30 March 2011

A business that does not need to pay any tax

We all don't like to pay tax, especially for those who are working under a company. The higher they earn, the higher tax basket they are in and the more tax they have to pay. If you are living in Singapore or in Malaysia, there are few ways you can "do your own business" while not paying any tax, which is through shares investment.

If we do not talk about the dividend which is also taxed by SG/MY government, all the capital gain tax through shares investment is not required to be paid. This is actually a great advantage to an investor in Malaysia/Singapore as a lot of other foreign country actually impose the capital gain tax.

29 March 2011

Margin of safety - first thing in the investment world

The definition of investment to me is you are utilizing current resources on the hope of achieving greater returns. You must be very sure that the investment is positive return before you invest in it. However there are some descipline you must follow, and margin of safety is the first principle you must remember.

Margin of safety by definition is to set aside a buffer of the target return which you would like to achieve. It was first introduced by Benjamin Graham. For example, if the intrinsic value after you calculation is $1.00, the investment guru advised us to purchase at $0.70 or 30% lower. This 30% is set as margin of safety.

The benefit of margin of safety includes:

1. As intrinsic value is always an estimated value based on current facts and subjective opinion from investor, we can avoid or reduce the possible downside when intrinsic value turns up to be much lower than what we expected. As a result of it, we can pay little for the potential losses.

2. As market is always rational, however there are sometime market react overly to the negative or positive event. If the prices drop below sharply against the intrinsic value, it is

Behavior of Business Like Investor

Business like investors have common behaviors as below:

1)Tend to hold for long term

Business like investors tense to hold their investment for long term (definition here is 5 years and above) as they understand that long term profit is much bigger than short term profit after they take into account all potential risks and returns.

28 March 2011

Cash Flow - 'Blood' in Your Investment Journey

A successful investor is an investor who can control his cash flow well.

If you are a businessman, you will try to control the cash outflow tightly by increasing or delaying payable amount while reducing or collect the receivables faster. Reasons being are due to cash is the important items in working capital especially during the recession period. A lot of banks refuse to lent out money to people in need or they will impose a high interest to reflect the poor credit rating the borrowers get.

If you are a stocks investor, try not to borrow margin money to invest. It's well known that margin rate is always significantly high. You will need to have extraordinary good return to cover the margin rate while having excess cash to avoid force sell in margin calls.

27 March 2011

Your emotion controls how many returns you can get

Over the period of investing, common mistakes which I think the investor made can be categorized into few:

1. Data Analysis

2. Emotion

Data analysis can be also sub-categorized to Fundamental / Technical perspective or even Macroeconomic perspective. You can learn from many ways to improve your analytic skills before you made a very good investment. However, emotion plays a bigger part to determine how many returns you can get.

There are various theories which teach investors to buy at a lower point and sell at the higher point. However, due to the greed and fear factor, investors require a very strong self discipline to follow the framework they have set and not to 'Buy High' and 'Sell Low' due to market crash.

There are few players which I conclude as

26 March 2011

My Way of Portfolio Rebalancing

As an employee with restricted income, I have to be very cautious on performing the portfolio rebalancing.There are certain ways of doing portfolio rebalancing in theory, but in practical, my way of doing portfolio rebalancing is after taking consideration of my current needs and risk I am able/willing to take.

Early Stage (Secondary School Time - newbie)

As different from a newbie investor, I have established a very strong mindset that enable me to putting almost 100% of my invest-able amount in Equity during early days. I still remember that when I was in Secondary school, my mother helped me to buy a stock which I forgot its name and it went bankruptcy. After which, I bought another stock which dropped from RM5.10 to RM0.50 (PSCI). From there, I learn that Intangible Asset is worthless if the management sucks.

However, because the amount that I bought during early days is relatively small compared to today, I was glad that the early failure that I 'achieved' helped me to gain a bigger success later.

University Time (A seed is planted)

When my AUM was still small (less than 5 figures), I invested in only two/three stocks. Theory of diversification couldn't help me as my aim at that point of time is to try to grow my money as soon as possible and I do not have time to do homework to read all the stocks annual report in KLSE (Bursa Malaysia). I only switched a stock to another when I found a

24 March 2011

Equity is still one of the best investment tools

Over the long term, the fact shows that the return is higher as compared to bonds or money equivalents due to its risky or volatile character. As we seen the impact by recent financial crisis, middle east turmoil as well as Japan's earthquake & tsunami tragedies to the stock markets, a lot of fear emotion in the market and people started to panic to sell off their investment holdings and look for safer returns.

Nevertheless, a lot of opportunities arise whenever there is a risk involved. As what Benjamin Graham mentioned, the intelligent investors are those who beat the market by being 'smarter' than other investors by doing a lot of detailed homework and thus enjoyed better returns than the rest.

Statistic shows that over the longer period such as 10 years and above, Equity performed pretty

22 March 2011

Things to take note when you purchase or redeem Unit Trusts Online

There are few things you must take note when your purchase / redeem Unit Trusts Online:

0. Do your homework of the funds you would like to purchase - Please make sure you do homework before you purchase the fund. Please treat your money seriously as now your money can work hard. Some good website you can go to: eUnitTrust Website and look at Toolbox >> Fund Comparison OR Fund Supermart.

1. Check out transaction cut off time. If you submit the trade after cut off time, the trade will be treated as next trading days. You must also take note of the fund holiday as the transaction date will be on next day after the fund holidays. Normally the cut off time for online trades is 3pm. However, there are some exceptional cases where cut off time is reduced to 12pm whenever the business day is eve of holidays.

2. Check out the transaction charges and any hidden charges. Most of the clients do not really know the hidden costs such as platform fees, annual management fees, trailer fees and so on. Basically equity funds have higher management fees as compared to bond funds / money market funds. Of course, passively managed funds has lower management fees compared to actively investment funds as actively managed fund's aim is to beat the market.

3. Check out the period when the payment can be reached. Some clients do sell the unit trusts when they need money urgently. However, please take note that it takes about 5 business days for bond fund redemption and 7 business day for equity fund redemption. So, please make sure you can time the redemption exactly so that you can meet your commitment of budgeting.

4. Check out the term and conditions of cancellation of the Unit Trust. Your Rights to cancel

19 March 2011

My first property purchased in JB

The first property I bought in year 2009 was a guarded and gated property nearby my hometown which is named as 'Sri Pulai Perdana 2'. The property is located at 23km to JB. It is a cluster house or in other words called Semi-D link house. The reasons why I purchased it were:

1. With Iskandar Malaysia master plan, I believe the property price in JB Market will increase gradually if not dramatically. I would like to travel between JB and SG so that I can save the rental expenses in Singapore.

2. The location of the property is nearby my hometown. I would like to stay near to my parents. However, I realized that this is not a good reason if you would like to purchase property as an investment.

3. I would like to know more about the property investment, and learn

18 March 2011

Reasons why I started this blog

Today I tried to create a blog in since year 2009.

There are quite a numbers of investment ideas which I would love to share with you. After resting for a year, I am now more equipped with knowledge of investing in Unit Trusts, Stocks and Property. I would like to share with you which websites consists of comprehensive and useful information. I would also like to share with you some of my thoughts of current market movement as well as my 2 cents view of stocks which I am following. Last but not least, I would also like to share with you how I am doing my homework in investing in Property market.

You are welcomed to give some comments to me, as I would
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