28 April 2011

How to travel with a good budgeting control?

Some of my friends travel quite a few time within a year. In Malaysia and Singapore, there are numbers of budget airlines to be chosen, such as Air Asia, Tiger Airways and Jet Star. In my case, I always do a planning for traveling in advance. For example, I always book an air ticket in advance in a year. It can reduce a significant amount on air tickets. Sometime, budget airlines will have some promotions which can reduce your budget on it and you can use it for traveling for a far distance, such as Europe and Australia.

On top of that, you can go to http://hostelworld.com for hostel booking or http://www.booking.com to look for the accommodation and read the user review before any booking been made. The benefit of staying in a hostel is that you have the flexibility to cook yourself and it make you save the money of having meals outside .

Not only that, you can also rent a car in case if you have a plan to move from one city to another city in a long distance.It is good that you can have a four people in one group and you can rent a car to go around the place which cannot be reached by public transport easily. It can save your time

21 April 2011

Save money for your future

This year is the last year I am in my 20s. Quite a number of friends of mine in this age range had been started up their own family. I would not be surprised if they have few babies and in the middle of fighting in their career to achieve better active income. 

Many friends of mine are looking for the new houses and spent some money to decorate their dream house. Before that, let us figure out how much money do we need to have a good family:

Typical Income for Dual-Income Family in around 30s (2ppl*3500 median monthly income = 7000)

Typical Expense for having a family: 

  1. Wedding Expenses: 50K (including wedding album creation, wedding dinners, honeymoon, registration fees, other expenses etc)
  2. House down payment: 60K (20% of 300K house)
  3. Decoration of House: 20K
  4. Furniture: 20K

Monthly Income multiple for the expense: 21.43 months or around 2 years of annual income for both couple without any expenses.If you like to have a better lifestyle, it could go beyond that.

Some of my friends will think that it is a financial burden to have a family

17 April 2011

Top 5 Developers in Malaysia

I have compiled a list of top 5 developers in Malaysia in term of Revenue generated on Year 2010. The sources are based on the annual reports which can be retrieved from Bursa Malaysia website.

link: http://www.dreamstime.com/stock-photo-boy-with-house-rimagefree7983016-resi3342988

Dividend - another sources of passive income

Dividend in long run is proven to be a reliable source of passive income to the investors regardless of the business cycle.

History shows that dividend represents part of total equity return. For example, if your stock return is 10% and your dividend yield is 5%, you will get a total of 15% returns as compared to those without dividend return.

Intra City Train services in Iskandar Malaysia, will it work?

Recent news copied from link below: http://www.theborneopost.com/?p=121591

"Johor Chief Minister Datuk Haji Abdul Ghani Othman has approved the proposed RM1.23 billion modern intra-city commuter train service network for Iskandar Malaysia.

According to a press release yesterday, the approval was given to Metropolitan Commuter Network Sdn. Bhd. (MCN), a joint venture company between KUB Malaysia Bhd and Malaysia Steel Works (KL) Bhd.

The intra-city train service entailed the building of seven new stations and 16 halts connecting all major suburbs in Iskandar Malaysia. The commuter service would cover over 100 kilometres of rail network and serve all major upcoming Tipping Point developments such as the Johor Premium Outlet, Legoland Malaysia, Educity, Hi-Tech Park-Senai, and Lake Hill Resort City.

The project was envisaged to provide a shuttle service from JB Sentral to Woodlands, Singapore. It was forecasted that project would have an annual ridership of over 30 million people, once operational."

My point here is the success of the commuter train service network will work only if the train service network can link to Woodlands Singapore. There are quite a number of residents travel and

16 April 2011

Think and Grow Rich

Think and Grow Rich is a book written by Napoleon Hill.

The main idea of the book is that wealth is created by your mind or your thinking. You can start to create your own wealth from a little ideas. The book mentioned that the first thing you should do is to set a target, to enrich your internal content/strength and you could grow richer slowly by slowly and achieve your target eventually.

The human is an animal which is easily be influenced by others. So long as you can control your mind, you can control your actions and hence you can achieve the target you want to be. Of course, sometimes we must know our limitation and try to tap on other's strength and corporate with others.

Another very important point here is that, you have to help more people in other to help yourself. It is similar to create a win-win situation whereby both you and the counter party can grow together. We all have our own strength and weakness. If we can combine our strengths, we can achieve a better result.

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14 April 2011

How to perform a stock screening?

Malaysia and Singapore shares market have list of thousands of shares. Many investors have problems of reading through all the annual reports. As result of that, we have limited time to check on all the listed companies. One of the techniques we can do is perform a stock screening. Below is my way of performing stock screening:

  1. ROE: more than 15%. Which means the company is possible to achieve 15% growth in earnings per annum if all the earnings are accumulated without distributed to investors as a form of cash dividend. In other word, it is ability of company to achieve growth without needs of additional debt borrowing/additional shares issue.
  2. P/E: less than 10. Price Per Earnings ratio here means number of years you can get back your investments. Normally the lower the PE, the better the investment. Studies show that Low PE can give you a better returns in long run. Of course, we have to be aware of management manipulation of financial statement.
  3. 5 year average CAGR: more than 10. A compound annual growth rate of more than 10% can give you a decent return if you can hold it for long term. However please take note that passed performance may not be the indicator for future performance. However, we can find out why such company can achieve this result after we performing the stock screening.
  4. Dividend Yield > risk free rate: this can give you a protection when share markets collapse. The lower the share price, the higher the dividend yield is. And it can stands as part of your passive income.

Of course, after the stock screening, we will list out top 100 companies and then read through the annual reports and related information. Please be noticed that this stock screening is just one of the method for finding out potential stocks. You will gain more experience by practicing in the shares market.

Good luck.

Is dividend important to your investment?

From my previous post Dividend - another source of passive income I have elaborated the importance of dividend to be part of our passive income streams. Dividend is a form of returns which company appreciates the shareholders for holding their shares for a certain period. Some company may pay the dividend in quarterly basis, some in half yearly basis and some in yearly basis. There is sometime where company will distribute special dividend to us on the back of fantastic returns for certain good  period.

However, we must also understand the instability of the dividend streams as well as company dividend policy. Some companies distribute the dividend based on certain percentage of the earnings earned for previous year. For example, if a company earns 10cents per year, and its dividend policy is at least 40% of earnings, then you will get 4 cents in returns. Some companies distribute based on capital budgeting policy. If they find a good investment opportunities, they will keep the money and invest in those investments which will give higher potential returns in future.

Some dividends are 'tax exempted', which means you do no need to pay for tax for those dividend income. In this case, you can treat dividend as a business which does not require you to pay the tax.

After company distributes the dividend to the shareholders, normally the stock price will drop accordingly to the dividend distributed. However, the company shares price will

11 April 2011

ROE - Key Performance Indicator for Company Management

Introduction of ROE

Return on Equity (ROE) is a term important in shares/equity investment. The simple formula for ROE is Net Profit / Shareholdings. In short, it is measured by how strong is the top management to produce profit based on current shareholdings. In DuPont formula, it is calculated as Net Profit Margin * Asset Turnover * Equity Multiplier. I will explain to you the components one by one:

Simple DuPont Formula Explanation  
  1. Net Profit Margin (Net Profit / Revenue) - This is one of the very key indicators to measure company performance. A good company with 'Monopoly' status always have a better profit margin as compared to the peer companies. It can be achieved by Economy of Scales or through operation efficiencies. When you notice that the company's profit margin is increasing, perhaps you can check whether it is due to a new product launched or operation efficiencies or due to cost control improvement etc. 
  2. Asset Turnover (Revenue / Asset) - It is an indicator to show whether the company is capable to have a better turnover by selling more products with limited asset available. A low non-current asset based company can perform better than a high non-current asset based company due to its bargaining power against customer.
  3. Equity Multiplier (Asset / Equity) - Sometimes a good ROE can be due to high equity multiplier. It means that the company has bigger borrowing from bank/payable/bond holders to achieve higher asset. In finance industry, the leverage can be as high as 10 times and above. You must compare the equity multiplier with its peer companies. Normally if company can achieve optimal capital structure, the WACC can be the lowest. Thus, investor can achieve higher returns.
Things to take note

It does not necessary mean that you can achieve a good returns by investing in high ROE company. However, if you can find out a company is having higher and consistent ROE as compared to

09 April 2011

Be serious in your investment

I realized that many investors do not take it seriously in their investments. A good example is the Lehman brothers mini bonds issues. It was due to the innocence/ignorance of the investors on the financial products offered in the market. As a result of it, many retirees lose their retired funds.

While many investors are blaming for the salesmen who sell the toxic products to them, it gives a chance to them to review their attitudes towards investing. It is advised that to read the prospectus and annual report before making any investment. For real estate investor, they have to go the

Determination - path to successful investment

The people is build on three parts: spiritual, mental, physical.

Many people do not believe in investment, as they still do not think that investment is a business that can bring them to a big pool of fortune. Instead, they rely on the sole income source which is the salary income. The danger of this is they will not have single cents if they stop working. And it turns to be worse if the person is the only financial support to the company.

As time flies, majority of the investors are investing in so called safe investment such as fix deposit, savings account as they do not have the knowledge of managing their moneys. Stories of many financial advisors failed to deliver the good result to them had give them a bad impression that investment is a very risky activities and hence they do not want to invest big in investing.
Most of the investments people makes is the property. However, many people treats their home as investment but this property does not bring them any good income and they are forced to keep on working and loss opportunity cost to open a business or making a better returns investment.

Even if you are starting to invest, the most important factor is your mindset - determination. A several time of failure at fist may give negative impact to certain investors. And the moment they

06 April 2011

Iskandar Malaysia

Iskandar Malaysia was first announced by Malaysia ex prime minister on year 2005/2006. The initial idea was to copy the success story of Hong Kong - Shen Zhen by create a metropolis in between Singapore and Southern Johore.

It hopes to reach 5 million people in Iskandar Malaysia by year 2025. There are 5 flagship zones, namely Johor Bahru, Nusajaya, Eastern Gate, Senai-Skudai and Western Gate.

05 April 2011

You can be your own fund manager - part 3


  1. Managed by finance professionals. You can start investing by invest your money into unit trusts as it is managed by professionals. You can read through the prospectus and annual report and learn their investment philosophy. Basically it is suitable to those investors who requires less time on doing homework but want a decent returns without worrying unsystematic risk.
  2. Diversification. When your investment is little, it is unwise you go and purchase shares as the commission rate is comparable higher. With little cash, you are able to invest in a pool of different shares or asset classes.
  3. Monthly investment plan. Normally unit trusts come with monthly investment plan. You are able to invest as little as possible while enjoying the benefit of dollar cost averaging.

Things to take note:
  1. Annual management fees - most fund managers are charging annual management fees ranged from 0.1% to 3%. It can reduce your annual returns if fund manager can achieve a better result compared to market. When you do a research, please check at the fund's management fees.
  2. Platform fees - some distributors are charging platform fees. For that reason, you may consider to transfer your holdings to those don't charge for platform fees.
  3. Understand the underlying risk or the character of funds. Equity funds are more volatile than bond funds

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04 April 2011

You can be your own fund manager - part 2

In part 1, I emphasized that you could be your own fund manager by the reasons you understand yourself better than others and you would know how much risk and return you would like to take as well as the time horizon you would like to put your money into.

Rule #1 - the longer time horizon you can invest for, the higher return you can ask for.

If you are a youngster and happen to read my blog, I would like to congratulate you because you have the most precious asset - time. Most of the time the market is volatile depending on many reasons, and if you notice that, those higher return asset classes are both volatile and have higher returns. So even if you are low risk taker and having a lower income base, you still can ride on top of markets.

Rule #2 - the more experience you are, the higher risk you can take

Risk does not come from the volatility, but the innocence of the people on investment. Intelligent investor is a good book written by Benjamin Graham which I would like to recommend you to read through. It is similar to driving, after you take the driving lesson

You can be your own fund manager - Part 1

One major part of personal finance is investment. Statistic shows that most people cannot rely on their CPF/EPF money to enjoy a comfortable retirement. To meet the requirement, you may end up have to save more money during your 40s-50s in order to battle for the other factors such as inflation or unforeseen circumstance.

Here, I would like to share with you how I suggest to allocate your money in to different asset classes.

First of all, you must understand your risk appetite and desire returns. As you become more familiar/experienced investor, you may ask for higher return and could take a higher risk. Most people started off investment through Unit Trusts / Insurance / REITS and moving on to invest in higher risk asset classes such as Shares / Futures / Options etc.
In part 2, I will share with you more on Unit Trusts / Insurance. In Part 3, I will share with you more on REITs. In Part 4, I will share you with on Shares and please stay tuned...

01 April 2011

Treat your investment as your own business

For those who are in business, they typically know that it is very hard to compete with others with exceptional result by doing a normal job. Their business profits will eventually gone down or up depending on the environment.

Hence, please treat your investment as your own business. Before you make any decision of investing, please ask yourself few questions:

1) Is this a good business? 

2) How reliable of the top management? 

3) Can I hold this investment for long term?

4) Can I buy more if the price goes down further?

Your mind controls how much you could earn

Whether you are a hardworking person, a smart guy or with great talent, your mind controls how much you can earn.

From the fact that richest guys are normally grouped by businessmen or professionals, why not everyone wants to be one of them? Maybe you can find many excuses such as having financial burden or family commitment or you do not have courage of failure which could cause you a big negative impact etc. Most of the people are already in their comfort zone and not willing to change themselves to be more competent and hoping company could hire them for the rest of their lives. History shows that there is no so called secure job even in public sectors during great depression, not talking about private sector. So what should you do?
Think out of box

THE God gives you a healthy brain and body. Please use it to think out of the box to achieve the target you had set for long term. Do believe in yourself that you can success and must success to give you a financial freedom.

Action, action, action

When you have a proper plan, just do it. Your experience gains
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