Well seriously, the only way is to put them in FD for 30 years...

Introduction (jump to my 2nd post if you boring reading these)

Ok, now you start working, earn some money, and trying to make some good use of your hard-earned "blood sweat" money. So what would you do? But yourself some good gudget from lowyat of course and then you are thinking about investment.

First of all, your saving account, is not considered as investment, its interest is so tiny and it is solely for you to ATM your money and pay to lowyat model shop or hardware store.

Many people invest in Fixed Deposite, good and steady, you put in as monthly basis you will get 3.1% per annual. Sounds great, so if you put like 100k in FD you will get 3100+ more per annual. Really great rite? But the truth is, for example, our inflation rate for March 2006, is estimated as 4.8%(feel like 16% if your charkueyteoh increase price 50cents), ie you paying 4.8% more to buy stuff, or your money lose value for 4.8%, that means you are still losing money if you put money in bank.

So, people are thinking about other better solution thou. Stock Market! You might say, thou i am not too familiar with stock market, but i do know there is a risk to bear with much higher potential return. You can make 20 times more then FD or lose 90% of your money in one week. Plus, you have to study which stock you want to buy, track them yourself, etc. And you need to buy a few kinds of stock to diversify your risk, say one of your stock lose money, the rest might earn money and still can let you earn net profit.

Buying property like house or land require money, so not suitable for fresh starter to 1+ years working people, unless of course, you say your father or grandpa is rich and willing to buy you a house or land. Property is a good way(if not best) of investment thou, which usually its value will appreciate after years, usually many times much higher then FD, EPF even if deduct the loan(assuming you taking loan to buy property) interest.

(note: buying cars is not buying property, it is just pure expenses, or pure debt, you need to pay for fuel, maintanence, and your car value depreciate like hell especially if you buy certain brand)

So, tata! HeRe comes the Unit Trust! 2b continued...


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Ok here comes the part 2

I will just talk about what should you know about unit trust, not going to touch too much on the inside(who manage the money, who approve, etc, i am not too sure)

Tata! Here come unit trust! Some people(agents) said it is just like FD, you put in money, lump sum or monthly(you want weekly also can), and you earn interest. The concept is somewhat similar but actually there are differences(of course).

Firstly, unit trust (UT) company will charge you service charge, which is a one time charge. Also, there will be an annual fee, something like annual management fee. All these charges is what the unit trust company lives on, they are not doing charity you know.

Service charge = (sell price - buy price)/sell price x 100% = ~6% ('cept bonds cheaper)
Annual mgnt charge = usually 1.5%, depends, bonds usually lower

Wowowow, so many charges, and still say just like FD!? Told you liao mah, its different one, becoz the unit trust companies are not doing charity, they need to support their wives to buy cosmetic and their kids to buy transformer. But wait, dun run away first, let me tell you why the heck you should pay these people rather then put in you hard earned money to bank and let them to shark other people.

And also, UT have risk also, doesn't mean you sure sure get double or triple of EPF interest everytime, you might also lose money in short term. But, usually(note, usually only, not always), you earn more with UT in long term. As long as M'sia grow, your UT grow So, if any agent tell you that garentee got so and so return(eg, garentee 300% return in 15months ) you tell him go back eat oat. Remember, no such thing is easy peasy speedy money.

Firstly, there is a company of expert to manage your funds, you dont have to go study the stock market to invest in unit trust, nor you have to have first hand news to ever able to earn anything. They will worry this for you, and they will decide which area(stock, bond, equity....) to invest, surely they can decide better then you(sure a UT company wont hire a monkey as their fund manager?). And you, just have a peace of mind, put in money and wait, just like FD

Remember the risk diversify i mentioned when investing stock? You also dont have to worry about this, the fund managers will worry about this, your UT fund is nicely diversified into a range of stock or bond(depends on the type of UT you buy) and even some in FD as well. So you will have a well diversified risk profile. Remember, diversified risk doesn't mean no risk, you still have risk, but minimum risk, it also depends on the risk profile your UT is. But you wont lose like you lose in stock market la, as someone has mentioned, UT is very slowww, so thats the point, you lose money also slowly lose

And also, you can start invest in UT for as low as 1000, and you get all the benefit of UT, like diversify risk(what else you can diversify with 1000 only btw, you cant even buy 1 lot in stock!), fund manager, good interest... blahh. And can top up in any UT you invested for as low as 200. So thats a very good point, you dont hv to work for 10 years to save enough money to invest

And for this little bit of money you are contributing in developing our beloved M'sia economy as well! Becoz your funds will be used to invest, not shark loan

Next i will touch about UT trust risk profile, which to choose and how to monitor, etc. Part 3 tbc

(wooo, gosh, got works 2do, brb)

(edit, another benefit of UT is that you have a liquid asset. Thats means it can help you whenever you need money. Not like property like house or land, you have to sell it to get cash. You can cash UT anytime if you urgently need money)

This post has been edited by rexis: Apr 26 2006, 12:07 PM

Indeed slower then stock, because UT is invested in a diversified range. So if cant be fast, there will be top losers and top gainer everyday, unless a war happened and the stock market collapse la.

So, lets say that a unit trust has a "rippening" period, this is the period that it need to earn enough interest to cover up its service charge(~6%) and annual fee(~1.5%), so after cover up the charges, then you considered earning net profit. This will take sometime(~maybe 1 year) and thats why people say it is slower.

So after your UT "ripe" it is "fruiting" liao, you will start earning with your UT. Just like you plant a fruit tree, you need a few years to enjoy its fruits. But when the fruits come in it is sweet

In some case, UT can still 2x or 3x of FD and EPF in the first year, covering the service charge and so on. But thats not the usual case.

I hv edited my part 2, forgot to add in another advantages.

Also a bit about myself, I used to be a UT agent, during my time of unemployment. The meaning of being a UT agent means i passed the UT agent exam, but didnt really go and sell any UT, even thou got follow leader to whatever dinner and meet client... i still couldn't get my own client wahhwoo..

Imagin, getting hp contacts and calling them and ask for their money to buy UT. Not really my type of work. Lisense already expired long time ago.

But i get to know about UT in that way.

Haha, my agent ask me to check internet myself when i ask for more information about newly launched funds from her. Haha, i nearly prepared the cheque to buy liao, she should have come and just collect my signature and cheque rather then asking me to check internet myself.

Alamak, i was trying to *focus* on UT investment mah. Now everything messed up liao lar, you shouldn't put duck egg, chicken egg, ostrich egg together one... anyhow...

Part 3:

Different UT have different risk profile, namely aggressive, moderate and conservative. Over the long terms, all the UT are the same. But different customer hv different taste of UT.

Conservative funds is the one you guys said slooow funds, it is pretty much nearly risk free because the UT is invested in bond, money market, dept...(not sure what are these). Its graph usually a near linear upward trend so it can be considered as a fixed income UT. But remember, low risk is also a risk. Nothing is garenteed. This funds is perhaps suitable to retired old folks who wish to use their retired money wisely, they couldn't take too much risk and prefer to have a FD style income. Also, conservative funds (bond funds) usually have lower service charge and annual fees, and they grow slowly.

Agressive funds! Agressive means straight away pump up 6 zerglings and rush them to your opponent's base while you preparing the hydra... okay, cut the crap, one direct way to reconize this is from graph, agressive funds move up and down a lot. They said youngsters like you and me would prefer agressive funds, coz young ppl dun hv heart attack, can take bigger risk... haha, the last part was just my own interpretation, dun take it seriously. Since move up and down a lot, you have to monitor the funds closely, because you might have a change to earn profit in as short as two months period. Yup, agresive funds is more alive. Yet still safer then playing real stock la.

Moderate funds is basically half conservative and half agressive. It is suitable for most people, your whole family from atuk to adik, nenek to cucu. So, basically when a UT agent approach you, they will promote a moderate risk fund(suitable for all) and a newly lunched fund(new mahh) to you. I dont think that they know too much about stock market(not their field anyway) and what is inside these funds because their main aim is get your cheque. So self study is also important, in each UT company you can get their prospectus for free, it is a nice piece of booklet which contain all their UT profile.

(Below) Conservative, nearly linear curve, steady flow of cash to your coffer!



(Below) Agressive! According to below you can earn 9% in 2 months(dun forget to deduct the 6% service charge dulu, so 3%) and lose 7% in 4 months(add the 6% service charge too ) But over long term still can grow.



(Below)Moderate funds, not easy nor difficult. Less heart attack causing spike and yet still have some fun turbulence.



Credit to: Public Mutual, in case someone dunno which is the biggest and oldest UT company in M'sia, this is the big guy.

Add: you can spot some history in the graph too, for example, our beloved Datin Seri Endon(badawi wife) passed away on 20th Oct 2005, did you notice a slight drop on October 2005 on the agressive fund? But the conservative fund still steadily gain a little bit day by day, thats what we call steady income fund.

Btw, in case your guys spot any error or missed out any points pls correct me

This post has been edited by rexis: Apr 27 2006, 09:51 AM