[quote=MakNok,May 9 2009, 10:26 PM]

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Added on May 9, 2009, 9:10 am
When one retire just at / after the crash of the stock market, all his retirement fund gone bye bye.



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MakNok,

It is STUPID for a person to be 100% invested in stock market. It is as simple as that.

Any normal and common financial planning will say

A) Have 3 to 6 months of emergency fund in bank / FD

B) Keep the money that you need within 5 years in fixed income aka bond.

Now, if a person follow rule (A) and (B), a person will NEVER lose everything with a stock market crashes. And, even if the stock market crashes, the person has 5 years to recover from that.

My favorite saying is INVESTMENT means that you can go to sleep and do nothing for 5 years and you will be fine. So, by definition, your investment needs to be able to survive a stock market crashes.

Dreamer

[quote=constant,May 12 2009, 01:18 PM]
MakNok,

It is STUPID for a person to be 100% invested in stock market. It is as simple as that.

Any normal and common financial planning will say

A) Have 3 to 6 months of emergency fund in bank / FD

B) Keep the money that you need within 5 years in fixed income aka bond.

Now, if a person follow rule (A) and (B), a person will NEVER lose everything with a stock market crashes. And, even if the stock market crashes, the person has 5 years to recover from that.

My favorite saying is INVESTMENT means that you can go to sleep and do nothing for 5 years and you will be fine. So, by definition, your investment needs to be able to survive a stock market crashes.

Dreamer

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How to invest in bonds? Aren't they for high net worth ppl?

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constant,

http://finance.yahoo.com/q?s=BSV&.yficrumb=auuw5dfuvav

http://www.marketwatch.com/story/lazy-port...mpetition-again


I do not buy individual bond and stock except one stock. I buy stock index fund and bond index fund. For someone in Malaysia to do this, they need to open US Stock brokerage A/C to buy ETF. You need a few K in USD to do this.

Dreamer

chew_ronnie,

There is a CATCH here which you need to bring up. All those number are ASSUMING that the I (investment ) portion of the ILP return X % per year. So, what is that X%?? The last 3 years, KLSE went up 30%. If you assume that X is 30%, it will DEFINITELY not happen. And, if the actual return is much much lower than X, I would bet that ILP will cost a lot more than term insurance.

So, what is X assumed in your ILP quotation??

Mark my words. We will see a lot of screaming and crying from people buying ILP in one or two years. They THINK that they got a bargain.

Dreamer

chew_ronnie,

<<X is assumed at 3% yearly. >>

1) That number does not seem to be correct.

2) What happen when the return went negative for 2 years??

<<the whole insurance industry is moving towards ILP, and traditional plans shall be phased out very soon. >>

3) That simply mean this plan is GOOD aka MORE PROFITABLE for insurance company. Which means it is BAD for consumer.

4) A 2 years bear market will wake people up very quickly.

Dreamer

This post has been edited by dreamer101: May 16 2009, 10:50 PM

wodenus,

No. Savings are emergency fund. Which by definition, you need to touch and use when emergency. Hence, you MAY do something about savings in 5 years.

Dreamer

wodenus,

FD is not investment. An investment needs to keep up with the inflation. FD is used as saving instrument.

Dreamer

wodenus,

You do not listen very well.

A) FD is saving instrument. You SPEND your saving instrument in case of financial emergency.

<<But you can go to sleep and do nothing for five years and you will be fine. And it will survive stock market crashes.>>

B) In 5 years, the FD value will be reduced by inflation. So, whether the stock market crashes or not, the FD REAL value will go down every year.

Dreamer

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Added on June 10, 2009, 5:18 pmc.o.o.l,

That is why FD is NOT investment. Whether inflation happens badly or not, the REAL value of FD will go down. FD rate is never high enough to cover inflation.

Dreamer

This post has been edited by dreamer101: Jun 10 2009, 05:18 PM

wodenus,

A) So, do you BELIEVE the actual inflation rate is 5% or less??

B) Now, if you keep track of your expenses every month like I do for the past 10+ years, do your expenses only increase 5% or less compare to last year?? That is your own inflation rate.

You know the number.

Dreamer

wodenus,

<< Don't keep track of expenses much. Are you saying that if my personal inflation rate is less than 5%, then my FD becomes an investment?>>

1) That furfills one of the two conditions.

2) The second conditions is you do not intend to use it for the next 5 years. The second condition does not work if this FD is used as your emergency fund.

Dreamer

wodenus,

Yes.

Dreamer

[/quote]
Index Fund is not that good in Malaysia.

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Peter_APIIT,

Then, WHY do you invest on index find IN MALAYSIA?? I had suggested that you could open an US Brokerage A/C and buy ETF.

Dreamer

delite,

Questions

1) Out of all your premium payment, how much is going towards investment??

2) How do you know that you get your $1 back??

Do you know?? Or, you just ASSUME??

ASSUME = Make an ASS out of U and ME.

Dreamer

cherroy,

My objection to those ILP is VERY SIMPLE...

It is an insurance + UT combo. Now, if people KNOW exactly how much of their premium went into each part and whether they get extra or less chip, then, it is fine.

But, THE PROBLEM is most people do not know what they are buying. Hence, they may be getting a BAD DEAL but they have no idea...

For example, this "delite" person, he / she does not even know that the $1 is not guaranteed.

Dreamer

lunchtime,

Why would an insurance agent EDUCATES its customer to shop for lower cost insurance?? That reduces their income...

There is a conflict of interest here...

Life is FAIR. If a person is TOO LAZY to shop around, they deserve to get a raw deal.

Dreamer

This post has been edited by dreamer101: Feb 1 2012, 12:17 PM

lunchtime,

I do not sell insurance.

<<"they deserve a RAW deal." >>

I REPEATEDLY tell / teach people to LOOK and STUDY carefully what they buy. But, they CHOOSE to be LAZY.

They could spend a lot of time and effort shopping for a car, house, and so on...

But, when they SPENT the equal or larger amount of money on insurance, they CHOOSE not to take the effort to SHOP around.

So, WHAT do you say about this kind of people??

"They deserve a RAW deal" is about the kindest words that I can say about them.

Dreamer

Pink Spider,

Let me ask you a SIMPLE QUESTION.

If you are going to spent 100K on something,

A) Do you spend time and effort shop around??

B) Or you just buy whatever somebody tell you to buy??

C) Do not buy until you know what you are buying??

Even if you KNOW NOTHING, you could do &copy;. Now, if you want to work harder, you do (A). What can you say about people that do (B)??

<< So you're saying aunties selling vege at the market who do not even finish SPM deserve bad deals? A person who wish to renovate his house need to learn about grades of cement, types of steel bar etc that the renovation contractor uses on his house? A patient needs to "shop around" and go on the internet to do research and find out about whether his doctor is giving him the correct pills?>>

All your examples are a bunch of BS that are NOT RELEVANT in this case.

You buy insurance in order to protect yourself from SOME RISK. Now, isn't it COMMON SENSE to find out

1) How much are you ACTUALLY paying??

2) What protection do you get??

And, YOU as an insurance buyer can INSIST that the agent tell you (1) and (2) and you can talk to a few agents about (1) and (2) before you buy something.

WHY are people buying insurance without knowing what they are getting into??

Dreamer

P.S.: Even auntie that sell vegetable know how to shop around for the best deal in term of vegetable to save a few cents. So, WHY do people are CARELESS and LAZY not to shop around for a big ticket item like INSURANCE??

P.S.2: Are YOU telling me that you do not know how to shop?? Buying insurance is THE SAME as shopping for anything else.

This post has been edited by dreamer101: Feb 2 2012, 07:47 PM

Bonescythe,

Insurance is an useful RISK MANAGEMENT tool.

But,

1) Why people REFUSE to be INTELLIGENT insurance buyer/ consumer and figure out what they are buying??

2) Why insurance agents do not tell their buyer EXACTLY what they are buying??

Hence, we have MANY PEOPLE overpaying for insurance and not getting what they needed.

We can BLAME insurance agent. But, the buyer that has to bear RESPONSIBILITY too. It is THEIR MONEY. If they DO NOT CARE and DO NOT SHOP around, why should they be SURPRISED that they can be OVERPAYING and NOT GETTING what they needed.

In fact, the money spent on insurance could be about the same size as car and house. But, people spend far less time studying insurance when they buy versus buying car and/or house.

Dreamer

Pink Spider,

Let's have some COMMON SENSE!!!

If I want to buy Insurance, I do not consult Insurance Agent first. They have an inherent conflict of interest. Most of them will sell me more insurance than I need. I consult people that BUY insurance. Not people that SELL insurance.

At the minimal, I asked around friends and families and check out their experience in BUYING INSURANCE...

Now, how much expertize do you need to ask around and find out whether you can TRUST someone before you make a MAJOR PURCHASE from them??

You do this when you buy vegetable too. You asked around from your friend and families as to who you can trust.

Dreamer

This post has been edited by dreamer101: Feb 3 2012, 08:37 AM

Folks,

One of the FUNDAMENTAL PROBLEM with buying insurance is people DO NOT KNOW that they are making a BIG PURCHASE.

They only see that they are paying RM100 to RM200 per month. But, they do not realized that they are entering a contract to pay for 10 to 20 years. If they REALIZE that they are spending 10K to 20K or a lot more, they would have spend a lot more time shopping around like how they buy car and house.

From insurance agent point of view, they do not want to ALERT people to this fact. Aka, it is a BIG PURCHASE. In fact, this ranked among top 3 to 4 BIGGEST PURCHASE that a person may buy in their WHOLE LIFE along with car, house, and tertiary education.

So, if you want to help someone, ALERT them that they are SPENDING 10K to 20K on insurance. They should be CAREFUL.

Dreamer

This post has been edited by dreamer101: Feb 3 2012, 08:56 AM