everybody is of the same religion. ~Voltaire

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?

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.

Economic crunch hits docs and patients

As I was just discussing with my dad about one other effect that the economic crunch would likely have, this article published in the Star came in a timely manner for me to post it here. All this while I had thought that the medical profession was a 'retrenchment-proof' job and you were considered safe if you had the word 'Dr' in front of your name. The article below tells us otherwise.

Tuesday March 31, 2009

By FOONG PEK YEE

pekyee@thestar.com.my

KUALA LUMPUR: The economic slowdown is biting hard even in the medical profession, causing keen competition in government clinics, with private practitioners also scrambling to get a share of overtime payments.

Several government clinics are now operating much longer, up to 9.30pm daily, with doctors manning them paid RM80 an hour in overtime payments.

Health Minister Datuk Seri Liow Tiong Lai, who acknowledged the keen competition going on between government and private doctors for overtime payments, said:

“Many doctors, irrespective of whether they are in the government or private sector, are very keen to earn extra income these days.”

Liow said that to cater to the increasing number of patients seeking treatment at government clinics, the number of clinics providing outpatient treatment would be increased from 16 to 31 soon.

Besides these clinics, he said 59 hospitals were also providing similar treatment after office hours.

Patients pay RM1 each for outpatient treatment at government clinics, which record more than 50 million such visits annually.

With private practitioners charging at least RM15 per visit and with the economic slowdown causing people to tighten their belts, more and more patients are heading to government clinics.

“With more people seeking treatment at government clinics, opening up more such clinics between 5pm and 9.30pm will make it more accessible, especially for those who are working,’’ Liow said in an interview.

The minister said he had received feedback from private doctors on poor business in their clinics due to the economic slowdown.

On allegations that government doctors were being favoured over private practitioners to work overtime in the government clinics, he said:

“The faster approval for government doctors could be due to the fact that their credentials are readily available for checking.”

“As for the private doctors, it may take longer to verify them,’’ he said, adding that all doctors applied for the overtime online.

Boycotting American Products

In almost all Muslim countries, the collective cry to stop the war against the innocents in Palestine is heard. Some countries, if not all of them, even went to the extent of boycotting Israeli/Jewish/ American products. Yes, products like McDonald's, Nokia, Coca Cola and Starbucks Coffee!

Don't get me wrong. I'm all against war and especially if it is affecting innocent women and children. But this? Leaders of countries calling for a boycott of products from those countries? I don't think so.. In fact, I feel that those 'leaders' are on their way to successfully create a worse situation of an economic downturn.

Stopping me from going to Starbucks or McDonald's would not redirect me to any other local stalls. Instead, I'm going to tighten my wallet. And if this actually happens, won't there be lesser money being circulated in the market? And therefore forcing the economic situation to take for the worse? Wrong timing/situation for personal finance education???

If things are headed the way it is, 2009 isn't going to be any better and if those leaders out there are not thinking about having a solution to this financial turmoil we are facing and instead taking actions based on their emotions. Leaders should not try to make use of this situation to gain cheap publicity and for their own political gains. I'm sure all of us want peace and there are other ways to end this problem. Don't you all agree?

Major Landslide!

For those who have been wondering why I haven't posted for about a week, this is the reason that I have- I was caught in a landslide! A reason good enough, I hope.

All power and telecommunication to my housing area was cut off. The main road was inaccessible due to the debris from the landslide and the houses that collapsed from the impact of it. Finally we had to come out through a jungle, which was cleared by the army personnels who arrived at the location for the search and rescue operation.


We could see young and old alike trying to vacate the disaster stricken area as soon as possible. In total, 14 beautiful bungalows was destroyed and 4 persons were killed and 1 body still not found in the tragedy. Luckily the number of death was low as it occurred during a long weekend break and most of the occupants were away.

Please bear with me until I get things sorted out.

Which option to take, 11% or 8%?

The most heated argument taking place among working Malaysians today is 'shall we agree to the option given by the government to reduce our contribution to the EPF from 11% of our salary to 8% for two years starting Jan 1, 2009 or not'.

EPF (Employee Provident Fund) is a fund created by the government as a retirement fund once the employees retire. It is made compulsory as for some people, it may be the only source of retirement fund. It is currently fixed at a minimum 11% reduction from the employee's salary and a minimum 12% contribution from the employer.

Lowering the rate of employees’ contribution to the Employees Provident Fund (EPF) temporarily is part of the Government’s bag of tricks to stimulate the economy. The idea is to boost private consumption by putting more money in workers’ pockets.According to Government's estimates, RM4.8bil a year will be freed up for spending in the economy if all EPF contributors opt for the rate cut.

It is indeed a good strategy for the short term and good for the country's economy as a whole. More employees who fall under the lower income bracket welcome this move as they are struggling to make ends meet due to the current hike in essential goods after the petrol price shot up lately to its all time peak suddenly.A little more cash at their disposal would definitely ease their burden.

However, the rest of the group or the 'financially savvy' ones are crying foul over this move.Their reason is that it definitely means lesser retirement funds. Bad move in the long run.

For the past few years EPF has managed to give out dividends at around 5%. If you can really discipline yourself, even if you claim yourself to be in the financially savvy group, this move can be seen as an opportunity. How?

If you are earning RM4000, the reduction of 3% in EPF contribution will amount to RM120. That means an extra RM120 in your pocket. Don't spend it. Instead look for ways where you can save and invest this money so that it can give you a higher dividend than the one given by EPF. I believe an excellent investment instrument for this small amount in monthly basis would be the mutual funds/unit trust where you can do a Dollar Cost Averaging for 2 years with this extra cash. Or you can also pay off any outstanding credit card debts as the interest charged is usually very high.


So, now you have 3 options in front of you:
1. Reduce the deductions and spend the money.
2. Stick to the 11% deductions and leave the money to grow with EPF.
3. Opt for the 8% deductions and invest in places where higher dividends are being paid.

Make the right choice and have a comfortable retirement later!

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!

5 Most Important Things To Watch Out When Taking Housing Loans

Look out for the lock-in period.
This is the time frame set by the banks to tie you down with them. Usually they won't allow you to swith to other financial organisations within this period. They also would not like you to pay off the debts earlier than scheduled. If you do any of the above, it is possible for them to charge a fee which would be between 5%-10% of the loan amount.

Choose the right package
Though there would be various packages offered, they can be summarised into 3 broad categoried:-
-starting off with a very low interest rate and later have a BLR (base lending rate) + x%
-a fixed interest rate throughout the loan tenure
-initial high interest and gradually lowering the rates, or having a BLR -x% for the main portion of the tenure.

Now the question is, which is the best package? Well, it all depends on you. The type of organisation you are working for or running your own business, are you on a tight budget now and how you foresee your income growth in the future.

See whether the lawyer's fee/MRTA is absorbed by the bank or passed on to the customers.
In an economic situation like this, most banks try to absorb the legal cost involved and give free MRTA (Mortgage Reducing Term Assurance) coverage.

Choose a bank with the best service offer
When applying for loans, try to apply to as many banks at once. In fact, instead of going to different locations, looking for these banks, if there is any expos going on for new homes, you can get most of the banks having a counter there. Or simply give a call to them and get a sales representative to see you. You can then choose the fastest service provider or the one that really satisfies your condition of customer service. If you face problems in the beginning itself, most likely you would have problems too later on.

Get a longer tenure for the loan
Whichever institutions giving you the longest loan period, grab them!
Though it will boil down to having to pay more in terms of interest, our aim would be to pay more than the stipulated amount monthly. Most banks charge lesser interest rates when the duration is longer. And we can make use of this point to our advantage. When paying off 100 or 200 extra every month, the duration of the loan will be reduced automatically and in bad times, you can choose to pay lesser than what you are used to pay every month and you will feel a great relieve for that.

In Malaysia, there are many banks offering home loans that varies in its packaging. I list some of the more popular ones below:
1. Standard Chartered

2. Public Bank Berhad

3. HSBC Bank Malaysia Berhad

4. Hong Leong Bank Berhad

5. AmBank Berhad

6. MaybankBerhad

7. Citibank Berhad

No, I'm not being paid to list the above banks and neither am I biased towards any one of them. It's just through my own experience of getting a home loan. I finally ended up taking a home loan from Public Bank as it met with most of my requirements.