Financial Quotes

“Everyone who has achieved financial independence will tell you that – at least in the early days you have to work smarter and harder. The price of success must be paid in full, and it must be paid in advance. There are no shortcuts.” John Cummuta.

Saving is traditionally and simply defined as not spending. Investing take place when saving actually start to earn something.

“Wealth is not a matter of intelligence it’s a matter of inspiration.” Jim Rohn.

Saving generate more stable return like fixed deposit and bonds, whilst investment gives a fluctuating return; stocks, unit trusts and long term bond are some of the examples.

Simple interest is the amount of interest paid at the end of a specific period of time. Compounded interest is the amount of interest paid on the original principal plus interest already earned.

“To be wealthy, you must develop a burning desire for wealth and financial independence.” Brian Tracy.

Rule of 72 is used to determine the number of years it will take for the principal amount to be doubled. Simply divide 72 by the expected annual rate of return on your investment.

“Before you can really start setting financial goals, you need to determine where you stand financially.” David Bach.

Investment Quotes

Thousands become millionaires, but millions become bankrupts in stock investment. Are you in the millions? Knowledge and experience is the perquisites in stocks trading. Learn from the gurus and give a thought to the following quotes:

Understand the risks in stock market. “Risk comes from not knowing what you are doing.” Warren Buffett.

Remember, never beat and outsmart the market. “The simple truth is that there are no ‘sure things’ in the market.” Bernard Baruch.

“If it goes up I buy it, if it goes down I sell it.” Mark Twain.

Study the market and work hard. “The odds are in your favour when you do your homework and work very hard.” Marty Schwartz. “The harder you work, the luckier you get.” Gary Player.

Trade and follow the trend. Never trade against the trend of the market. “The trend is the stairway to heaven.” Robert Krause.

Always preserve your capital. Warren Buffett said, “It is better to miss an opportunity than lose money.” George Soros said, “Survive first and make money afterwards.”

Define your trading plan and trade according to your plan. “It is the actual consistent execution of a well defined trading plan which has a positive expectance which makes profits.” Troy Stayman.

In stock trading, timing is very important. “The perfect speculator must know when to get in; more important he must know when to stay out and most important he must know when to get out and when he’s in.” Jay Gould.

Compare Returns Before Investing

When shopping for an investment, you should compare the return of the various unit trusts. Do not be misled by an attractive potential returns that are being promised. Look and compare past performance of the various unit trusts. To be on the safe side, look for unit trusts that have been in the market for more than 10 years. Let us understand some of the returns.

Total Return
Total return measures the amount of capital appreciation or depreciation plus any income yield over a period of time, inclusive of unit splits if any.

Average Annual Return
Average annual return is total return for a period of more than a year divided by the number of years involved. For example if your investment has increased by 60% over five years, that represents an annual average return of 12% per annum.

Compound Annual Return
Compound annual return is the growth in value each year as percentage of the value at the beginning of the year plus any accumulated earnings.

Real Return
Real return refers to your net return after adjusting for inflation. Real return shows investors whether their wealth has increased in terms of purchasing power. For example, if the return on your investment is 6% and the current inflation rate is 4%, your real return is 2%.

Inflation is the evil in the economic of the purchasing power. Choose therefore unit trust that has return far much higher than the inflation rate.

Advantages Of Investing In Unit Trust

Good Potential Returns
In the long run, unit trusts have the potential to generate better returns when compared to more popular investments like fixed deposits and traditional insurance policies. In 2006, I bought Public Regular Sector Fund when the CI was 900 points. In 2007, when the CI was at 1450, I sold and made 41% return. My other 3 funds I bought in 2003 gave me an average return of 20%.

Less Risky Due To Diversification
Unit trusts are designed to spread your money cross a large number of different securities. This reduces the impact of having a single investment go wrong or underperformed.

Professional Management
When you invest in unit trust, you are indirectly hiring a full time, experienced professional to look after you investment. The cost of these professional are shared by all unit holders.

Ease Of Access To Money
Unit trusts provide easy access to the money you have invested. Unlike fixed deposit and insurance, you will be penalized if you redeem before its redemption period.

Before you invest in unit trust, you must get the right agent who can give sound financial advices.

Investing Strategy During Challenging Times

The recent increased in fuel price which led to higher prices of goods and services may make us think of how to find an investment that gives return higher than the inflation rate. Current inflation rate exceed 5%.

Some of the investment assets that provide a good hedge against inflation are equities ( commodity and energy sectors ) good grade bonds and unit trusts.

Unit trust investment during bad times has its advantages. Firstly, the fund is managed by professional fund managers. Secondly, buying unit trust during bad times when the price is low will give a higher return in capital appreciation when you can sell during good times. Take advantage of the concept of dollar cost averaging during this bear market condition. Do not follow the herds but go against the herd. Buy when people fear and sell when people are greedy.

EPF contributors should take advantage to invest now when the price is low. Rather than leaving the money you have in EPF earning only 5.5%, you might as well draw your EPF account 1 and start investing in unit trust that can possibly earn more than 5.5%. After all, EPF also invest bulks of its fund in equities or stock market.

Quote

"Compound interest is the eighth wonder of the world." Albert Einstein. Why wait? Invest in unit trust while the stock market is still low. If you don't understand the value of money, read what was once said by Benjamin Franklin, "If you would know the value of money, go and try and borrow some; for, as he that goes a borrowing goes a sorrowing."

Invest Early To Achieve Financial Success

Brian Tracy once said, “At least eighty percent of millionaires are self-made. That is, they started with nothing but ambition and energy, the same way most of us start.” If you are young and wish to see your cash grow over time at a rate exceeding 5%, putting your EPF saving in well managed unit trust is a wise option. If you put RM30,000 of your EPF saving in a Public Mutual Berhad index unit trust fund and achieved a long-term average return of 23% each year for 10 years and 20 years, your investment will have grown to RM292,467 and RM2,318,081 respectively. It pays to invest early. Take advantage of Dollar Cost Averaging especially in the current stock market scenario as it provide an opportunity to accumulate more units. “The philosophy of the rich versus the poor is this: The rich invest their money and spend what is left; the poor spend their money and invest what is left.” Jim Rohn.

Invest Your EPF In Unit Trust

We believe that EPF is an investment fund that will take care of our retirement financial needs. In 2006, EPF declared 5.15% and in 2007, it is about 5.5%. With the current scenario, do you think that the return of about 5% is adequate to take care of all our financial goals on our retirement?. My answer to this is definitely no. Why? The answer is INFLATION. Before the hike in petrol price, the retail price of a 10kg dragon rice was RM30.00, now RM39.00, an increased of 30%; dressed chicken was RM6 per kg, now RM8 per kg. Petrol was RM1.92 but now RM2.70, increased of 40%. My question; is the return from EPF of 5% adequate to cover the inflation rate of say between 10% - 30%? It is wise therefore to put EPF savings in well-managed unit trust. Public Mutual Berhad has numerous funds to invest in. However be selective on the fund you want to invest in and get good advice before you withdraw your EPF. Based on the recent prospectus, some of the funds gave an average return of 20%. You can withdraw 20% from your EPF Account 1 of the excess above certain ceiling depending on your age. Subsequent withdrawal can be done every after 3 months interval.

Rule 72

Rule 72 is a simple way to calculate the number of years it takes to double the amount of capital invested.

Example:

If you invest RM10,000 at an interest rate of return of 10%, it takes roughly 7.2 years for the capital invested to double to RM20,000.00. Calculated as : 72/ interest rate (10%). Try using you calculator and multiply RM10,000 by 1.10 for 7 times. The answer is RM19,487.17.

Happy investing.

Benefits Of Investing In Unit Trust

Unit trust is an investment vehicle that pools the financial resources of many individual investors who aim to achieve similar investment objectives. There are many benefits investing in unit trust. Firstly, the risk is minimized since the funds are invested in diversified portfolios. We all learned that diversification reduced risk. Secondly the funds are managed by professional who has the expertise and experience. As individual, we do not have the time, experience and the expertise to study the stock markets and we may make wrong investment decision. With as little as RM1,000.00 you can start investing. The investment can be turned into cash at any time if your need arise. Unit trust provides a very competitive return in the form of dividend distribution and capital gain. Dividend distribution may be given every year while capital gain is realized when you sell at a price higher than your purchase price.

My Experience In Unit Trust Investment

Investing In Unit Trust I am writing to share with you about investing in unit trust specifically in Public Mutual Berhad which can give higher return or yield than EPF, Fixed deposit and even ASB. In early 2006, I invested through EPF in a fund called Public Regional Sector Fund. I sold it in mid 2007 when the KLSE was 1,500 points and I made a return of 41%. My other funds ( three of them ) which I bought earlier also give me a return of average 20% per annum. After realized how much I benefited from investing in the right unit trust, I signed up as a consultant. I want to be serious in this business because firstly I can help myself and secondly investment in stocks and shares is my passion. For those who have never heard of unit trust, it is fair for me to give a little information about it. Unit trust is an investment vehicle that pools the financial resources of many individual investors who aim to achieve similar investment objectives. There are plenty of advantages investing in unit trust such as: It is affordable; low initial investment of RM1,000. Managed by experienced professionals Risk is minimized through diversification. It can turn into cash easily. High return through dividend distribution and capital appreciation. Recently in the Star, EPF deputy chief executive officer, Encik Johari Abdul Muid said that it is during economic downturn that investing in unit trust is encouraged to benefit in the upswing later. Yes, actually this is the best time to invest. I have done a comparison on the performance of the various funds under Public Mutual Berhad and I can confidently conclude that the returns from some of them are much higher than the return from ASB. Investing in the right fund and with the right timing can give a return of between 20 – 50%. Investing in unit trust can either be by direct cash purchase or through withdrawal from EPF Account 1 ( subject to certain limit depending on your age ). Choosing your agent is very important because he should be able to monitor your fund performance and advise you accordingly. Rather than leaving your money in EPF or ASB earning only about 5% and 9% respectively, it is better to invest in unit trust with Public Mutual Berhad. Peter Lynch once said, “The mutual fund is a wonderful invention for people who have neither the time nor the inclination to test their wits against the stock market, as well as for people with small amount of money to invest who seek diversification.” In case you are interested to invest, please call me at 013-3595414 for discussion.

Wellcome to my unit trust blog

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