Hi,

I am trying to learn about Malaysia market here. Why are you buying KLCI index fund?? The Unit Trust in Malaysia has a lot of cost in it. Let's say the annual maintenance fee is 3%. Compare this to buying one bank counter that pay dividend yied of 6%. How does the Unit Trust is better?? The Unit Trust will have to grow 9% per year to match my bank stock.

Please comment...

Dreamer

www.min.com.my/eng

but... compound interest is d best invention hunman has made....

but d prob is, some of d money will taken away from us everytime we invest... thats y im searching for passively manage funds...

Yup, everytime you buy UT, you lose 5% straigth away and 1.5% annually for their maintenance cost. That's why UT company are always trying to launch new fund.
Global fund still ok since it is not accessible for retailer investors like us, also you spread your risk in foreign currenct asset and might earn better if RM depreciation like 98's.
For local equity fund which you can buy yourself in the stock market, it is not worthwhile to be invested especially for those having sound investment knowledge people. In stock market, the commission rate is about 1.2% with no maintenace fee need to pay and can get back the money in 3 days time while UT need at least a week or so when redeem your units and need to lose 5% every purchase and 1.5% annually.

I am not saying UT is not good but bare in mind their cost of purchase is not cheap also. But for those having little knowledge about the stock market and having no-discipline in investment, it might also a good choice.

Cherroy,

1) You are saying Global fund unit trust might be good for diversification.

2) Local fund unit trust is good if you are ignorant about local stock market.

FD start to look very good.. You lose nothing in commission and you gain 3.88% every year.

Dreamer

For sure, global fund is good for risk diversification. Bear in mind...you should evaluate your financial status before you do any investment plan. Clarify your financial goals as well.

Save money in FD, if you can't take risk and you know nothing about mutual fund and stock market.

Invest in Mutual fund, if you can take low risk and you're clear about the operation of the mutual fund, eg. how the fund manager invest, how much is the service charge, etc.

Invest in stock market, if you can take high risk and you know much about stock market. Just to remind, don't think to earn fast cash in stock market. Investment in stock market should be mid-long term investment, not short term, which is more like gambling.

So, after getting know about yourself and your goal, you have to choose the most suitable investment mode. LOW RISK, LOW RETURN. HIGH RISK, HIGH RETURN. THIS IS ALWAYS TRUE!!!

Leekk8,

So, how do you classify the one blue chip bank stock that pay 6% dividend?? High risk or low risk compare to unit trust?

<<LOW RISK, LOW RETURN. HIGH RISK, HIGH RETURN. THIS IS ALWAYS TRUE!!!>>

Not really. If you are NOT smart about how to do your investment, you can get high risk and low return at the same time.

Dreamer

This post has been edited by dreamer101: Aug 23 2006, 11:25 AM

Also, there is forex FD which offer better return rate than ringgit denomination eg. AUD - 5.5%
NZD - 6.8%
USD - 5.2%
(Not exact but roughly)

The main risk is currency depreciation and loss during the exchange.

Actually if one is wealthy enough should spread his/her asset a little bit (Just my opinion) since ringgit isn't as strong as other currency like SGD or AUD. Also economy wise, Malaysia isn't perform well for the last few years. Although BNM and gov keep stressing that GDP growth 5-6%, the actual business situation out there is not that as good as they mentioned.

Dreamer,

Typically, that's true. Everything is fair in this world...How much you gain is how much effort you put.

If you study about investment and know very well on it, sure you can reduce the risk by maintaining the return.

If you know nothing about investment, just choose stock like gambling, then the risk is high while return is low.

Blue chip is considered low risk investment...It won't give you more than 20% return I guess...The risk is when the economy of Msia went down like 97. Sure UT is lower in risk, as you won't loss that much if economy went down, compared to blue chip...

hi guys... i was wonderin how does index fund works... i.e. S&P 500.... where d fund manager will invest in all 500 stocks in d market....

i was thinkin to invest index fund overseas... but d prob will b d foreign exchange for RM wit US dollar... wats u all think???

hi guys... i was wonderin how does index fund works... i.e. S&P 500.... where d fund manager will invest in all 500 stocks in d market....

i was thinkin to invest index fund overseas... but d prob will b d foreign exchange for RM wit US dollar... wats u all think???

I'm not too sure how is the RM performance now. You may need to do some research on this.

For index fund, the manager will invest in the index stock only. For S&P500, ya, he will invest in 500 stocks only. Since the index is depending on the 500 stock prices, your fund price also will follow that.

For example, If the fund manager invest in KLCI Index fund, he would place his money in all the 100 stocks in the SAME WEIGHATGE as those stocks carry in the index.
By doing this the fund return will be very close to the index movement. Hope I didnt mislead u guys

Leekk8,

1) I am saying choosing stock or Unit Trust has the same level of risk in Malaysia.

2) Thank you very much. During 97, this counter do much much better than my unit trust. The UT is higher in risk at least in my case.

3) 50% of KLSE is owned by GLC and GLIC. So, do you really get diversification by buying index fund?? KLSE is dominated by a few indutries and company anyhow. It does not really represent Malaysia's economy.

4) In Malaysia, you need to be even more careful choosing UT. Or else, the fee will kill you first.

Dreamer

Cherroy,

The mortgage interest rate in New Zealand is 12%. I have a cousin in New Zealand. They do not have much money in New Zealand. So, if you have relative in New Zealand, you can open FD in NZ and get even more interest than 6.8%. But, bear in mind, NZD is weaker than RM. So, you have forex risk.

Dreamer

One of the reason why u lose money in UT is simply bcoz u dunno the substantial investment by that fund.

Beside that , u dunno to switch when market is bad. U have no enough experience in UT or maybe u choose wrong agent.

If u know how to switch , i think u can earn more dividend than if u just put your money in the fund untouch.

Hotlink,

1) I admit I do not know how to play Malaysia market.

2) If a person has to switch and know how to switch regularly, won't the person be better served by stock as opposed to UT?? The person will be hit by 5% every times that he/she switch??

3) If a person has to swicth regularly, then. he/she is not investing. This is speculation/gambling. Not everyone can play this kind of game well.

Dreamer

Stock? If u buy stocks how do u switch? u just can sell the stock . But if u buy UT then u can switch from the equity fund to bond fund if the invested subtaintial company of the fund drop a lot.

Since bond fund usually just grow up ( buy pure bond fund ) bcoz of the interest of the bond, so when the market drop, example u switch your 10k from the equity fund to bond fund, then u still can maintaince your 10k and get some interest of the bond fund.

When u think the market is almost the reach the bottom line, then u can switch back to the equity fund since the NAV of the equity fund is low then u can manage to get more Units. AND the equity fund will grow very fast.

Earning from the bond fund and a lot units from equity fund will make your return great.

As i know, Public mutual UT is free of charge from switching equity fund to bond fund, while rm 25 will be charged if u switch from bond fund to equity. So it is quite little if compared with 5% u mention.

This not gamble, just how you manage your portfolio well like if you buy stocks, u need to have a clear bottom line for u to cut your stocks even is a nice blue chips

Imagine if a blue chip drop from RM10 to rm 2, if one person cut loss at rm 9 and use that 9k to buy back at rm 2 , then when the blue chip grows up, he will earn a lot. Dont simply keep the stock and think that you wouldnt lose a cent if u never sell the stock.

I would like to emphasize again switching is not gambling in UT.

"As i know, Public mutual UT is free of charge from switching equity fund to bond fund, while rm 25 will be charged if u switch from bond fund to equity. So it is quite little if compared with 5% u mention.
"

if not mistaken, free switchin is onli avaiable once a year of investment and it depends on d fund itself....

but afaik, there is no free switch for public fund, correct me if im wrong...

Hotlink,

Let's take an example, I have a blue chip stock that pay dividend yield of 6% at RM6 which is around RM0.36 per share. Let's say the stock drop to RM2, it still pays RM0.36 per share. To me, I am still collecting dividend yield of 6%. Why should I sell?? In fact, at RM2, the dividend yield had gone up to 18%. I will buy more shares and hold.

I make money when I buy NOT when I sell.

If you buy a share at certain price with good dividend yield, as long as it still pays the same dividend, you really do not care what the current price is??

Dreamer