Investment is like planting a fruit tree. You won't be able to see the fruit in short term. Good performing mutual funds (unit trusts) need at least 3 years to see positive returns and you may break even by the first year.

Wrong calculation pidah.
Correction. No fee is imposed on selling. So you shouldnt have deducted 8637 when you sell.

123391 = 100,000 * (A)^3
A = 1.073

7.3% compounded ROI for 3 years.
Much better than FD.

This post has been edited by luqmanz: Nov 4 2006, 10:11 AM

Erm..something popped into my mind. Why not we invest in those ah longs who needs money to borrow money out? Then we also can have nice interest.... my friend does that I think it's 1.5% per month... so means by 3 months it matches the interest rate of any bank FD

Ah Long is illegal in Malaysia, you might be sued if doing this...
It's not an investment if we do something illegal...

actually it's illegal to even loan ur fren money.... according to the law only those with license can do that

I think it's legal as long you do not charge interest. That's all... License means u can charge interest.

Yes, it's legal if you didn't charge any interest on your loan. If you lend money or even give money to your friends without charge any fees, it's legal...
You can give your money to anybody...right???

Yeah, from what I heard have to be friends with those "tai kos" big brother so we can invest in it Anybody ah longs?

even if you dun charge interest it's still illegal.... but then nobody cares about it cos no 1 even knows it's illegal

David83,

Let me play devil advocate here and ask why?? Why I cannot buy an investment that pays me immediately and pay me every year?? It is my choice and if it is NOT a good deal, I do not have to buy!!! I can keep my money in the FD until I find a good deal. This is my strategy for my money in Malaysia.

In 2005, I buy the best managed Malaysian Bank stock at RM6.80 (including commission). It pays $0.55 commission last year. This give me yield of 8%. This year I get dividend of $0.40. This gives me yield of 5.9%. Looks like this will be the yield going forward. I am NOT even looking at appreciation.

What is the risk?? Yes, it is higher than FD. But, this bank survived the last recession and if this bank goes to hell, you can forget about the whole KLSE too. It is about the same risk as the KLSE index. Until foreign bank can come in, all local banks enjoy a margin of 3% to 4% ( difference between loan and FD rate). The banks will make a lot of money.

So, please tell me why am I buying unit trust?? Where I lose a few percents when I buy and a few percents every year?? For foreign exposure, why not buying mutual fund from US companies like Vanguard?? There is no load and annual maintenance of less than one percent??

ASB may make sense if I am a bumi. But, other than that why??

Dreamer

P.S.:

1) The lot size is 1,000 shares. I can save my money in FD until I have enough money. Since the dividend is around $0.40, I can wait until the share price is low enough and yield is attractive to me. I make money when I buy.

2) This is part of my portfolio of FD, real estate, and banking stock. I have enough cash for 2 years of expenses in FD. So, I have enough money for a normal recession.

This post has been edited by dreamer101: Nov 5 2006, 11:38 PM

How long have you been holding on to PB? if you had it since 1996 it would have given you a return of around 300% which turns out to be 30% per annum which is very good.....while it is still consistently given dividends of at least 7% every year.... bear in mind it's dividends only while if there are capital appreciation you get more

<<it's dividends only while if there are capital appreciation you get more>>

Darkmage12,

You only get capital appreciation if you SELL the stock. The goal/strategy here is to buy stock that pay you good dividend every year. You make money every year without selling the stock. So, your statement of 30% per annum is ONLY REAL when you sell the stock. I only bought PB at 2005.

For some people that bought PB at RM3, their dividend yield is around 13%. Why should they ever sell the stock??

Dreamer

Yes, if the stock has dividend yield around 13%, we no need to sell the stock and get the dividend every year...it's not easy to get some investment give you high return every year...

<<it's not easy to get some investment give you high return every year...>>

Leekk8,

Yes and no. You have a choice. You do not have to buy anything until it is a good deal aka on sale. You can keep your money on FD until you find a good deal. You can be patience and wait. Meanwhile, you need to learn how to calculate and spot a good deal. For example, PB is probably paying RM0.40 dividend for a while. You could wait until market panic and PB goes down to a level where it is a bargain before you buy. Market always goes in cycle. Ditto for real estate and so on.

But, you NEED to know how to calculate and spot a bargain. Know when something is a good deal or not.

Please comment and criticize my proposal.

Dreamer

P.S.: There are many things wrong in "Rich Dad, Poor Dad"'s books but this is something that I learnt from those books.

This post has been edited by dreamer101: Nov 7 2006, 01:31 AM

I know BUY low SELL high is the concept of investment, there are some companies having high dividend yield, so we can wait for the price become low or reasonable, then we can buy it. I believe that there are always some companies worth to buy. I'm a newbie in investment, and I never buy stock before. I'm learning and will start trading in stock market maybe next year. For me, I will allocate 70% of the funds that I have into some high dividend yield stock, but the rest will be put into some potential companies, which may be growing rapidly.

I not dare to say RICH DAD POOR DAD is right or wrong, in fact, I learn quite a lot from that book. Some of the things might not same as Malaysia, as the author is an American. However, the idea of the book is, we need to change our thinking and perception. Things are changing all the time, so our mind also must be changing. Before I read the book, I didn't realize the importance of investment and financial planning, but after I read, I realize the importance and it's worthy to try to do own business...

i thought all stocks in malaysia trade in 100 shares a lot? but then u said PB = 1000 shares a lot?

where to check those stuff? i've been thru Malaysia investor and bursa malaysia website, no such info.

The percentage returns was taken from their financial report. Since I'm not able to find out all those details such as splits and all. I've taken their own return of investment figure as calculation. It's accurate as they've taken account unit splits, distribution and rise as well as rise in unit price.

For eg 2006:-

1. Total returns of the Fund is derived by this formulae:
End of Period FY2006 Bid Price - 1 = 4.78%
_________________________
End of Period FY2005 Bid Price
(Adjusted for unit split and distribution paid out for the period)


* Public Mutual only imposed the service charge once, on your initial/first investment. After that only management fees 1.5% perannum

Yes I've taken that into account, although I have to correct myself on imposing service charge twice. Still my point is, NETT RETURNS is a more important figure than what the returns the mutual funds tell you. An 11% average return yields only 7%++ when you talk about NETT RETURNS in 3 years. A big sum of profit goes into financing the management of the funds. And the thing is, even if the fund is losing, you STILL have to pay management fee further adding salt to the wound. It also means that the mutual fund charges you a fee even if the fund is not performing at all.

Somehow the risk vs returns is not worth it, at least for me or maybe at least for majority of the mutual funds in malaysia.

http://www.amazon.com/Future-Investors-Tri...1929731-1324720

Read the book
The Future for Investors: Why the Tried and the True Triumph Over the Bold and the New (Hardcover)
by Jeremy J. Siegel


From the research done over the USA stock market, high dividend paying stock has higher return than fast growing stock over long period of time.

Dreamer

As far as I know only a few stocks are in 100 shares lot. Majority is in 1,000 shares lot. I might be wrong.

Dreamer

yeah but still the dividend returns were almost like 200% over the 10 year period 1 mention

IIRC they changed all the lot sizes to 100 to make it easier for the public to invest in it.... only some shares have lot sizes in 200/1000....still many are used to calling 1 lot as 1000 shares as it was practice last time

i think you might be wrong in this.... im not sure myself cos many are still using 1000 shares /lot