Unit Trust For Newbie

PUBLIC MUTUAL ONLINE REGISTRATION THROUGH PBB ATM

2009-09-09T11:01:00.001+08:00

We wish to inform that unitholders who are Public Bank ATM customers can now

At the PBB ATM Main Services Screen (Please Select Transaction), unitholders

have to:

Step 1 – Select ‘Other Services’

Step 2 – More Services

Step 3 – Register for Public Mutual Online

Step 4 – Key in local mobile no.

Step 5 – Confirm mobile no.

Once the registration is completed, the ATM advice slip will be printed.

The docket mailer will then be sent to unitholders’s mailing address. Please be informed that you need to log in and change the User ID and Password within 30 days of the date of issuance of the docket mailer.

Please let me know should you require further information.

Brighter Future Ahead

2009-06-18T18:31:00.000+08:00

Your success as a unit trust consultant depends upon your desire to excel.
Fast track consultant can achieve the highest rank of an agent as Mutual Fund Group Agency Manager (MFGAM) in one year and three months. It took many years to become a General Manager or a CEO of a company.

I knew many companies out there, that many if not all of their management staff struggle to become a CEO of the company, but unfortunately the CEO would normally will be picked up from outside of the company. Very true right! Here you don’t have to worry on that.

If you work smart enough, you will be the MFGAM. No one from nowhere will come and become your boss. For those who hate traffic jam, you can even have your office right in front of your house if you want. Other CEOs don’t have this privilege.

Furthermore, besides your sales commission, your staff’s performance will also contribute to your income directly. You will also get indirect commissions that consist of 5 levels i.e.

Year-end bonus
Breakaway bonus
Equalisation bonus
Career benefits
Profit sharing.

So far, I knew only 2 levels of extra benefits that you will get if you work for company (in general) i.e. yearly bonus and Employee Share Option Scheme if any. So, don’t wait for too long.

There are more to come. You can fly to Dubai or Seoul for FREE if your sales is greater than RM2.875m or RM850k (RM650k for new agent) respectively by the end of Dec 2009.

So hurry up. The faster you become a consultant, the easier and longer period for you to achieve the sales target.

New Unit Trust Consultant Campaign 2009 (Jan to Dec 2009)

Join us today and enjoy the great benefits we can offer you. Full and part-time positions available.

Incentive 1: Joining Incentive Refund
Achieve RM50, 000 in total personal sales within six month from the date of joining and we will refund your Computerised Unit Trust Exam (CUTE) and Joining Fees.
So, basically your investment is zero.

Incentive 2: Incentive Trip
Achieve a minimum total personal sales of RM650, 000, you will book yourself a seat to Seoul! As compared to the standard National Sales Convention (NSC) Incentive Trip qualification requirement of RM850,000, a low RM650,000 qualification to the NSC is our wonderful way of saying welcome to all our new UTCs.

Don’t miss the boat! Join us today and enjoy these amazing benefits.
So, to grab this offer,

Why No.1 Malaysian Unit Trust Company?

If you are married and have a son or daughter in school, will you say, “Son, go to school and get no. 6, 7 or 10 etc in class”? Surely you will say “study smart and hard and get no. 1 in class”. Thus, why choose no. 2, 3, 4 etc when the no.1 is waiting and open for you.

Consistent performance and proven track record are there. If you want to buy durian, don’t choose the bad one. Choose the good one and you won’t regret. So don’t buy fund that are not performing*.

On top of that, we’ll support you with a suite of financial planning and sales tools as well as best-in-class training. The company will also subsidise you for pursuing Chartered Financial Planning (CFP) programme, if you meet certain sales target.

Start Buying Now. Seriously. Part II

2009-04-26T22:40:00.000+08:00

Let’s look back at the Asian Crisis. The Asian Crisis bottomed in the year 1998 for Singapore. Which month was the bottom?

Before I tell you the answer, let me ask you another question. If I gave you the chance to buy at any point in 1998, would you?

You would, and you should, because no matter which month you bought in 1998, you would have made from +60% to +200% by the end of 1999, the year of recovery.

Let me give you another example. The economic slowdown associated with the bursting of the tech bubble, Iraq war and SARS bottomed in 2004. If I gave you the opportunity to buy at any point in time in 2004, would you? Of course you would, because you would have made up to +200% over the next three years to end 2007.

This is my point about investor psychology. When you look back in time, the difference of a few months means very little. But when you are living in and experiencing a recession or a financial crisis at the moment, the feeling is very different. Day-in, day-out, you are bombarded by the doom and gloom, and even one month of seeing the market go down feels like an eternity.

It’s like a kid who hates school. Six weeks of school could feel like six months, and six weeks of holidays feels like six days to him. It’s actually the same amount of time, it just feels different.

Now we are in an economic crisis. I don’t know when the exact month of the bottom is. For all we know, it could be over, in early March 09, or it could be ahead of us.

If you have the money to invest over the next few years, it comes down to this question: do you think the economy and the markets will recover? Your answer should be yes, because they always do. It’s no magic that they always do, it’s just that human beings want economic growth, and work very hard to attain it. Any kind of problems that crop up are dealt with in time so that we can increase our consumption and improve our way of life.

Already we are seeing some signs of economic improvements. This crisis started in the housing market in the U.S., and the latest numbers show an unexpected increase in housing starts and existing home sales. The banks, who were amongst the worst hit, are also variously reporting that they will make profits in 2009.

On 23 March 2009, various key markets around the world jumped 6 to 7 percent, including Japan, Hong Kong, Singapore and the U.S., reflecting some of these improvements in economic numbers.

Where is the absolute bottom? Did we miss it? Now that we are past the lows in March, and markets have jumped significantly, will you refuse to buy and wait for the same lows in March to come back again? What if it doesn’t come back?

You have to realise that it is a fool’s game to try to look for the absolute bottom.

There’s no way to catch it, and there’s no way to be faster than the market when the turn comes. The only way is to buy when valuations are low enough, and then hold till the recovery comes.

Some years down the road, when you look back at late 2008 or the whole of the year 2009, it’s going to be a blur to you which month it was that the market actually bottomed and turned.

You are going to wish that you have invested around this time.

Start Buying Now. Seriously.

2009-04-21T12:12:00.003+08:00

Start buying equities now. I have.

So have investment legends like Warren Buffett, who bought in October, John Bogle, who said in this month that equity markets are too low and Bill Miller, who recently said that he sees great value in equities. (I am nowhere near an investment legend, but I am following their lead).

This is opposed to the doomsayers who say that the worst is yet to come. These doomsayers are … who are they again?

It’s interesting for me that there are always “investment experts” who criticise Warren Buffett. They say he was irrelevant to the new economy in 1999, when he refused to buy technology shares. They say he didn’t understand the situation when he said that financial derivatives were “financial weapons of mass destruction” back in 2002. And now they say that he is simply trying to talk up his own investments, when he said recently to “Buy America”. These things they say of the world’s most successful investor, the world’s richest man. Nobody remembers these “they”, but Warren Buffet continues to make loads of money from his investments.

Let’s look at the reasons why “they” say things will get worse.

“This time it’s different”

You’ve heard this one. “They” say this time it’s different because it’s an unprecedented global economic slowdown not seen since the Great Depression. To this I have two responses:

It’s always different. If it wasn’t different, no one would panic, and no one would sell their shares, and stock markets wouldn’t fall. For example, if a plane slams into a major building somewhere tomorrow, (it would be a tragedy, but) world stock markets would not crash the way it did in the aftermath of September 11th. The Asian financial crisis, tech bubble bursting, Iraq and Afghanistan wars, SARS, sub-prime crisis, they were all different.

It’s never different. What doesn’t change is that the human race has always been able to find solutions to these problems and emerge stronger. This is a unique trait that human beings have. If we did not have this trait, we wouldn’t have evolved as a species. This is one of the reasons world stock markets grow over the long term; we always grow and thrive as a species, and we always find solutions to problems.

“We don’t have clear signs yet that a recovery is in sight”

This is what many analysts say. Again, I have two responses:

If we had clear signs, the stock markets would have gone up a lot, and you would have missed the opportunity to make inordinate profits. Stock markets always anticipate economic recoveries. By the time the analysts are able to report clear signs, we would be more than halfway to the top.

We do have some clear signs of action. We know that these actions are being taken.

Monetary policy actions: We have seen governments across the globe cut interest rates and increase money supply. In recent weeks, we have announcements coming out of the U.S., the E.U., the U.K, Australia, China, Korea and others. These are extremely expansionary.

Fiscal policy actions: More and more governments are injecting billions into their economies. Usually they will do this by funding infrastructure projects, reducing taxes, and so on. This will increase overall demand and stimulate the economy.

In a short time, the global economy will feel the effects of these actions. So yes, we do have a recession. But a lot of smart people at governments all over the world are working frantically to address it.

The fiscal policy actions are easy to understand, but if you always wondered why interest rates have such a big impact, the reason is this: private companies always have expansion plans. They may be reluctant to borrow funds to expand if borrowing costs are high. They will be particularly cautious in a recessionary environment. But when rates decline, many will start borrowing, start hiring and start expanding.

“The recession will extend for another 3 quarters”

This seems to be the consensus economic forecasts. But let’s say this is true. Three quarters means the last quarter of 08 and the first two quarters of 09. Let’s budget another quarter and say it goes on till the end of 3Q 09.

I don’t want to forecast when the economy or the stock markets will recover. But I can say this: the stock markets always recover before the economy does.

So if stock investors all thought that the global economy would recover by end of 3Q 09, they would …

“I wish I had bought …”

If you are old enough, I bet that you have said this phrase “I wish I had bought equities” during any of the points below. We are now at point no. 7, and the Malaysia market is trading at a very low PE.

I am bullish on Malaysia because:

The population is growing. This means that the domestic economy will be growing.

Top blue-chips have successfully regionalised. Sime Darby, Genting, Gamuda, Public Bank, YTL Corporation, these are no longer just local companies. They have tremendous presence in the region and the world.

Do not regret again and say “I wished I had bought …”

Conclusion

Has the market reached a bottom? I feel strongly that either:

We have passed it. October could have been the bottom.
We are very near it. A lot of the bad news has been priced in. Given the very low valuations now, there’s not much downside, which makes the upside over the next two years very interesting.

Do not “punt”. Make sure you invest with money you can set aside for at least three years. This is because:

You don’t want to be caught having to sell at the wrong time.
You need time for the markets to realise its full recovery potential.

This is the time to invest profitably. Seriously.

Krisis Kewangan Global ~ Apa Yang Rakyat Perlu Tahu

2009-03-27T10:41:00.001+08:00

Pada krisis ekonomi 1997 kita melihat perbalahan antara Dr Mahathir dan Anwar Ibrahim, jatuhnya Tan Sri Tajudin Ramli dengan Syarikat MAS, Tan Sri Halim Saad dengan Syarikat Renung, Datuk Teng Pek Kim dengan projek Bakun, Mirzan Mahathir dengan Syarikat perkapalan MISC dan lain-lain. Kemudian timbul pula selepas itu Tony Fernandez dengan Air Asia, Nazir Tun Razak dengan CIMB, Syed Mokthar dengan pelbagai rangkaian perniagaan dll.

Untuk rekod krisis ekonomi pada tahun 1987 dikaitkan dgn kemerosotan nilai hartanah, krisis ekonomi 1997 disebabkan spekulasi yg berlebihan dalam perdagangan nilai matawang dan krisis ekonomi 2008 dikaitkan dgn krisis kewangan global.

Apakah yg dimaksudkan dgn krisis kewangan global?

Ianya dikaitkan dgn keruntuhan bank-bank dan syarikat-syarikat pelaburan yg terkemuka dunia terutama yg telah hampir 100 tahun bertapak kukuh di Eropah dan USA. Mulanya ia berkaitan dengan sub-prime. Secara mudah sub prime dapat diterangkan seperti berikut:

Sebuah bank memberi pinjaman perumahan kepada pelanggan. Kadar riba adalah 12% (contoh), Kemudian bank tersebut akan mencagar pula rumah tersebut kepada syarikat pelaburan A dgn kadar riba 10%. Syarikat pelaburan A akan mencagar pula rumah tersebut kepada syarikat pelaburan B dgn kadar 12%, begitulah seterusnya.Dalam contoh ini sebuah rumah yang nilainya hanya RM 500,000 mungkin telah meningkat kepada RM 1,500,000 dan ianya akan terus meningkat jika banyak syarikat pelaburan meningkat. Oleh kerana USA merupakan pusat kewangan antarabangsa maka banyak syarikat pelaburan dari seluruh dunia datang melabur.

Krisis bermula apabila nilai harta perumahan jatuh menjunam. Ramai peminjam gagal membayar hutang. Bank menghadapi masaalah kutipan hutang, maka ianya mula menjangkiti sektor-sektor kewangan lain seperti syarikat kereta dan syarikat eksport import, bila ini berlaku ramai hilang pekerjaan, perbelanjaan harian merosot, kedai-kedai tidak dapat menjual barangan, industri kecil-kecilan akan mula terasa kesannya. Yang masih ada pekerjaan akan mula mengurangkan berbelanjaan, ekonomi negara akan mula menguncup, akhirnya semua rakyat akan merasa kesannya.

Sebagai Rakyat Apa yg perlu kita tahu sekarang ini

1-Banyak eksport barangan keluaran kita adalah ke pasaran USA. Krisis yg melanda USA sekarang ini menyebabkan banyak barangan kilang kita tidak ada pembeli. Kilang terpaksa ditutup. Hampir 200,000 pekerja akan hilang pekerjaan. Kesannya kuasa beli pasaran akan jatuh, banyak rumah dan kereta akan dilelong, bank akan mengetatkan syarat pinjaman, atas desakan akan banyak jenayah rompakan , kecurian dan penipuan.

2-Bila banyak perusahaan kilang dan industri ditutup di dunia ini, permintaan terhadap minyak akan jatuh. Secara automatik pendapatan negara akan merosot. Bila ini berlaku kerajaan akan kekurangan wang untuk berbelanja kemudahan awam. Jalan raya akan lambat diperbaiki dan industri kontraktor akan terjejas. Maka banyak perniagaan yg berkaitan dengannya akan runtuh.

3-Bila ramai kehilangan pekerjaan dan kilang-kilang terpaksa ditutup , kutipan cukai dan zakat akan merosot. Bantuan kepada yg susah terpaksa dikurangkan manakala golongan yang susah akan bertambah.

4-Rakyat yg mempunyai wang lebih suka menyimpan. Akibatnya tidak ada aktiviti-aktiviti ekonomi baru untuk membolehkan orang ramai mendapat pekerjaan.Contohnnya jika A ada RM 20000.00 beliau membuka restoran mungkin 4 orang pekerja telah ada pendapatan. Tapi A memilih untuk menyimpan wangnya maka aktiviti ekonomi akan jadi kosong.

OBJECTIVE OF INVESTMENT

2009-03-16T13:35:00.002+08:00

Definition : An investment is an activity of increasing returns and wealth to the investor based on the initial amount that was invested.

However, good investment policy should contain some of the following characteristics :

It should be for the long term (5-20 years)
It must have an objective (e.g. child education, housing, pension...)
It must have a time plan (withdraw by the year 2020...)
The interest/dividend must accumulate over a time period
It must outperform inflation rate and cost of living
It must be moderately safe (minimum risk)
It must grow
It should not be withdrawn due to current short-term turbulence
The investor should be disciplined, focused and patient

Rich Person : Poor Person

2009-03-07T03:14:00.001+08:00

What is the difference between A Rich Person and a Poor Person?

Well – Nothing. Both have 24 Hours A Day.

So really, to find out what Successful people do – we need to look at What They Do during those 24 hours.

One of them is so simple it is ridiculous. It is called the Notepad.
I mean either the one that you find on every computer – or – the paper one.

They write out their tasks and plan the next day the night before.

But they do more than that. They do the horrible tasks first.

The tasks they really don’t want to do. And they don’t think about it too long either.
They shut their eyes and get stuck in & they make sure they complete it.

Why? Because they know that the rest of the day is fine after.

If you can create or improve this habit then it will boost how much you achieve everyday massively.
This leads to discipline, probably the most important factor of Success.

And then there is the Television, or their competitor nowadays, Social Networking sites.
Don’t spend all of your Valuable Time worrying about other people and their lives.

You’ve got your own life to lead. Seriously – sell your TV.. How much does it cost you?
A few thousand maybe. How much does it really cost?

Ten, twenty or thirty times that in your lost hours which you could spend making something, creating something, on a business idea, in fact on anything that will improve your life. In fact, focus on this everyday, on what you could really be doing with that time, and it will improve your life immeasurably.

At the end of the day you need to decide whether you are in control of your day or your day is in control of you.

You need to identify the big issues and tackle them, not worry over the little details that will get you going round and round in circles.

You need to focus on the right things, and don’t think you are busy just because you are busy, make sure you are busy doing the right stuff.

Once the day is Gone it is Gone.

When you realize that Time is more expensive than Money, you are half-way there.

Have a fantastic day!

Living The 7 Habits - The Courage To Change

2009-03-05T08:34:00.005+08:00

Last 2nd of March was my birthday and I've received a book as a birthday present from my wife. The book's title is "Living the 7 Habits" by Stephen R. Covey. This is a very interesting book to read to motivate me.

Steven R Covey’s bestselling The Seven Habits of Highly Effective People may well have changed the lives of the millions of people who bought the book. Here, in Living The Seven Habits, Covey draws together a collection of those successes and lets them tell their stories. The range of stories, taking in a selection of individuals, family situations, difficulties at school, college or in the workplace and high-level, corporate problems, help to explain how "The Seven Habits" have in some way shaped the experiences of the people involved, allowing them to cope with their personal, ever- changing landscapes in order that, however trivial or traumatic their problems may seem to the others, they have not only survived and improved, but have also learned something of lasting value.

Covey’s comments and insights after each story help to explain which of "The Seven Habits" came into play and under what circumstances, and add a depth and understanding of the individual situation that enhances and compliments the strategies he uses to overcome problems. Many of the stories are deeply moving, others are inspirational, but what they all have in common is an understanding of the principles that Covey instils in his readers.

An excellent companion volume to Covey’s previous works, Living the Seven Habits is an artful testimony to the man who has wooed millions of readers across the globe with his common sense approach to life skills. And for anyone who has not yet encountered "The Seven Habits", this book gives a clever and tempting taster of how things could be. --Susan Harrison --This text refers to an out of print or unavailable edition of this title.

Investing in Bonds

2009-03-04T09:37:00.002+08:00

Malaysian retail investors have never participated actively in bond investing. Some of you may have bought bond funds offered by the unit trusts, however, most of you may not know what a bond investment is really about and the effect of it has on your investment portfolio.

So then….What is a bond?
A bond represents the debt owed by either government units or corporations. By investing in bonds, you basically become the lender to the issuers and you will be paid a specified percentage of interest. This percentage of interest is called coupon payment, and it is given to you by the issuer because of the use of your money. At the end of the maturity date, you will get back your principal. An example to quote is the Bond Simpanan Merdeka 2008 issued by Bank Negara for the senior citizens, which has 3-year tenure and pays 5% interest per year.

In Malaysia, the main issuers of public debt are the Government of Malaysia, the central bank (Bank Negara Malaysia), and quasi government institutions (Khazanah, Danamodal and Danaharta). Private debt securities and asset-backed securities are issued by the National Mortgage Corporation (Cagamas Berhad), financial institutions and non-financial corporations. The major investors in Malaysian Bond market are the Employees Provident Fund (EPF), pension funds, insurance companies and other financial institutions.

The price of a bond is determined by many factors, with the main drivers being interest rates, inflation, maturity and credit quality.

* Interest rates
Bonds are highly sensitive to interest rate fluctuation. When the prevailing interest rate goes up higher than the coupon rate, the prices of the outstanding bonds will fall below the principal value. If you are buying a bond fund, higher interest rates will cause lower fund prices.

* Inflation
During periods of rapid economic growth, we will see increasing inflation. This will eventually lead to higher interest rate and cause a drop in the value of bonds.

* Maturity
Due to the sensitivities to inflation and interest rate fluctuation, longer term bonds will face more uncertainties compared to shorter term bonds. As such, longer term bonds should offer better interest payment as the additional risk premium for the investors. Nevertheless, it will suffer higher price fluctuation as a result of the longer period it takes to mature.

* Credit quality
When we lend out our money, we would want to make sure that we will be able to get it back. Therefore, the credibility or credit quality of the bond issuers plays an important role in the bond price. A corporate bond will have higher yield than a government guaranteed bond, due to the additional risk that the investor has to bear for facing the possibility of the corporate bond getting defaulted. The recent global financial crisis was partly attributed to the decline in credit quality for certain corporate bonds.

Why invest in bonds?
Investing in bonds offers an alternative to investors to diversify their investment portfolios due to its nature of having relatively lower risk compared to stock investing. As bonds provide periodic interest payment and repayment of principal at the end of the maturity, it will be suitable for you if your investment objective is to preserve capital and receive a predictable stream of income. Depending on your investment time horizon, you can choose to invest in short, medium or long term bonds. However, you must understand the factors that drive the price of the bond that you invest in.

As retailers, most of the time we will be investing in bond funds offered by some unit trusts or commercial banks. Bond funds are combinations of various bonds; therefore, the risk of investing in bond funds is relatively lower compared to individual bonds. However, you must take note of the factors listed above while selecting an appropriate bond fund. In addition, you will also need to know about the fund management companies and make sure that the approaches they take are suitable for your risk profile and investment objectives. The timing of investing in bond funds is also very important.

What to watch out for when investing in bonds:
• Watch out for the interest rates especially if it is too low or unstable.
• Avoid speculative bonds. Even when you are investing in bond funds, make sure that the bonds in the portfolio are investment grade, which carries a credit rating of BBB and above. Bonds with rating of BB and below are considered ‘high yield’ and below investment grade.
• Don’t invest a large portion of your portfolio in bonds. It will limit your portfolio growth, as over time, inflation will erode the fixed income stream and principal. Bonds are suitable to complement stock investing.
________________________________________
This article was written by SIDC and Mr. Ooi Kok Hwa, a holder of a Capital Markets Services Representative’s License to carry on the business of investment advice under the Capital Markets and Services Act 2007. The information provided in this article is for educational purposes only and should not be used as a substitute for legal or other professional advice.

Ways to weather stormy markets

2009-02-23T14:04:00.001+08:00

What you can do, and what not to do, to whip your investments into shape

Stocks today are more volatile than they've been in years. January's wild weeks and February's broken-heart start are signs that new market leadership is emerging and old mainstays are losing steam. It's time for you to change with the times.

But how? Change is tough enough to imagine; it's even harder to do, especially when the market's direction isn't clear and buyers are grasping at straws. Adapt to changing conditions by adopting rules that can carry your investments through these turbulent times -- and beyond.

“Too many people get distracted by benchmarks, well-meaning friends, media reports or information from people that know nothing about them," says Dan Moisand, a financial adviser at Spraker Fitzgerald Tamayo & Moisand LLC in Melbourne, Fla. "They forget why they are investing in the first place. The clearer and more specific one is about goals, the better."
Here's what you need to do with your investment portfolio now, and what you don't want to do -- especially now.

Time horizon

Do see the big picture: When confusion reigns, you don't necessarily have to stay the course, but you'll want to stay above the fray and keep perspective on long-range goals and plans.
Always keep an investment portfolio that fits your personality and objectives. It's probably hard to believe now, but if you're planning to retire in 10 or 15 years, today's gyrating markets won't even register. If your money is appropriately divided among stocks, bonds and cash, any direct hit to stocks -- and your pocketbook -- will be cushioned.

All this makes it easier to tolerate the market's inevitable swings and stumbles, and to use these downturns to your advantage with prudent bargain-hunting.

Don't be short-sighted: Toss your monthly brokerage statements. Time in the market, not timing the market, is ultimately a more profitable strategy.

Longer time horizons make losses less likely. That's because stocks usually go up.
So show those market-timing gurus and gizmos the door. With investing, you don't have to join the party at just the right time; you just have to show up.

Strategy

Do stay diversified: Smart investors are exposed to various types of stock funds, government and corporate bonds, cash, and maybe a smattering of real estate, commodities and natural resources. Portfolio diversification may be old hat -- don't put your eggs in one basket and such -- but cliché or not, it works.

Don't speculate: "It's more important to avoid the big mistake than to hit home runs," says Ellman, the New Jersey adviser.

We all love stories, especially Cinderella stories where the little guy or gal triumphs over injustice and lives happily ever after. The stock market is full of those get-rich-quick stories. Mostly, though, it's brokers who are getting rich off the little guy's quick trades.

If you think one stock will be a lottery ticket, ask yourself this: If you were given $100,000 today, would you put it all into that stock? Remember, Cinderella's bubble burst at midnight.

Foundation

Do keep your portfolio in balance: Many investors react to the moment, buying near tops and selling near bottoms, making hasty decisions based on rumors and hunches.

The best plan is simple but challenging: Trim winners and add to losers. This is known in portfolio-speak as "rebalancing." Do it religiously once a year, and be sure to wait an extra day so your sales will qualify for favorable long-term tax rates.

Don't get pushed to act: In turbulent times like this, it may seem that you have to do something, anything, to stop the shaking. In bull markets the opposite is true, and you'll do anything just to get on board. After all, everybody likes volatility when stocks are going up.

If you feel compelled to make a move, take a lesson from the pros. Big institutional investors and money managers contemplate "what if" scenarios and have a plan of action in place when they occur.

Don't chase hot performance: Everybody loves a winner. Among mutual funds last year, for instance, trophies went to natural resources, energy, Chinese stocks and other emerging markets. This year, who knows? But it's unlikely that these same sectors will enjoy another round of turbocharged results.

While it's tempting to follow the crowd, investing is never that easy. "Don't take needless risk," Levin says. "Stick to your investment plan and rebalance back to your target levels for U.S., international, small and large stocks, as well as bonds."

Emotion

Do invest with confidence: "Smart investors pick an asset allocation that is consistent with their risk tolerance," says Jim Peterson, a vice president at the Schwab Center for Financial Research. "They don't chase performance in hot areas of the markets and they don't panic when certain areas of the market do poorly."

Be flexible as well. In addition to boosting bond allocations, many investors have shifted into U.S. and international growth stocks in anticipation of an economic downturn. Growing companies with lots of cash and a broad, global customer base are better equipped to withstand chaotic times.

Yet even proven defensive measures might not be so effective this year for stock investors. Come December, you may find that the stock portion of your portfolio is below your target range. After a brutal year, you won't be in the mood to buy, but that's exactly what you want to do. The more comfortable you are with your plan, the easier that decision will be.
Don't get overconfident: Know what you don't know. Believing that you know the inner workings of a particular stock or business sector can be dangerous, even -- maybe especially -- if you work for that company or industry. Think Enron.

"You have to understand that the market has a way of doing what you don't think it's going to do," Kays says. "That's why you have certain rules in place to protect yourself on the risk side, and when people get overconfident they break those rules."

Overconfidence is prevalent when stocks are soaring, but even in this market downturn there are bargain-hunters who are convinced they're catching the bottom. They may be in for a rude and costly surprise.

"You're better off missing the bottom on the way up than getting in and things dropping another 20%," Kays says. "There's an old saying in the investment field that the pioneers get the arrows and the settlers get the land. You don't have to be the hero."

Survey: Malaysians not saving enough

2009-02-19T08:20:00.000+08:00

KUALA LUMPUR: Malaysians are not saving enough and they are not prepared to face a financial meltdown should they lose their job or be retrenched.

According to the latest findings from Citi’s Financial Quotient (Fin-Q) 2008 survey, only two in five (39%) Malaysians actually save and less than one-in-three (28%) make and stick to a monthly budget.

Citibank Bhd head of segment and marketing, retail bank Timothy Johnson said the results from Malaysia show an average Fin-Q score of 51 points out of a possible 100 points, with 54% of Malaysians scoring 50 points and below.

A majority of Malaysians reported in the survey saved up to 20% of their monthly income - excluding the 11% in the Employees’ Provident Fund - and 12% said they do not save anything at all.

In the event of a job loss but with continued regular expenses, one-in-five indicated their savings would last for only four weeks.

On average, Malaysians reported having 11 weeks of savings in reserve,

“Against the backdrop of the current challenging economic environment, these findings are quite worrying,” Johnson said in a briefing yesterday.

He said although the Fin-Q scores in seven of the 11 subject areas have shown improvement, it was not.

“We believe that a lot more needs to be done to ensure Malaysians are truly financially savvy as the detailed survey results revealed that there is still room for improvement,” he added.

The Citi Fin-Q survey comprised 500 online interviews of 40 questions each, rolled out to determine the level of understanding among Malaysians about their personal finances and financial practices. The survey was conducted from Oct 15 -30.

Johnson said more Malaysians were taking an interest in their finances and the recent economic crisis had made saving for emergencies an important element for them.

According to the survey, 56% are somewhat better off now than they were a year ago. Nevertheless, 37% were worried about their financial future. While 86% of Malaysians attempt to follow a budget, less than one-in-three (28) actually stick to the budget.

The Fin-Q also revealed that 30% Malaysians indicated they would “know exactly” and 60% have a “good idea” what to do if they were given six months salary to invest. There was also a 6% increase in the number of Malaysians who have a formal retirement plan and 56% are confident or somewhat confident that their savings will lead to a comfortable life in retirement.

Asked how much would be needed for retirement, Johnson said it was very subjective. He said the answer required thorough thinking and planing as the amount of money you need in retirement had a direct correlation to the style of living you wish to have.

“If you want to retire in Bahamas, you will need a bigger amount compared to living in a house in suburban area,” he said, adding that to gauge the figure, one should look at the current expenses and estimate how they might at retirement.

Johnson also pointed out a fascinating finding in the survey. He said 35% Malaysians believed that money can buy happiness.

He said the Fin-Q was a snapshot of our current level of financial literacy and what we all need to do to better control our finances. Malaysians needed to be disciplined and have good financial management to ensure enough savings, he said.

“I believe Malaysians should provide additional focus on developing and enhancing their level of financial literacy, more so given the current challenging environment.”

source : http://biz.thestar.com.my/news/story.asp?file=/2009/2/19/business/3295860&sec=business

Why You Should Join Me?

2009-02-06T16:10:00.006+08:00

Why would I want to be a Unit Trust Consultant?

Because YOU deserve to have a well-paid and fulfilling career in an industry that is enjoying explosive growth in Malaysia.

The Malaysian unit trust industry is vastly untapped

The local unit trust industry is a multi-billion Ringgit industry because of its vastly untapped potential. In a period of just 15 years since 1992, the amount managed by private unit trust companies grew from a mere RM400 million to RM71.005 billion! (Source: Lipper, 28 January 2008)

The Malaysian Private Unit Trust Industry's Growth Rate from 1992-2007

Great Opportunities to earn unlimited income

According to the Securities Commission, in December 2007, the Malaysian unit trusts boasted 15.32% equity penetration rate*. In comparison to the same period, United Kingdom's equity penetration rate was 41.62%. (Source: London Stock Exchange and Investment management Association, UK)

Malaysia unit trust equity penetration rate

In December 1992, the Malaysian unit trusts equity penetration rate was merely 6.40%. This means that Malaysia's rate is low in comparison with more developed countries like the UK and Malaysia's ratio is rising rapidly.

For you, all these translate into plenty of opportunities to earn potentially unlimited income as a unit trust consultant.

Why would I want to join Public Mutual?

Because Public Mutual is the biggest and the best!

No.1** unit trust company in Malaysia

There are 28 private unit trust companies in Malaysia and Public Mutual has the largest market share of 40 percent as at end-December 2007.

Market Share of Private Unit Trust Industry as at 31 December 2007

We have more than 50% market share in equity and balanced funds sector, Islamic fund sector and foreign fund sector.

We manage more than 60 funds with a total net asset value of RM27 billion for over 1.8 million accountholders.

We have a wealth of 27 years of experience in managing funds.

Public Mutual is the most awarded unit trust fund manager in Malaysia, raking in total of more than 100 major awards since 1999 including Best Fund Manager in Asia awarded by Failaka Advisors, Dubai and The Most Outstanding Islamic Fund Manager Award at the KLIFF (Kuala Lumpur Islamic Finance Forum) Islamic Finance Awards 2007.

Strongly supported by Public Bank

We are backed by the vast resources of one of the largest and strongest banks in the country – Public Bank. Public Bank is a premier financial institution that continues to be accorded prestigious domestic and international recognition for its banking and management excellence.

Extensive Network

We are supported by more than 240 Public Bank branches which augment our network as ubiquitous collection centres. We are linked extensively through our national network of 26 branches, as well as a 33, 000-strong agency force to provide better service to our investors.

So, what's in it for me?

Unit trust consultants of Public Mutual enjoy great benefits. Amongst them are:

Highly competitive incentive structure and benefits programme in the industry.
The potential to earn unlimited income.
Flexible working hours.
Overseas trips, awards and public recognitions.
A wide range of financial planning and professional sales tools.
Subsidised Certified Financial Planner (CFP) certificatin course and diverse training programmes.
Sales incentives and campaigns to support your sales effort.
Numerous recruitment incentives and subsidies for agency building.
And much, much more...

Now What?

Contact ME!

Take hold of this opportunity NOW if you seriously crave to enhance your personal and professional life.

Peluang Kerjaya Bersama Public Mutual

2009-02-05T16:01:00.004+08:00

Salam,

I have just created a new blog for anyone out there who are interested to become a Unit Trust Consultant whether full time as well as part time.

It can be access at the link below or through the "Other Great Sites" link.

http://www.kerjaya-unittrust.blogspot.com

Regards,
herwan

Inflation : The Silent Threat - Part 2

2009-02-02T14:37:00.003+08:00

What are the Effects of Inflation?

Although inflation can be considered a normal economic development as long as the annual percentage remains low, it can cause a crisis once the percentage rises over a pre-determined level. The most obvious way it can affect your personal finance is by significantly reducing your purchasing power. You will find that the price of everyday products and services rising and with interest rates going up as well, loans will often cost more.

For example :

- In 1978, RM300 can buy one month's worth of groceries for a family of four.

- In 2008, RM300 can buy one week's worth of groceries for a family of four.

- In 2028, RM300 can probably buy two day's worth of groceries for a family of four.

By understanding the difference between nominal returns and real returns, you will be able to see the impact of inflation will have on your funds. Nominal return refers to the growth rate of your money while real return is the growth of your purchasing power, which is the nominal return reduced by the inflation rate. Hence, monies that are placed in fixed deposits may lose their value over time due to the eroding effects of inflation.

For example :

12 months fixed deposit rate = 4%
Inflation rate (personal level) = 6%
Real return on investments = 4% - 6% = -2%

Inflation : The Silent Threat - Part 1

2009-02-01T13:32:00.002+08:00

About 30 years ago, a plate of nasi lemak costs less than RM1. Today, it has increased up to RM3, so do not be surprised to pay more than RM7 for your breakfast in the next decade! That is simply the work of inflation over the years! Just like the power of compounding interest, compounding inflation can have a severe impact in your standard of living if left unchecked. But what exactly causes this phenomenon and how can we overcome it?

What is Inflation?

Inflation is defined as sustained increase in the general level of prices for products and services, which is measured as an annual percentage increase. As inflation rises, every ringgit you own buys a smaller percentage of product or service. In other words, there is a decline in your purchasing power. For example, theoretically a RM1 cup of teh tarik will cost RM1.05 after a year if inflation rate for the period is 5%.

What Causes Inflation?

The two generally accepted causes of inflation are:

High demand, low supply - If demand is growing faster than the supply of products and services, prices is forced upwards. Also known as demand-pull inflation, this normally occurs in growing economies when there is "too much money chasing too few goods".
Rise in production costs - When the price of raw material goes up, production cost will rise, which leads to companies increasing process to maintain their profit margins. This also applies when employees demand higher wages as companies usually pass on these costs to the consumers.

Asian markets, including Malaysia, set to rebound in second half

2009-01-19T15:49:00.002+08:00

Standard & Poor’s research sees 43% upside for equities by end-2009

PETALING JAYA: Asian markets, including Malaysia, should post healthier gains on anticipated economic recovery in the second half of this year, Standard & Poor’s (S&P) vice-president (equity research, Asia) Lorraine Tan said.

But she expects markets to consolidate and range-trade perhaps after the Chinese New Year.

“On the whole, we expect about 43% upside for Asian equities by end-2009,” she told StarBiz.

Tan said unfortunately the worst was not over and that risks might come from a poor forthcoming results season that might dent company expectations.

“The slowest growth for Asia is expected to occur in the first quarter, which could lead to further pressure on companies’ balance sheets and cash flows,” she said.

She said S&P economists anticipated the US economy to start recovering in the second half, although full-year 2009 would still show a contraction.

“Our US strategy team expects the S&P 500 to close 2009 at the 1,025 level, representing a 20% upside from the 2008 close. We believe Asian markets will see a sharper rebound,” she said.

Tan attributed the rebound mainly due to the severity of the market fall in Asia, despite having strong fundamentals, and expected the Asian financial system to remain intact.

She said while the US economy remained fragile, it should start to recover in the second half. as the subprime crisis bottomed out (which should remove the 1% drag on US growth). This will be aided by the over US$1 trillion stimulus packages combined with falling energy prices, which should benefit US consumers by over US$200mil.

She said the rebound was under the assumption that the November market low was indeed the bottom for the US market.

In the near term, Tan said default rates might rise in Asia, possibly a result of cyclical downturn as opposed to the US and parts of Europe where default rates were a direct result of the credit crisis.

She believed Asian banks and corporations needed limited restructuring, which should hasten the economic recovery process.

On the recent market rally, she said: “We believe the recent rally in the equity markets was warranted with many issues having fallen below reasonable fundamental levels due largely to deleveraging and redemptions by global investors.

“At current price levels, we believe values are more reflective of the economic climate and, given continued earnings uncertainty for some companies, we feel the downside risk for some may have risen.”

Overall, Tan expected a better year with equity markets generally ahead six months in advance of an actual economic recovery.

But Schroders (Malaysia) head of retail distribution Josephine Lip has a more conservative outlook on the recovery of the equity markets.

“We expect a modest recovery in 2010 despite the world’s governments and central banks’ efforts to breathe life into the ailing global economies,” she said.

So far, she said, actions taken by the monetary authorities, including significant interest rate cuts and huge injections of capital, had little material effect.

“But the efforts will pay dividends in time and, with inflation under control, and lower commodity prices, real incomes should receive a boost,” Lip said, adding that tax cuts could also provide additional income for households.

Lip said Schroders remained cautious given that monetary policy was still struggling for traction, thus limiting earnings visibility, presenting a hurdle for recovery in equities and risk assets in general.

“However, there is undoubtedly significant values to be found in equity markets, so we have moved to a ‘neutral’ position (from ‘underweight’), in the belief policy action should support markets in the months ahead,” she said.

Against this backdrop, Lip said Schroders was “positive” on bonds (against “neutral” for equities and cash), with a preference for investment grade, high yield and inflation-linked over conventional government bonds.

“Investment grade and high-yield valuations are looking attractive given that spreads are at historically wide levels and given reasons for thinking credit may lead in the current cycle with a recovery in credit markets a pre-requisite for a recovery in equities,” Lip noted.

She said although there was the risk of spreads widening further, Schroders believed the market had discounted most of the bad news.

Lip also said president-elect Barack Obama’s fiscal package, combined with ongoing efforts of central banks to boost growth, should provide scope for positive surprises.

“This is especially so given investors’ sentiment was already at extremely depressed levels, with the US market discounting a fall in earnings of 25% to 30% based on our estimates,” she said.

On Asian markets, Lip said the region did not face the same financial risks as the West as it had undergone its own deleveraging process after the Asian financial crisis.

“When risk appetites return, Asia should recover more quickly than the West due to its well-capitalised banking system and limited leverage problems,” she said.

Schroders recognised there was significant value to be unlocked in equities and that sentiment and economic outlook was currently very poor, she said, adding that it believed the unprecedented policy response from central banks and governments should eventually take effect and support markets in the months ahead.

“We are cognisant that any improvement in the performance of risk assets could turn out to be a bear market rally, so we remain vigilant should sentiment take a renewed turn for the worse.”

Source : http://biz.thestar.com.my/news/story.asp?file=/2009/1/12/business/2968111&sec=business

Don't Panic in the Midst of a Market Crash!

2009-01-13T13:23:00.004+08:00

New investors often panic during the midst of a market crash. Suddenly you see your holdings fall drastically and you see that the hard earned money you have put into that sure-win investment evaporating. In those circumstances, there is a very strong urge to do something, anything, just so that you do not feel so helpless.

Thus, one of the biggest mistakes investors often make when the market crashes in to be emotionally driven to take wrong actions on their investments. Of course, there are different situations for every market crash. Some could be the start of a longer and overdue decline (remember the bursting of the Nasdaq bubble?), while others are just temporary and stocks would soon bounce back in time. But the key thing to remember is not to let panic take over.
Investors might do 4 possible things when they are faced with news that the market has just crashed. They might:

sell off their investments,
switch to other investments,
hold on and just watch, or
buy in further!

There is no absolutely correct decision, but we would discuss each of these responses to see when it is a good or bad time to perform them.

The first option, which many new investors are guilty of during a market crash, is to sell off everything. "I have lost 30% of my investments in a month! If this keeps up, I would lose all of it in two more month's time!" Scary as this thought is, it is as likely to happen as it is to snow in Malaysia! If you have thought long and hard before you bought your fund, and you have a reasonably diversified portfolio, you would know this cannot possibly happen. Even during some of the worst market crashes, markets never ever lost all their money. For that to happen, every single stock held by the fund manager must simultaneously go bankrupt!

Very often, by the time you read in the newspapers or hear that the market has plunged overnight, the crash has already happened. Only major crashes make the newspapers and headlines. So, by the time you make the decision to sell off everything, the markets are already down on account of whatever bad news resulted in the crash. When you look at the charts of market indices in hindsight, you often ask "if I could have bought into this market at the very bottom, I would have made so much money in 2 years!" However, if you have lived through those times invested in those markets, you would have realized that it is precisely then, when markets hit bottom, that most investors are selling off all their holdings. So, while selling off everything is the most common choice, it is also usually the worst option!

The only time when it might be a good choice to sell off your investments was if you had cleverly invested in a huge bull market and was riding the market all the way to the top! So, once you have crested it, and there is a market crash, it may signal the end of the huge bull run you have just experienced. In which case, getting out would actually be a smart move. However, this is not an easy thing to do as very often, in such circumstances, you would have been sitting on hefty profits and are wondering whether this is just a temporary dip before the market continues upwards again!

The second choice can also be dangerous and that is to switch to other investments. This is because you are effectively selling out from the current market you are invested in and moving to other investments, whether they are bond funds or other safer markets. In such situations, the urge would be strong to move to less risky pastures like bond funds, capital guaranteed funds and money market funds. But as we have stressed earlier, this is similar to selling out everything and holding cash because the underlying push is still to stop losing money based on something that has already happened! So, again, emotions might be causing a bad decision.

The third choice, which we suggest all investors do, at least at first, is to take a deep breath and hold on. Do so for 1 or 2 days. Like we said just now, with a well diversified portfolio, you can wait that one or two days until you sort out what is happening and calm yourself. While there is the strong urge to take action now, there is also a high possibility that you would be acting emotionally if you acted now! So, the best thing is to take one step back, clam yourself down, and think through everything rationally before you do anything at all! In a few days, everything might look overdone! (Market crashes very often are overdone as investors panic and drive markets lower than they should be!).

Note also that being calm and rational does not mean you sit back and start counting all the reason why you should sell off all your holdings! You should be asking questions like

"Why did I buy into this investment, are the reasons and factors still there?"

"Is this a temporary reaction from investors because of one event which would soon blow over?"

"If I did not have any investments, and had just cash instead, would I be looking to buy this investment because it is now cheap or would I be looking in some other place?"

These are the questions you should be asking yourself. What you should not be asking yourself is whether you need the money or how long you can afford to hold out before you must cash in your losses! These questions will only drive you to sell your holdings blindly. Whether or not you can afford the losses and how long you are prepared to hold the investments are questions you should be asking yourself before you buy any investment, not after you have already bought it!

Even if you do come to a decision to sell your holdings after calm and rational thought because good of and valid reasons, waiting can have its benefits. The markets usually calm themselves after a few days and there is a strong possibility or a slight rebound no matter how terrible the crash. As we saw in the month of October, and in November as well, many markets swung wildly, some within a single trading day as investors grappled with bad news from the ongoing US financial crisis. Just as markets could crash 5 to 8% within a day, they would go back up 8 to 10% the following day again.

The last choice, which is buy even more, is a brave one. Oddly enough, it often tends to be the best in hindsight. It is also the most difficult to do because your mind is screaming for you to sell! Of course, this also varies from situation to situation and some crashes have heralded a longer term decline. But generally, in most circumstances, markets are resilient and bounce back again from their crashes. Let's take a look at table 1.

Table 1

Source: Bloomberg, MSCI, all performance figures are in USD.

Table 1 shows all of the single negative years for the S&P 500 index (an index that is often used as a broad indicator of the US stock market) since the year 1929. And we include the Great depression in this analysis as well. In total, there were 26 years which were negative years, some, like in 1931 during the great depression, was were the index was down 47.1%. Since some of these were too mild to be considered a crash, we set a benchmark of down 20%. So, we look only at the years in which the market crashed by at least 20% or more within one single year. (Note that the US market has crashed 41.7% so far this year as at 25th Nov 08). When we look at only the 20% crashes, we note that there are only 5 of them.

For 3 out of 5 of these great crashes, the 1 year period following these crashes would be a positive one. In other words, there was a 60% chance after such a "crash" year that the following year would be a good one. If we extended this period to 3 years after the "crash" year, the percentage went up to 80%. The percentage fell back to 60% for a 5 year period. And we note that this long period covers all sorts of crisis from the great depression, to world war 2, to the 1st and 2nd oil shocks in the seventies. Indeed, during the great depression, in a year when the S&P 500 index crashed 47% in 1931, the index was up 111% five years later.

Thus, as we have shown. Statistically and historically, the decision to buy in more after a particularly terrible year may often, in hindsight be the best, but it is certainly one of the most difficult option to take.In conclusion, there is a strong urge for investors to panic and do something during a market crash. However, this is almost entirely emotionally driven. So, we advise that investors would often be better served holding on to their investments instead. In the aftermath of the crash, after things have settled down, the situation would then no longer look so dire. Things have crashed so much over the last two months that in many markets, all fundamentals are being ignored now. Stocks trading at a 2 times price to earnings ratio and 0.5 times price to book ratio are still rated a sell. Many Asian markets are trading at below ten times PE ratio and still the panic is present.

As we mentioned before, ask some of those hard questions and don't panic during a market crash! If the factors on why you bought the investment still stands, then all the more reason to hold on to those investments. This discipline and rational thinking will tide you over difficult volatile periods and serve most, in the long run, to make better returns for such investors.

Source : http://www.fundsupermart.com.my/main/research/viewHTML.tpl?articleNo=143

Apa itu bon?

2008-12-15T12:25:00.002+08:00

Apa itu bon?

Bon adalah akujanji hutang diterbitkan badan kerajaan atau syarikat. Dengan melabur dalam bon, anda sebenarnya berperanan sebagai pemberi pinjaman manakala badan kerajaan atau syarikat yang menerbitkan bon adalah peminjam.

Sebagai balasan, penerbitnya akan membayar faedah tetap (dikenali sebagai kadar kupon) bagi sepanjang tempoh pinjaman dan memulangkan jumlah pokok yang dipinjam apabila ia matang.

Contoh bon ialah Bon Simpanan Merdeka 2008 diterbitkan Bank Negara Malaysia untuk warga emas.

Di Malaysia, ada dua jenis bon iaitu bon kerajaan dan bon korporat. Bagi bon kerajaan, penerbitnya ialah kerajaan, Bank Negara Malaysia dan institusi separuh kerajaan.

Bon korporat dan sekuriti bersandarkan aset pula diterbitkan Cagamas Bhd, institusi kewangan dan syarikat bukan kewangan.

Pelabur utama bon di Malaysia ialah Kumpulan Wang Simpanan Pekerja (KWSP), dana pencen, syarikat insurans dan institusi kewangan lain.

Harga bon dipengaruhi pelbagai faktor, dan antara yang paling penting ialah kadar faedah, inflasi, tarikh matang dan kualiti kredit.

Kadar Faedah

Bon mudah dipengaruhi turun naik kadar faedah. Jika kadar faedah naik ke paras lebih tinggi berbanding kadar kupon bon, maka harga bon akan turun ke paras lebih rendah berbanding nilai pokoknya.

Inflasi

Dalam keadaan ekonomi berkembang pesat, inflasi lazimnya turut naik. Kenaikan ini lambat laun akan menyebabkan kenaikan kadar faedah dan menyebabkan nilai bon jatuh.

Tempoh Matang

Berikutan bon adalah instrumen yang mudah dipengaruhi turun naik inflasi, bon jangka panjang selalunya berdepan ketidakpastian lebih ketara berbanding bon jangka pendek.

Kualiti Kredit

Sudah menjadi lumrah bahawa hutang perlu dibayar. Justeru kredibiliti dan kualiti kredit penerbit bon adalah penting dalam menentukan harga bon kerana ia dapat membantu pelabur membuat keputusan berkaitan pembelian bon.

Pulangan daripada bon korporat selalunya lebih tinggi berbanding bon kerajaan disebabkan risikonya yang lebih tinggi.

Kenapa labur dalam bon?

Pelaburan bon menawarkan alternatif kepada pelabur dalam mempelbagaikan portfolio pelaburan kerana bon membabitkan risiko rendah berbanding saham.

Berikutan bon menawarkan pulangan dalam bentuk faedah tetap secara berkala dan pembayaran balik jumlah pokok apabila sampai tarikh matangnya, ia adalah instrumen sesuai jika matlamat pelaburan ialah mengekalkan wang pokok dan mendapatkan pulangan konsisten.

Bergantung kepada tempoh masa pelaburan, bon yang boleh dipertimbangkan merangkumi bon jangka pendek, jangka sederhana dan jangka panjang.

Namun, dalam membuat pilihan, anda perlu memahami faktor yang mempengaruhi harga bon yang mahu dibeli. Bagaimanapun pembabitan pelabur runcit dalam bon lazimnya terhad kepada pelaburan dalam dana bon yang ditawarkan melalui unit amanah.

Dana bon adalah kombinasi beberapa jenis bon berbeza, maka risikonya adalah lebih rendah berbanding pelaburan dalam satu bon saja.

Anda juga perlu mendapatkan maklumat secukupnya syarikat pengurusan dana terbabit seperti rekod prestasi dan pengalaman mereka.

Pastikan juga pendekatan pelaburan mereka bersesuaian dengan profil risiko dan matlamat pelaburan anda.

How Safe Are Unit Trusts? We Tell You More

2008-12-04T16:50:00.002+08:00

The nerves of many investors have been badly rattled of late. The bankruptcy of Lehman Brothers, and the mini bonds saga that followed, gave investors of the Lehman Brothers mini bonds a rude awakening, as they saw their investments reduced to nothing but worthless scraps of paper.

One fundamental rule of investing: Always know what you are buying into. If you know next to nothing about what you are investing in, do not buy into it, no matter how enticing the returns may seem, or how persuasive the personal banker may sound!

One of our primary responsibilities is to ensure that investors know what they are investing in and are able to make profitable investment decisions in the long run. In this article, we tell you more about the advantages and disadvantages of unit trust investing, and the risk control measures behind unit trusts.

Advantages & Disadvantages of Unit Trusts In a Nutshell

By now, investors should be well-acquainted with the numerous benefits of unit trusts. Diversification, economies of scale, professional management and liquidity are the main benefits of unit trusts. For example, for a minimum sum of RM1,000, an investor can stretch his or her dollar and gain foreign exposure.

But as with any form of investments, unit trusts have their own set of risk and disadvantages as well. Firstly, the returns from your unit trust investments fluctuate according to market conditions. There is always the possibility that the value of your investments would depreciate.

Unit trusts are professionally managed instruments, but it does come at a cost to investors. Upfront sales charges, annual management fees and expense ratios are costs that investors have to take into account. The management fees and expense ratios vary from fund to fund and some can be more expensive than others.

Having run through some of the main advantages and disadvantages of unit trusts, let’s take a closer look at the risk control measures behind them.

Understanding How a Trustee Works

The assets of a fund are taken into custody, and held by a trustee. In accordance with the duties and responsibilities of a trustee of a fund, trustees are required, but not limited to:

take into custody or control all the property of the fund and hold the property on trust for the participants
ensure that all the property of the fund is properly accounted for
keep and maintain a register of the participants of the fund

By holding on to the assets of the fund, the trustee functions as a third-party ‘safety net’ for investors.

However, this safety net is not 100% “fool-proof” either. A trustee can also become insolvent. In the event that the trustee of a fund becomes insolvent, the trustee is not allowed to use the investors’ holdings and monies to offset the trustee’s debts. The fund manager will appoint another approved trustee to take over as the new trustee.

Will I Get My Money Back If the Fund House Winds Up?

Investors need not worry about their investments, in the event a fund house ceases its operations.

The assets of unit trusts are held separately on trust by the trustee for the benefit of the unit holders. In the event that the fund manager goes into liquidation, a meeting will be called by either the manager or the trustee for the purpose of determining an appropriate course of action.

If a resolution is passed at the meeting, the trustee will take the necessary steps to wind up the fund. The trustee then has to ensure that the resultant proceeds have been distributed to participants in the same proportion as their holdings of units.

Investing in Unit Trusts Is a ‘Safe Yet Risky’ Affair

At the end of this article, we hope to reassure investors that there are various ‘safety mechanisms’ in place for unit trusts, notwithstanding the fact that there are inherent risks to investing in this vehicle (such as potential depreciation in value of investments) as with any other form of investments.

The important thing would be for investors to do their research and homework, understand what they are buying into, and to have a good appreciation of the risks and returns involved before parting with their hard earned cash.

What You Should Learn from Your First Investment (based on Warren Buffett's actions)

2008-12-02T14:46:00.001+08:00

The late American professor Randy Pausch talked about parents sending their children to learn sports in his book, The Last Lecture. Pausch says that most parents rarely send their children to learn sports such as football, swimming or soccer in order to learn about the intricacies of the sport. Instead, he believes that parents want their children to learn far more important lessons such as teamwork, perseverance, sportsmanship, the value of hard work, and an ability to deal with adversity.

All these are indirectly taught when a child learns to push harder they feels like quitting. The best thing, says Pausch, is that children don’t realise that they are learning these lessons until well into the process. Really good coaches are those that can make the children learn something that they intend to teach.

Indirect lessons are also there with in the sport of investing. The investing newbie, of any age, represents the child in this arena. Smart parents and smart newbies will pick the right coach to inspire, not just the selection of what to buy, but also their attitudes and approach to buying and selling their assets.

If your personal investing coach is Warren Buffett, the lessons are clearly seen in everything he says and does. Buffett walks the talk. For example, Buffett expounds the benefits of value investing and because of this conviction; Berkshire Hathaway was holding US$31 billion in cash back in 2003 when he was not able to find attractive stocks or bonds to buy.

Lately, Buffett has been shopping. He acquired a US$5 billion stake in Goldman Sachs Group Inc and US$3 billion in General Electric Co during the current economic turmoil. This lesson of value investing, practiced and preached, by the world-famous investor inspires everyone, new or seasoned, in the often brutal world of investing.

Buffett’s indirect lessons are just as beneficial and perhaps, more inspiring. Most of these, found in interviews and in his annual letter to shareholders of Berkshire Hathaway, set the right context for investments and can be extended to the way we choose to live.

Live Life as Simple As You Are

One indirect lesson that has proven to be true in the current economic turmoil is about living within your needs or as Buffett puts it “live life as simple as you are”. He still lives in the 3-bedroom house in Omaha that he bought 50 years ago (Buffett has other properties and his choice to live in this one despite his wealth says something). Many that have met Warren Buffett personally say that they are more impressed with his humanity than his stock wizardry. If this indirect lesson had been widely taught and learnt, the subprime mortgage crisis is unlikely to be as severe as it is.

Invest for Reasons That Are Bigger Than the Glitter of Wealth

Buffett’s action also speaks volumes about the underlying objective of making profit by investing. In 2006, he gave away more than 85% of his fortune to five charitable foundations with the bulk going to the Bill and Melinda Gates Foundation, which is driven to finding cures for diseases that plague impoverished nations. This donation was the single largest charitable gift in the US history of philanthropy. Buffett’s indirect lesson is not just about giving back to society. Here, he shows that it is possible, even advantageous, to become extremely rich without focusing solely on the glitter of wealth.

Throughout the years, Buffett has managed to avoid the temptation of buying companies to make a quick buck. During the dot-com bubble, Buffett avoided investing in technology companies, saying that he did not understand their business model. The results are obvious. Buffett was right and those that doubted his sanity or logic lost their money.

Buy to Hold Forever

Another indirect lesson that should be learnt by all, especially those making their first investment is about holding for the long-term. Buffett’s holding period is said to be “forever”. The Coca-Cola Co is an example of a key holding of Berkshire Hathaway, one that he may well hold ‘forever’. Here, holding forever means buying a company and its prospects that you believe in. This is holding when the stock falls (perhaps even buying more) without a change to its fundamentals or the reasons that compelled the purchase in the first place. A falling investment due to external circumstance does not make it a bad buy. With this view, newcomers and seasoned investors can reduce their emotional distress when markets fall.

Granted, it is easier to learn indirect lessons with experiences such as in organised sports. These three are just here to prodded investors to think a little harder about the reasons why they want to invest and in the way they chose to live life.

source : http://www.fundsupermart.com.my/main/research/viewHTML.tpl?articleNo=139

Harga Unit Jatuh? Adakah Pelabur Kerugian?

2008-11-18T18:36:00.001+08:00

Seringkali saya diajukan oleh pertanyaan seperti di atas oleh para pelabur saya dan juga bakal pelabur. Ini adalah soalan lazim yang sering diajukan oleh mereka kerana sebagai manusia normal, adalah lumrah untuk kita mengambil sikap berhati-hati untuk setiap risiko yang bakal diambil.

Di dalam pelaburan unit trust / amanah saham, wang yang kita laburkan akan ditukar kepada bentuk unit.
Sebagai contoh (dengan mengabaikan service charge), pelabur yang melabur sebanyak RM1, 000 pada harga RM0.25 seunit akan mendapat 4000 unit.

Unit ini adalah berbentuk tetap. Apa yang berubah hanyalah pada harga unit. Harga unit ini akan berubah-ubah setiap hari bursa saham diniagakan, iaitu pada hari bekerja. Apabila harga unit berubah, nilai semasa juga akan berubah. Namun begitu, jika pelabur tidak menjual unit yang dimilikinya, pelabur tidak akan menerima apa-apa kesan daripada kenaikan atau penurunan harga unit tersebut.

Di dalam setiap pelaburan, ada risiko yang perlu kita hadapi. Tetapi bagaimana kita menghadapi risiko itu adalah yang penting. Begitu juga dengan pelaburan unit trust / amanah saham. Tetapi risiko pelaburan di dalam unit trust / amanah saham ini adalah kurang jika dibandingkan dengan melabur terus ke pasaran saham. Kejatuhan harga unit trust / amanah saham ini pula tidak terlalu mendadak seperti di pasaran saham semasa kerana harga bagi sesebuah dana unit trust adalah harga purata bagi berpuluh-puluh harga saham. Jadi, harga bagi setiap dana tidak akan turun mendadak pada sesuatu masa. Ini kerana, walaupun ada saham yang turun harganya, ada juga saham yang harganya sedang naik.

Atas sebab inilah, saya sarankan kepada pelabur supaya jangan terpengaruh dengan spekulasi-spekulasi dan Insyallah, anda tidak akan kehilangan wang pelaburan anda jika anda kekal kepada objektif pelaburan anda; iaitu untuk jangka panjang.