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.
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