If you want to invest in long-term, you can invest in mutual fund or stock market. Both can be long-term investment vehicle. However, you still need to time your investment to make sure that you get in when it is low and get out temporarily when it has reached its peak.

I don't believe in short term investing of share. It is very difficult to time your investment for short term, though not impossible. Furthermore, playing short-term share trading means you will have more transactions. With more transactions, you have to pay more fees to your broker.

FD and Bonds are very safe investment vehicles, but their return is very low. Your return may be eaten up by the higher inflation rate. Still, you can use them as a vehicle for your "emergency fund". Your fund here will not depreciate at all, unlike mutual fund and stock market.

Vince, I am very interested in investment. I am a business student now. What is the qualification to become an investment consultant? I am planning to take up CFP in the near future. What are the prospects like in this career?

I am not so sure how to go about looking for the best stock. I am still learning. I have never invested before.

From what I heard, you should choose the stock of companies in the industry which is currently on an uptrend. That means that industry is going to prosper in the future. You need to read up a lot to know what industry is going to be hot. Sometimes, you'll have to make your own prediction based on what you researched.

However, some people advise that we should not be concentrating only on one industry. They use the term "diversification". You should spread your investment across several industry. Preferably, choose industry that is not related to one another. The idea is to reduce your risk. When one industry fails, you can cover your losses from the profits you make from another industry which is prospering. But personally, I have doubts about how to go about diversifying... If one lose, one win, then we get nothing right? Haha!

In choosing a company, you need to ensure that it has a good track record. You don't want to buy a company that is making losses for the past 10 years and is on the brink of bankruptcy. Choose a company with steady and growing profit.

Correct me if I am wrong. I am still learning... Don't take my words too seriously...

I have been following an article that appears every weekend (either Saturday or Sunday in The Star) on investing in foreign country. It seems that there are certain funds that let you put your money in foreign countries' investment vehicles. However, I am not sure whether we can invest as individuals.
(Correct me if I am wrong)

Yeah, if you were to invest overseas on your own, you need to have a huge capital. But I think there are a few funds available catering for such need. They pool all small capital together to invest abroad. What funds? I have no idea... Maybe someone can enlighten us here...

I have read "The Armchair Millionaire". The authors emphasized so much on the effectiveness of "dollar cost averaging". Basically, the idea is to set aside a fixed amount of money to the stock market every month regardless of the market condition. This will work if the market is on an uptrend in the longterm. That's the case in US.

What about KLSE? Is it on an uptrend in the longterm, say 10 years? What is the average yearly increase? Can the average beat other return rates from other vehicles like bond and FD?

This post has been edited by Truth Practitioner: Oct 24 2005, 01:09 PM

This is how dollar cost averaging works. You set aside a fixed amount of money to be invested into the stock market every month. Let's say you are going to set aside RM1000 every month. So every month, regardless of the market condition (bullish or bearish), you keep on setting aside that RM1000 and put into the share market.

So when the market is down, with that RM1000, you can buy more shares. Why? Because the shares are now cheaper, so your RM1000 can buy more of the cheaper shares! So what happens if the market is high?

When it is high, the shares will be more expensive, so you will only be able to buy fewer shares.

So assuming that in the long term the KLSE is on an uptrend, your shares value will increase. Thus, your investment gets positive returns!

But I am not sure whether this works in Malaysia. First, we need to know whether the KLSE is on an uptrend in the long term. Anyone can clarify this to us? I don't have the data. Secondly, if the KLSE is really on an uptrend, we have to make sure that the average yearly increase is more than the return rates in other investment vehicles.

(Please correct me if I am wrong. I am still a learner...)

I am really glad that someone like you is joining this thread. We need more experienced people like you! Please do post more often and share out your knowledge!

What is the long term trend of KLSE? Up, down or no changes?

No, you misunderstood me already. What I meant is the long term trend of KLSE from the available historical data. Perhaps from the year 1990 to today, what is the trend? Is it on an uptrend or downtrend.

According to the authors of "The Armchair Millionaires", the long term trend of the US stock market is always an uptrend. This is proven by the historical data available which spanned years back. So the author is implying that the stock market is a good vehicle for long term investment especially by using their method called "dollar cost averaging".

So now, what is the historical trend of KLSE? HAHA! That's a better way of questioning, I guess.

Haha! Personally I feel there's no politics involved directly in the share market. Note the word "directly".

Can politics influence the economy? Certainly yes! Politics directly determine the economic policies of a country which will influence the economy. Since the economy affects the share market, you can say that politics indirectly influence the share market (note the word "indirectly").

It's something like this...

Politics--->Economic policies---->Economy---->Share market

lklatmy,
Thank you for contributing here. I hope you will be posting more often so that we can continuously learn from you, the experienced one.

Since you have years of experience, do you know what is the long term trend for KLSE from historical data? Is it on an uptrend?

Wha is derivatives market and how does it work? I don't have any idea... I hope we can promote learning here.

In your opinion, do you think it is possible to time the market and gain from short term trading? There are so many seminars advertised daily in the newspapers claiming to teach people to time the market. They even show the pictures of those who successfully did it. I am really sceptical about this. Anyone been to such seminars before?

Is it difficult to learn technical analysis? Have you ever made money from short term trading using technical analysis?

I think we still need to time the market even if we are investing for the long term, am I right? This is because you'd rather buy when the market is low and let it grow to its peak. Sell it off at its peak and wait for another "low". Errr... now this sounds a little bit like short term trading...

So do you actually time the market if you invest in long term? I feel there is still a need to time the market...

And do you believe in "dollar cost averaging"?

If you have RM500 every month for a long term 15-year investment, where will you put the money?

I read an article in The Star business section today about a bond that is indexed to the inflation rate. The value of your principal will appreciate according to the inflation rate plus another interest rate (which is not very high, I think). The attractiveness about this type of bond is that your purchasing power will remain the same while you get to enjoy the benefits of an interest rate.



For all the "sifu" here, do you think this bond is attractive? I think it can serve a very good purpose to place our emergency fund, right? If we withdraw our money from the bond before the predetermined date, are we going to get any interest? Wait, is there a predetermined date for withdrawal to start with?

(http://biz.thestar.com.my/news/story.asp?file=/2005/11/7/business/12444972&sec=business)

Akina,

This is a very useful graph. Can you tell us where to find such graphs with other funds? It will be useful to compare these graph with graphs of other funds to know which funds are doing really well.


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This post has been edited by Truth Practitioner: Nov 8 2005, 01:26 AM

Even well-known Internet Gurus like EOneNet's President and SenZe advised people to be very cautious in trying out this sort of "surf-to-get-money" investment*. They said the companies can actually collapse overnight. They are also not sure whether these companies are genuine companies. As one of them mentioned, would a company want to advertise if they know that their targeted group would just leave their computer on on an "autosurf" mode without even looking at their ad? But then again, they are not discounting the possibility that some of these companies might be genuine. What you should do is to invest without expecting too much. Do not park all your money there! Your money might disappear overnight. Just invest a little bit and pray a lot... As the previous forumer said, it's more like betting than investing...


*Read this from Personal Money

I have been following a column on young investors in StarBiz. I was surprised to find out about a few "weird" investments that people make. Some of these are:

1)Pokemon Cards
2)Painting
3)Watch
4)Jewellery
5)Wine

Personally, I do not consider these "weird" investments as investments although they might appreciate in value. Comment please...