Thursday, May 14, 2009

Investing for the future

There are a lot to say about investment but my limitation is the time to write. It is mandatory to have an eye about having good personal financial if she is not interested in the local or global economy. Poor financial management will lead to many defects. So, start saving or investing. If you say it is too early to invest then you are probably wrong. This is because the money that you invest will grow. If you want to start 10 years later then most investors will say that you have just wasted a precious 10 years. I have been involved directly for more than 10 years now and happy to see the outcomes. The wealth that I am enjoying today is the result of yesterday’s work and today’s hardship is for tomorrow’s pleasure. Thank you grandpa, for the business brain that you had passed on to your generation.

I like to start things from the basic. I believed, with strong foundation you will have the stamina you need to maintain your position as high as it can be. So, in many things offered to the bumis, I will say that the ASB is just the simplest and most basic type of investment before anything. No wonder when PNB opens 5 million units for sale last week in other fund comparable to ASB, the non-bumi grabbed it in just a few hours. It is not that they have a lot of money but simply because they know the high returns they will get. The figure is around 7% per annum, minimal risk and better still, a government-backing fund. There is no difference in buying and selling price unlike other unit trust funds! So, whatever happens, they will still get their initial money plus the dividends! It is unlikely to make the investors lose their money. For those who have not place their money there then do so. For those who did not invest because you claimed it a ‘haram’ fund then check the status again with Islamic authority and Security Commission. The Muftis’ fatwa is ‘harus’ ( As for its investment methods and et cetera, I will tell you if you ask and not in this post. It is too wide lar. No space to write.

Other unit trust funds are more volatile and have higher risk. It may bring losses if it is not well manage. Ops! I mean if the economy performs badly. Please do not get it wrong. Economy is not all about share prices but it is just an indicator. Usually,
if the economy goes haywire, the share price will also plunge. If you already have an ASB account, then, you would want to consider buying it. It gives higher return in shorter period of time but of course, higher risk as well. If you plan to place the money for 10 years the least, then I would suggest you to buy the passive type of account rather than the active ones. On average, the passive fund, which gives lower return in a shorter time actually gives more in 10 years duration. However, if luck is not on your side then you might lose partial or all of your money. We are fortunate that Malaysia offers a lot of things. Now, the Islamic funds are much bigger and it gives a lot of options for the Muslims but do not forget, only PNB funds are not charging us any extra charges. Others will usually eat (5+1)% of your initial money and 1.5% for the next other years. On the other hand, PNB funds have higher probability to give bigger returns.

If you have time and would want to devote your passion on business then go for KLSE. It is potentially to give you an unbelievable return. Just look at the Bank Rakyat shares, it gives you 20-40% especially in the last couple of years. This is something good but my advise is, think thrice before start putting your feet on KLSE. It may not be suitable for medical doctors unless if he is able to control his desire on profit gains. Do not be greedy as God will pull your luck away. Other option that may be categorized as ‘safe’ is to invest in gold. It belongs to commodity section, unlike ASB that is 70% on equities. Gold prices do not change drastically overnight. It takes time to fall but half of it to rise. It is sell at around RM103 per 100g now compare to RM 33 for the same weight 10 years ago. Its performances indicate by10 years graph is on the climbing trend. The only things to bother is the need to ‘zakat’ our gold each year. Do not forget the 5 pillar of Islam. We must pay zakat for the unuse (invest) gold.

In whatever investment you are in, do not forget a few of its rules. First of all, investment is all about time. Do not dream big to have high returns in short period of time. Secondly ‘cash is king’. You can invest using loans too, but the returns are not guaranteed. There are few analysis need to be done before jumping into it. Rotating the cash money is what the investors usually do. Thirdly, place money on good managers. The bigger and stable the institution the safer your money will be because these people will need to take care of their names well. Anything happens to a certain fund, they will take some actions to minimize the loss. To conclude, the more cash money you invest, the longer it stays there, the higher returns you will get but do not forget the inflation rate that you have to bear.

Others investment points I would like to address:
• It pays to think like a pessimist when you make your list of debit and credit. It gives you space to breathe when you have money. I have read a religious article and it says “God is angry when you spend more than what you earns”.
• No matter how savvy your investment is, your credit card debt can bleed you of money. Consider using the debit card instead.
• Be fearful when they are greedy and greedy when they are fearful. Basicly, just stay calm in any situation appears.
• We make the dumbest money decisions when we are panic
• This is a great opportunity to restructure bad investments as well