Winning an award

What does winning the Morningstar award mean?

My first question was what's Morningstar? So like the usual inquisitive me...I went on to do my research.

Morningstar Asia, established in April 2000 is a wholly-owned subsidiary of Chicago-based Morningstar Inc. It is a leading independent provider of investment information and analysis for mutual funds and stocks in the US.

Maybe it counts for something, maybe it doesn't, it's in fact a matter of opinion. My simple opinion, quite simply is like buying a new hand phone, car or computer. We do a survey from various sources, the internet and some leading magazines. An of course if the budget permits, we always want that recommended item, the 5 star rated review. So for me in the complex enough world of investments and stock picking, I can be satisfied when there are experts out there who's conducting extensive research, data analysis and top it with a review and ranking of the possibly good potentials. Of course there are no guarantee that past performance is an indicator of future achievements. Well such as life, at least I'm making my choices on some fundamental data that I can be satisfied with in making my investments decisions.

You can read and download a write up on it at my company link.

Investing 101: Success in the stock market

In the recent months, I had the opportunity to meet a lot of people who have made investments through mutual funds, either via their EPF or cash investments. I have received positive as well as negative remarks on both the market as well as the funds performance…well not to mention a little spice on politics.

So I took the initiative to put together this summary from various materials, some I’ve read, some I’ve done research on and also some good pointers from those ‘sifu’ in the investment field. I hope it would assist in some ways for those interested.

So let’s get this right …. investing is a passive process. It does not involve active buying or selling of products or services. It is simply a process of buying and selling of passive financial instruments such as stocks, bonds, fixed deposit certificates, mutual funds and etc.

Now let’s explore the myths and realities of the stock market. For starters there are 985 listed companies on the KLSE and 494 private unit trust funds to choose from, and the numbers are not stopping there (figures as at Feb 2008). Imagine the amount of data that keeps on changing every minute of the day. So this is the truth, we can’t know it all so let’s not even try. I’m sure you don’t want to go through the overwhelming amount of data just to make that initial investment. Not to worry, we need to focus on three simple tasks.

1. Filter – which stocks/funds to buy?
2. Time in – when should I buy?
3. Time out – when should I sell?

Heard this before? Some people I know have already began practicing this approach to investments, but it’s not actually what it sounds like …. I know of many people who talks about timing and predicting the market. This is not what the three tasks are about.

I hope this information that I’m about to share will make you more confident and create your own success in investing. First of all, let’s get rid of the notion “beat the market”. There are not many people like the stock genius Warren Buffet, or Peter Lynch or Sir John Templeton. In the history of the world financial market, there are only a tiny number of these superstars, out of millions who have tried, many have failed. Just imagine 75% of the smartest fund managers, working 20hours a day, backed by huge research team, powered by advanced computers have never been able to beat the market consistently.

I’m not even suggesting that we try to beat the market, but needless to say, we can make money through investing. It’s one of those surest ways in the long term to add the extra million or two. Here’s a summary of what I’ve learned and applied myself.

1. For an unsophisticated investor like me, my no-brainer approach is to carefully select a few index based mutual funds and forget about them. So if you ask me which stock/fund to buy, I’d say all of them! (pick some good one’s based on track record, your risk appetite and the fund strategy that meet’s your understanding and objectives)

2. The sooner you buy, the richer you can become. Take 10% of your monthly savings and put it away into your chosen funds. Do this without fail for the rest of your life. Most of us don’t have lump sum amounts of money lying around, so my choice is force myself to set aside the amount on a monthly basis. When you invest a fixed amount every single month for a long term period, we’re actually practicing a rather sophisticated strategy called dollar cost averaging.

This strategy works only if we continue to buy – especially during the bad times – and hold on until the good times return. If you stop buying during the bad times, you lose the advantage when things rebound. In the book multiple streams of income, Robert Allen says that the numbers one reason the dollar cost averaging is so powerful is that it completely eliminates the need to guess when you should buy. It takes away the need for “market timing.”

3. The longer you invest, the lower the risk. You can always win if you just hang on long enough. Investing must be for the long term. Speculating will just actually increase the risk, not to mention the heartache and stress. If you want to invest your money without risk, take a lesson from the best stock picker in history. Warren Buffets said “My favorite holding period is …forever”. Well I guess that’s why he’s a billionaire. So when do you sell? Like maybe 20 to 25 years time. Especially through the EPF, you can’t use the money until 55 anyway. So let it earn a little bit more than 5%. Do you know how much another 5% will do towards your EPF funds? Well, that’s gonna require you to sit down with me and go through a simple exercise using a powerful financial software…just remind me when we meet next.

So as a summary…

• Start investing immediately
• Select funds that you understand and like, simplest way to invest in the market.
• Dollar cost averaging is convenient and smart for most of us.
• Long term investing is far less risky than short-term investing.

Hope you are able to get a good nite sleep after reading this and if you want any specific information on mutual fund investments, please contact me directly.

January 2008 Unit Trust Industry updates

History in perspective

It's interesting to look back into history when the KLCI hit rock bottom during the Asian financial crisis. I just came back from studying overseas and had started work middle of 1997. That period was one of the most valuable experiences for me. I must say it was like the stock market, a lot of ups and downs. I'm just wondering today if I had bought some shares then how much would it be valued at today. Interesting!

Estate Planning

In this Volume of MDRT newsletter, the topics discussed is estate planning, teaching financial values to children, debt management basics and dual income families.

If you want to receive the full articles or other MDRT newsletter series, please send me an email.

Don't mess with your insurance

Buy term and invest the rest and you could reap better returns from your investments - so some financial planners tell me. I have a slightly different opinion. Yes, investing in investment link funds or stock related insurance instruments do have it's advantages. We have to understand that the stock market will go up..and will come down...period. As a rule of thumb, investing must be for the long term and it's for a different objective. It is for accumulation of wealth not for protection of the family's well being. During a financial crisis when markets are low, a lot of people will start conserving their cash and also sometimes tempted to liquidate their investments. Stay calm, the market will recover in its natural course. More importantly don't mess with your insurance.

Having traditional insurance or endowments plans allows one to use the cash values to pay for premiums, a term commonly use is "premium holiday". It is logical to do this as these plans are usually more expensive (can easily be triple what you pay for a term plan) and since you want to conserve the cash that you have, you may opt for a premium holiday.

However, having a term insurance with normally lower premium means higher cover, so during financial crisis what do you do? Well, there are various options. During this times, I usually find that people are more willing to surrender their insurance plans as compared to selling their car. Why, because you need the car for your various use. If using a car is for the purpose of transport, there are plenty of options to go by...sell the beemer and get a kelisa for example. To me, the answer is just in our ego. This is just a temporary setback...that's life. Surrendering the insurance plan should be the last thing on your mind. It's during times likes these that we are under more pressure and stress. Ensuring that your risk is well managed is probably the best thing you can do, so that you have that peace of mind while going out in the market and sourcing out opportunities.

The point is, is your financial plan only good for sunny days? Can it withstand the storms in your life? Remember, our financial goals will only be realized in 20 to 30 years time. During this period, the financial landscape will be ever changing. Boom times and sunny days will come, so will recessions and stormy days. In financial planning, the mistake that most people make is to assume that the sun will always be shining. Unfortunately, life is full of ups and downs.

As important as it is to invest your money efficiently, it is also crucial that you set aside part of your resources for the right insurance plan so that when the storm comes, you will not be swept away.

Mohd Affendy

Fendy has been with the team since 2006. He now provides consultation on the areas of unit trust, insurance and also Islamic inheritance planning.

Fendy can be contacted at:
Mobile 019-388 5254
E-mail: affendy.partner@gmail.com

Darul Amir Hazim

Darul has been with the team since 2005. He's our specialist in the area of risk management. His area of service is on insurance and takaful, covering the areas of group insurance, personal and medical insurance.

Darul can be contacted at:
Mobile 016-395 4545
E-mail: darul.amir@gmail.com

M. Jamil Ali

Jamil is one of our senior associates and has been in the financial services industry since 1996.
He is a certified Islamic inheritance planner and also specializes in the areas of business insurance, risk management and wealth advisory. Jamil and his team operates from his office in Cheras and also Muar.

Jamil can be contacted at:
Mobile 012-289 2366
E-Mail: m.jamil.ali@gmail.com

Find out more about Jamil, visit his personal blog.

Norhayati Zakaria

Yati, is one of our senior associates and partner in the Southern Region. She has offices in Muar, Johor and Melaka. Yati and her team specializes more on insurance and takaful, both for life and general.

Yati can be contacted at:
Mobile: 019-3106979
E-mail: ihaagency@yahoo.com

Al Jazzura Khan

Al as he prefers to be called is the founder and managing partner of renbridge financial group.

He was trained as an accountant and worked in the areas of corporate advisory, investment monitoring, mergers & acquisition during his tenure with a venture capital company.

Started out initially as just an insurance agent in late 2000, he had successfully build the business to include many other areas such as mutual funds, general insurance, will and trust, business insurance as well as financial literacy talks and training. He achieved the prestigious professional award, MDRT in 2004.

He specializes in working with entrepreneurs and business owners in the areas of business succession planning and business insurance.

He also pen's down his thoughts, ideas and personal experiences on his personal blog.

Why Build A Financial Fortress

I believe each and everyone of you have your own dreams and reasons for wanting to build wealth.

Here I share some of my reasons why I want to be wealthy.

First, I wanna have fun.
The kid in me always wants to have fun. I always remember mom or dad asking me to behave and as a reward for behaving I get a toy ... wow, that was fun. Maybe you have reached your peak in building your wealth, so as a reward you can buy the toys that you want, great. Should you wear a RM30,000 watch? Should you drive a RM668,000 car? Should anyone live in a RM800,000 condominium? Of course the should. The problem is that a lot of people buy into all these things when they can afford it. Been there, done that.

So I am now in the process of building my financial fortress. Yes I do have money still, but I don't yet have a fortress to back me up. When your money makes more than you do, you are officially wealthy.

So go buy that new watch. Buy her that diamond ring. Buy that new M3 and move into that brand new bungalow. You can do all this when you have millions of ringgit. Take the family and extended family for a holiday overseas, and don't feel bad about it, because money is to be enjoyed. I think that is a good enough reasoning for the kid to want to build wealth.

Second, I wanna have a profit account.
The adult inside me likes to make investments, because this part makes me wealthy. But here's the deal .... have you ever played monopoly or the cashflow game? Just like that, you can be ahead or you can fall behind. Exactly like the stock market, it fluctuates ... so what do we do? I am not a stock analyst neither am I a spot trader. I just ride the waves and stay in for the long term. That's what building a financial fortress is all about.

In meeting people, sometimes they fear that they might make a loss in their investment. I often tell them that "timing" or "buy low sell high" is not the formula to wealth. You must be "positioned" properly. If you have quality investments with good long-term track records, then you are in a position to make profits. Another key is continuous and consistent investment, to ensure our nest egg grows. Besides, I don't need my nest egg all at once to retire on, I just need the income from it. So it would be silly to cash everything out while the market is at the bottom. We need to be patient with the market, there is always a correction, what ever goes down will come up.

Unless you are a sophisticated investor and have more than RM10.0 million, I would keep investing very simple. I don't want to clutter my life with a list of extremely complex investments that leads to unnecessary stress. I have chosen to use simple mutual funds and other paper investments - very clean, simple investments with some basic tax advantages. Once this side of my financial fortress is done, I will go into some debt-free real estates, that should be fun.

Pelabur Wanita: Menguasai Dunia Kewangan

posted by ASG

Sudah berlalu zaman di mana wanita hanya bergantung kepada lelaki bagi mempunyai masa depan kewangan yang terjamin. Mereka sudah mampu mengurus hal-hal berkaitan wang mereka sendiri tanpa bantuan sesiapa. Wanita dalam setiap posisi kehidupan – bujang, berkahwin, janda, pekerja sepenuh masa, suri rumah – kini memainkan peranan yang penting dalam menguruskan kewangan mereka sendiri dan juga keluarga masing-masing – dan mereka berjaya.

Sudah diketahui ramai bahawa lelaki dan wanita berkomunikasi dalam cara yang berbeza – bahkan mereka bagai datang dari dua planet yang berbeza sebagaimana yang disebut dalam legenda moden – dan ini juga benar dalam aspek pelaburan. Menurut beberapa kajian, wanita sebenarnya adalah pelabur yang lebih baik daripada lelaki. Dalam satu kajian yang dikendalikan oleh Universiti California dalan jangka masa dari tahun 1991 – 1997, portfolio wanita memperoleh 1.4% lebih tinggi daripada portfolio lelaki. Dan wanita bujang memperoleh pulangan sebanyak 2.3% lebih tinggi daripada lelaki bujang. Malah, kajian itu menunjukkan bahawa keseluruhan jumlah pelaburan yang terkumpul bagi wanita mengatasi kaum lelaki sebanyak 4.6%.

Apakah punca yang mendorong kepada fakta yang kurang diketahui ramai ini? Kebiasaannya, tanggapan ramai orang yang melibatkan wang dan pelaburan ialah wanita lebih cenderung untuk menjadi lebih curiga, kurang keyakinan diri, dan membuat keputusan berdasarkan pengalaman peribadi. Ini seterusnya akan mendorong kepada kadar pulangan yang negatif. Namun sebaliknya, wanita kelihatan lebih maju ke depan berbanding lelaki apabila mereka mempergunakan sepenuhnya kelebihan mereka.

Secara keseluruhannya, wanita cenderung untuk mengambil kurang risiko daripada lelaki dalam pelaburan. Kesannya, mereka tidak terlalu kerap meniagakan saham mereka, dan membuat wang simpanan atas kadar yuran transaksi. Wanita juga lebih gemar membuat kajian yang menyeluruh terhadap pilihan pelaburan yang ada berbanding terus memilih saham yang sedang naik di pasaran. Pengalaman peribadi dalam membeli dan kualiti produk juga akan mendorong wanita untuk melabur dalam syarikat tertentu. Sesetengah sifat ini mungkin dianggap negatif, namun faktor ini juga sebaliknya dapat membantu wanita untuk memilih saham atau jenis pelaburan yang lebih stabil dan berjangka panjang.

Corak kesedaran kewangan dan pelaburan bagi kaum wanita telah menunjukkan perubahan mendadak sejak zaman nenek kita, bahkan mungkin sejak zaman ibu kita mula berfikir tentang masa depan kewangan peribadi mereka – itupun jika mereka melakukannya. Secara tradisi, urusan kewangan keluarga berada di tangan lelaki, namun hari ini sudah banyak wanita yang menguasainya.

Menurut Pusat Kajian Wanita Dan Persaraan Keabangsaan, 80 – 90% wanita akan memiliki tanggungjawab peribadi dalam menguruskan kewangan mereka apabila mereka mencecah tempoh usia tertentu. Ini disebabkan oleh kematian suami, perceraian atau keputusan mereka untuk kekal membujang. Sekarang adalah masanya untuk menyediakan diri anda sendiri dan meraih keyakinan terhadap masa depan kewangan anda.

Anda boleh hubungi perunding-perunding kewangan bagi membantu anda ke arah kejayaan matlamat kewangan anda. Pastikan anda bertanya mereka akan hanlangan-halangan yang disebutkan seperti di atas dan apa yang boleh anda lakukan bagi mengurangkan jurang tersebut. Bincanglah tahap kesediaan anda untuk mengambil risiko yang lebih tinggi dan lebih banyak pilihan pelaburan yang stabil. Tetapkan matlamat kewangan yang realistik (menjelaskan hutang, membeli rumah, atau membiayai pengajian) dan tempoh masa, dan dapatkan nasihat daripada perunding kewangan anda dalam mendapatkan cara terbaik bagi mencapai matlamat anda. Ingatlah bahawa pelaburan ialah satu proses jangka panjang dan adalah penting untuk anda meneliti matlamat kewangan setiap tahun, memandangkan matlamat itu mungkin berubah seiring dengan masa.

Anda tidak pernah terlewat untuk bermula menabung dan melabur sekarang. Langkah untuk menyediakan diri anda sekarang akan memudahkan anda untuk mengatasi cabaran kewangan anda pada masa akan datang.

Wanita dan Kewangan

posted by ASG

Dalam satu laporan pada tahun 2005 daripada Pusat Kawalan Penyakit, secara purata wanita hidup 5.3 tahun lebih lama daripada lelaki. Oleh sebab jangka usia wanita lebih lama, mereka mempunyai keperluan yang lebih tinggi daripada lelaki untuk mendapatkan lebih banyak wang selepas tempoh persaraan.

Langkah bijak yang paling mudah untuk dilakukan oleh kaum wanita ialah dengan memulakan langkah menabung sejak awal dan melabur lebih banyak wang secara agresif. Lebih cepat kita bermula, lebih kuranglah jumlah wang yang diperlukan secara keseluruhan memandangkan dana tersebut akan mempunyai lebih masa untuk digandakan.

Wanita muda juga akan memperoleh lebih banyak kebaikan dengan membeli insurans nyawa lebih awal memandangkan insurans nyawa biasanya melibatkan kos yang lebih rendah pada usia yang lebih muda. Insurans nyawa juga merupakan antara perkara yang tersangat bermanfaat untuk wanita tanpa mengira usia. Wanita yang tidak terpilih untuk menerima pelan pembiayaan daripada syarikat yang disebabkan oleh pemberhentian kerja atau kontrak jangka pendek dengan majikan seharusnya mencuba pilihan ini. Selain menyediakan faedah kepada waris yang masih hidup, orang yang menginsuranskan dirinya adakalanya juga boleh membuat pinjaman daripada sesuatu polisi bagi merealisasikan impiannya seperti membiayai pengajian anak-anak atau memulakan perniagaan.

Antara langkah-langkah lain yang boleh diambil oleh golongan wanita bagi mencapai kewangan mandiri termasuklah:

· Menetapkan matlamat yang jelas. Mungkin ia adalah sebuah rumah impian di tepi tasik atau kondo yang selesa di tengah kota, apa sahaja target yang jelas akan memberikan anda sesuatu yang nyata dan realistik untuk dicapai dan akan lebih mudah menilai usaha yang perlu dibuat bagi mencapai objektif tersebut.

· Memeriksa kedudukan kewangan anda. Perhatikanlah kewangan anda secara kritikal, terutamanya yang melibatkan matlamat hidup anda. Timbangkanlah untuk meminta nasihat daripada orang yang yang sesuai dalam membuat pengiraan kondisi anda sekarang. Ambil tahu apakah pelaburan yang telah anda miliki sekarang dan berapakah jumlah nilaian pelaburan anda.

· Mengekalkan tahap kredit yang baik. Hutang kad kredit telah menghalang ramai manusia daripada mencapai target jumlah wang simpanan mereka.

· Memiliki satu portfolio yang jelas. Pelabur patut memulakan langkah mengumpul maklumat kewangan dan mula menabung. Bahkan sekecil-kecil jumlah wang simpanan mampu untuk membina masa hadapan yang lebih stabil dan kekayaan.

· Insuranskan pendapatan anda. Insurans kesihatan, auto, dan penyewa atau pemilik rumah semuanya penting dan perlu namun timbangkanlah juga insurans keilatan. Jika anda adalah penyara keluarga, fikirkan apa yang akan terjadi jika anda tidak lagi mampu memperoleh pendapatan.

· Menyumbang kepada jenis alat simpanan yang lain. Anda boleh menggunakan strategi simpanan yang ada seperti insurans nyawa, akaun simpanan, CD, bon dan anuiti.

· Memilih khidmat perunding yang dipercayai. Mintalah pendapat daripada beberapa orang yang berbeza dan ingat bahawa nasihat kewangan yang baik memerlukan masa dan kesabaran untuk meneliti segala peluang yang ada dan membina tahap kepercayaan yang membawa kepada keputusan yang baik.

Untuk kedua-dua golongan lelaki dan wanita, adalah berbaloi untuk mempunyai wawasan yang jelas dalam masa hadapan kewangan masing-masing. Ini merangkumi fokus yang lebih baik, mengurangkan tekanan pada hari ini dan hari esok yang lebih selesa dan terjamin.