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.

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.

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.

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.