Friday, January 22, 2016
Monday, February 02, 2015
Having a well-diversified portfolio not only secures your assets when markets go sour but it also shows your future partners the kind of intellect you have when it comes to investing. Diversification doesn't necessarily mean investing in different kinds of stocks.
It means investing in different kinds of investments such as mutual funds, bonds, commodities, etc. Gold is a favorite diversification asset by investors particularly because it doesn't move along with other securities.
When the U.S. dollar is down, gold is almost always up and vice versa. When the market is bad, you’ll see investors running for gold. This is exactly what happened in the 2008 financial crisis. Right after the most recent economic slump, gold prices steadily increased and peaked at around $1,800 in 2011. Gold sustained its high prices when the The Fed’s quantitative easing was still active, since high government spending also affects a country’s economy seriously. Anything that can put fear into the hearts of investors keeps gold prices high.
Talks of Europe’s Quantitative Easing are currently lending support to gold’s price increase. If you decide to get exposure from gold, there are several ways to do so. First is by buying the physical metal from brokers. This is the most direct and effective way to own gold but is only available for those who have serious amounts of cash.
Apart from paying gold’s actual price, investors would need to shoulder fees like storage costs and taxes. Speaking of taxes, there are different rates in each country. In France, for example, tax rates are currently deterring gold sales. BullionVault reports that since January 2014, the tax on sales of gold investments in the country rose from 8% to 10.5%. So if you’re living in a country with high tax rates on gold purchases, you may want to buy gold from brokers on-line. If physical gold is expensive for you, you may invest in gold-backed ETFs that are sold 1/10 of the metal’s spot price.
Tuesday, February 11, 2014
In normal circumstances, there isn't a company or even an asset that will grow exponential non stop. Do not get me wrong, there are many good companies that shows consistent growth but in order to be sustainable the company will need to grow within a reasonable rate.
Let's looks at what parabolic chart looks like in stock market.
The above chart shows a parabolic style where the growth line had bee almost towards up north pointing to 90 degree. If during this time, you are being advices by anyone to invest in this stocks you need to be extra careful and proper risk management process needed to be in place.
Parabolic chart can be very dangerous just as now fast it grow upward, the downtrend will also follow through fairly quickly same as the example above. The company might be financially sound but the growth rate can no longer cope with the actual expansion it needed and soon the price will fall back to the company fair value or even lower due to fear of collapse. There are many cases or examples of companies showing a parabolic chart and soon crash. If you are a short seller and you have seen a good opportunity there in a parabolic chart, you maybe able to short sell and make a profit but bear in mind that no one can predict when uptrend will end because it maybe able to continue for quite sometime before it collapse.
Same goes for property price, gold price or the recently famous bitcoins where the pice soar and drop within a short span of period.
Conclusion: Parabolic chart means a exponential growth in value resulting in a almost 90% upward chart which usually does not sustain for long.
You will understand when you plan on purchasing your property, can be one of the biggest commitment of your life and many questions popped into your mind.
"What if I bought it too expensive?"
"What if I can make money and can't sell the property?"
"What if there are new development nearby where can be a better buy?
Too many "What If" statement during the decision making.
I was earning less than MYR5000 and the property cost MYR495,000. It is a very huge commitment for me.
When looking at the selling price, a lot of people would have back off because they would think that they couldn't afford. I used to do the same until my friend who is a property agent convinced me to just view the unit telling me in every way that it will be a good buy.
I went on and view the unit with my girlfriend (now wife). Firstly I was impressed by the surrounding of the condominium, we saw many foreigners in and out of the condominium proofing the fact that there are many expat staying in there. The whole compound of the condominium is one of the largest compared to all the newly develop condominium, there is walking distance to a lot of shops, restaurants, banks and even a soon to launch shopping mall.
There are offices behind the condominium within walking distance to support the demand of the condominium. I like what I see but there are also things that I don't like.
- the unit comes with only 1 car park
- the condominium is considered old in the area with more than 12 years old
- the unit although comes with fully furnish but are all very old furnisher which may need to change soon
Rather than focusing on the positive side of the property, I focused a lot on the negative things that I saw and I can't made up my mind.
Thanks to my mom who encouraged me to proceed with the purchase and I did - of course with a lot of fear and doubt that time.
Now the property is selling 31% higher than my purchase price not to mentioned comes with tenant occupied for the last 3 years with rental higher than 5.5% per year. It is not something amazing but it definitely a worthwhile purchase to gain confident.
There are things I learned after purchasing the first property for my investment journey. It is not the knowledge that plays the most important part in the process but the courage. Courage from your friends and family and courage from yourself. Logic does play a small part but once you made up your mind to purchase the first property, the next one comes easier... And knowledge comes next to make sure you don't fall into purchases that will make you regret.
Have you buy your first property?
This post is mainly to show you investors or traders out there on how companies tricked you into believing that investment is that easy.
Let's look at this photo above, it is an advertisement embedded into either an email or a website. It shows you that their proprietary system is having a signal that ask their member to buy at a very low price and sell at a very high price.
There is always a similarities in these advertisement. Some of them are:
-They show you return that is impossible to ignore
-They always shows historical price (remember, anyone can show historical price, you just search for a stock and tell people that you bought at the low of the chart and sell at the high of the chart before it crashes)
-They do not disclose what they do and what economical facts supporting what they say
- They tell you things you can already know if you search the web yourself
What they normally would not tell you are that these return might not be real and they have no position in them, they will also not tell you that out of maybe 50 signals they gave you there are 49 who bring huge losses but they will only advertise the one that shows return. They will not tell you that you may need huge capital and can have the ability to suffer huge losses.
Do not falls into such tricks. If there is such big return, these companies wouldn't even be setup in the first place, they will use it proprietary and make money using their system.
Friday, January 10, 2014
Since young we like to compare our academic result, we do not just got ranking within our own class but also ranking comparing the whole schools. We got average mark, best subject mark, best activities, etc
When we grow up we like to compare our salary, compare our success and because success if define differently with each individual you're actually comparing something that the other guy do not think is a great deal.
You think having more money is success and you as a working class adult having an average salary thinks that your formal classmates earns a lot because although he only graduate from high school and did not continue his studies, he helped his father doing some construction work and is now earning quite an amount and driving far better cars than you do. On the other hand, your formal classmate will think that he is stressing himself and he is envy about you having a stable work with stable income and stress free. You can go holiday with your loves one in which he had not been doing that for years since he started to work in the construction industry and he is also envy you can speaks better English than he does and during gathering he is afraid because he is not a university graduate.
You see, success has different meaning to different people and people must learn this from young or else they will always be chasing on something that they do not know at the end it will not be what they want and should be chasing.
Of course I am not saying that you must be happy with your life and you must settle down in your comfort zone and thinking that the money you earn is already the fair value for yourself. You must still challenge but challenging is different from comparing. You need to challenge yourself but not comparing with your peers.
You'll be happier person not to compare with your peers and when you start having your own little success by challenging yourself, many people actually think that you're successful.
Don't think earning money is just to compare with your peers. Earning money is to gives you a choice. A choice to do things you like and make your love one happy.
Do Not Compare Yourself With Peers but Instead Challenge Yourself.
Tuesday, December 17, 2013
- There are many cost involved in setting up a fund. First there is a trustee fee that the fund needs to pay a bank who oversee their account (the account where they place all the invested money), the fee range from 0.5% to 0.8% or but it also have a minimum fee to pay. Imagine if the account is RM100,000 and 0.5% trustee fee is charged on the account and a minimum of RM2,000 is to be paid for the fee. 0.5% of RM100,000 will be RM500 but you need to pay RM2,000 because that is the minimum fee charged for managing your account. Now your trustee fee increase from 0.5% to 2% (RM2,000 out of RM100,000).
- Secondly, a fund involved management fee in which these fees are paid to the fund managers for managing the funds on your behalf. These fees range from 1% to 2% of the funds. If you know that the fund manager is really capable to earn you a profit of 8% - 12% average and giving them 2% will be relatively small but please consider this. A fund manager does not just manage one fund. They manage multiple funds across in their company and by managing so many different funds it does not just make them lose focus but they are also charging the same 1% - 2% of all different funds they manage. Management fee is charged to you regardless of whether the fund is making a profit or making a loss. If the fund performance is 2% and the management fee is 2%, the fund manager successfully making a 2% profit out of your money without helping you to make any money at all.
- Performance fee is another cost to you as a unit trust investor. Performance fee is charged when they make certain percentage of profit. Some funds charge you 20% out of all the profit they make. This will potentially reduce most of your profit generated from the funds.