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 Personal Financial Management V3, It's all about managing your $$$

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wongmunkeong
post Feb 18 2014, 08:52 AM

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QUOTE(sonicbull @ Feb 17 2014, 09:38 PM)
My answer in general...
After monthly repayment of the loans, the remaining cash
'Agressive':I will invest in a mixture of 10%fd, 30%mutual funds & 60%stocks.
If I have a business plan:I will save up enough capital in a fd/savings account to start the business.
Balance lifestyle: 5%fd, 50%vanguard etf, 45%stocks & mutual funds.
*
no expert here yar, just curious.
When U mentioned "30%mutual funds & 60%stocks"
U meant 30% bond funds or equity funds?
IF U meant equity funds.. er. then one would be 90% into equities (30% +60% stocks)?
Very aggressive indeed.

that 10% in FD - what if market collapses within 6 mths or 1 year.
how would one take advantage with monthly i keep my Fixed Income (FD or Bonds IMHO) at only 10% monthly?


Based on Kaiserwulf's "game" criteria:
Say you have RM 7000/mth to invest.
How would you allocate your investment(s) and in what frequency?
Other info: You have house loan at BLR-2.4% and car loan at 2% p.a. Your family is well provided and don't ask you for anything else.

My personal additional assumptions: mortgage = FlexiMortgage +do NOT have EPF a/c +not a biz owner.
IF biz owner, i'd suggest own biz be part of "Equities excluding REITs or Properties" if my biz is in trading/services

I would:
A. $7K - channel 50% to build emergency buffer, 50% for investments.
Once emergency buffer hits 6 months expenses or 8% of my net worth (keep topping up bit by bit if it is too far from 8%), 100% will be channeled to investments

B. Investments
1. Asset allocation of:
a. Fixed Income: 1/3 - to hold dry powder for FEAR / major value buys
b. Equities excluding REITs or Properties: 1/3
c. Real Equities (REITs & Properties): 1/3

2. Sub-asset allocation:
a. Fixed Income:
11.11% to local cash equivalent in FlexiMortgage
22.22% to local developed bond funds. Heck if BLR goes up, may even move this portion into FlexiMortgage
Note: since FI is just to hold dry powder for usage, local bond funds & FD/MM is good enough. Dont want to complicate things

b. Equities excluding REITs or Properties:
20% in Developed Markets ETF like URTH (including US) or a mix of ETFs like VEA (dev mkt exUS) +SPY (US)
13.33% in Emerging Markets ETF like a EEM or mix of CIMBA40 (ASEAN) +CIMBC25 (China)
yes yes CIMBA40 has SG in it, which is a Developed Mkt.
Again - point is not too nitty gritty, "close enough"

c. Real Equities (REITs & Properties):
REITs: Based on value hunting in SGX (0% tax on dividends for individuals) & MY (local expertise mar)
Criteria: net DY% >=7%pa & Price/NAP <=0.9 & D/E or leverage <=33% (buy for DY%)
OR Price/NAP <0.7 & D/E or leverage <=33% (buy depressed price for flipping)
Properties: Based on value hunting similar to above reasoning.


3. Execution:
With the Asset & sub-asset allocation done +specific vehicles identified, i would execute once every 4 or 6 MONTHS.
Why 4 or 6 months?
a. More cost effective purchases of ETFs, yet "timely" enough as done at least 2 to 3 times a year
b. Forces a review of Asset Allocation & sub-allocation at least 2 to 3 times a year

If AFTER the new injection of funds, any of the Equity classes or sub-classes varies 20% or more, FORCE a rebalance.
eg. 20% is for Developed markets, thus
if Developed markets hit <=16% force buy to hit back 20%
if Developed markets hit >=24% force sell to hit back 20%

If AFTER the new injection of funds, both Equity classes varies 40% or more, FORCE a VALUE BUY - spend down Fixed Income % down to 10% and bump up Equities & Real Equities equally.
IF DONE - do not buy into Equities anymore until Fixed Income rebuilt back to approximately 33.33%, then Execute as usual biggrin.gif

Why?
Approximately every year, about 10%+/- fall is expected
Once in 4 to 6 years, about 20%+/- fall is expected
Once in 8 to x years, major falls is expected (think 1997-1998 ASEAN currency crisis, 2008 credit crunch)
Statistics from statistical & equities company - sorry, can't recall which/where

Whew.. that's it.
All logical criticisms & suggested solutions are welcomed. The above is actually part of my "possible" Trust's asset management rules tongue.gif

Just a thought notworthy.gif

This post has been edited by wongmunkeong: Feb 18 2014, 08:55 AM
wongmunkeong
post Feb 19 2014, 11:27 AM

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QUOTE(kaiserwulf @ Feb 19 2014, 10:07 AM)
Nice breakdown WMK. I am just curious why the percentages since we have the game case of RM 7000/mth. 11.11% = RM 770 approx. Any reason for this number?

I like your 8% guideline for emergency cash. RM 500k networth = RM 40 000. Decent but not overboard.

Networth is asset + EPF - liability?

Also... anybody else with their personal breakdowns?
*
Hey KaiserWulf (sounds like the old Spectrum48K game tongue.gif - my age is showing bwhahaah),

Reasoning for the %s?
a. the big pix asset allocation of 1/3 1/3 1/3: simple asset class diversification in equal amount.
+Also found in the Talmud though tongue.gif. I ain't Jewish but the tests done on such general asset allocation by statistical organizations are very encouraging - google it
+the 33% in FI allows for a "great save" / great lelong triggered purchase of the 2 types of Equities
+the split of Equity types into "business" and "real estate" is for big pix equity diversification
where biz can hit home runs OR gets slaughtered,
WHILE "real estate" has yearly rental yields +capital appreciation (assumed as rising with inflation) thus even if market crumbles the yearly rental yields feed me

Simple analogy - think soccer / football - this formation of equal weight to "Defense", "Mid-field" and "Strikers"


b. The % in the sub-classes within each Asset class
1. Fixed Income:
If i've a flexi mortgage - i may even forgo bond funds as long term CAGR of bond funds are about 5%pa, and my flexi mortgage is saving me (thus "making me") 4.x%pa at such low interest times. It can only go up.

If no flexi mortgage, 11% in FD/MM is derived from 1/3 of 1/3 smile.gif and the balance in bond funds 2/3 of 1/3
Why? Generally bond funds get higher CAGR than MM. However, have to factor in that black swan thinggy of interest rate spikes.
Anyhow, didnt spend much time here coz FI is more of dry powder keeping for non-programmatic purchases (ie triggered by the 2 FORCED asset reallocation mentioned)


2. Equities exREITs & Properties:
Developed Mkt slight overweight due to longer term stability (think reliability) VS Emerging Mkts (higher frequency of dips). Statistically true though i can't recall where i got the few info from heheh tongue.gif. google = best friend.


Yup, net worth = assets - liabilities, where if one has EPF a/c it is part of assets
note though i generally dont count "fake assets" like cars, bikes, 100" tv, etc into the assets.


wongmunkeong
post Feb 19 2014, 11:57 AM

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QUOTE(Pink Spider @ Feb 19 2014, 10:20 AM)
Wong Seafood,

Care to comment a bit?

Just did a calculation of my investment portfolio...and the discovery...

Equities and equity funds: 82%
Bond funds (excluding MM and cash and FDs as emergency reserves): 18%

KLSE stock portfolio 2:1 diversified UT equity funds
*
Total investments (including EPF and EPF-invested into funds/stocks boh?):
Fixed Income: 18%
Equity: 82%

no right wrong thing wor bro Pink.
just opinions, like noses - everyone has one (unless surgically removed to spite face or accidents tongue.gif)

Thus IMHO for a 30yr+ old:
A bit on the aggressive side

a. visualize: If 1997 or 2008 happens again, how would U respond? (not react yar - react = auto fear/greed heheh)
If U want to respond by buying spree - yr 18% enough ka? to average down yr cost, where yr Equity lost 40% - 80%
yes yes - happens once a blue moon.. but blue moons seem to happen more often than 10yrs these past 2 decades heheh.

b. then again, to balance (a.) - how much U willing to "lose out" as opportunity cost to hold back for (a) and also for Fixed Income to be a ballast / stabilizing factor to your investment return?


bottom line = we ALL KNOW equities go up long term
problems:
1. can we hold and stomach the wild swings of being ultra heavy in equities?
ie. "fear selling"

2. can we OUT LAST the dips or market irrationality?
ie. not forced to sell to meet requirements, "need selling"

my apologies Pink - no clear 1 or 0 answer as each sees the above and have own thoughs + management
heck some dont even bother hehe

me - my personal approach is to manage it is by:
3. having emergency buffer + investment assets strictly separated, thus i can make my Fixed Income to ZERO or near that if necessary to buy ultra depressed equities

4. have equal weightage on major asset classes + use a programmatic investment as 1 of my approach,
coz i admit i dont have crystal balls to see future

5. the smaller % (Vs 4. above) approach of opportunistic investing is to satiate my known "tweak it better" nature which needs to be scratched on & off tongue.gif.

just a thought notworthy.gif
wongmunkeong
post Feb 19 2014, 12:55 PM

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QUOTE(kaiserwulf @ Feb 19 2014, 11:52 AM)
Looks good rclxms.gif What's the annual return for 2013 following that if I may ask?

'i assume you are practicing that already' so its not too difficult to count.
*
i am currently doing the 1/3 1/3 1/3 and the programmatic + FORCED rebalancing.
+ started INTENTIONALLY moving into Developed mkts last year (as per shared game's response).

however:
a. i'm not doing ETFs yet (i dont have $7Kpm free for investment lar tongue.gif), just stocks & funds +flexi mortgage.
b. i keep pumping monthly savings into "investment assets" monthly (Fixed income - flexi-mortgage until channeled into equities)
c. my tracking is per transaction-based with & distribution pro-rated into all holdings as at the ex-date

Thus, due to (a.) (b.) (c.), i can only easily share:
1. Each transaction's CAGR
2. Each group (Stock name or fund name) CAGR (ie. taking each transaction's CAGR into account per stock or per fund)
3. total net worth growth pm & pa

I think (1.) & (2.) is too long/complicated to list, thus my net worth or ROE growth?
note i didnt buy new home & i dont count cars, 100" TVs, etc. as assets:
2010: 37.05%
2011: 18.91% (index futures exploration soured, profits hit)
2012: 28.35%
2013: 15.20% (complicated pregnancy & birth cost impacted savings for investments since had to rebuild emergency buffer)

This post has been edited by wongmunkeong: Feb 19 2014, 01:00 PM
wongmunkeong
post Feb 19 2014, 08:08 PM

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QUOTE(Pink Spider @ Feb 19 2014, 07:53 PM)
First of all, thanks for the long-winded detailed reply notworthy.gif
*
older ppl get longer winded mar laugh.gif
anyhow, no - i wont touch my emergency funds for investments.
when i said that i'm even willing to go "fixed income" 0% and up my Equities in extreme value, i mean "fixed income" portion of my investment assets.
wongmunkeong
post Feb 19 2014, 08:33 PM

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QUOTE(Pink Spider @ Feb 19 2014, 08:12 PM)
Ok, let me recap, do correct me if I got your lecture points wrong...

- if emergency buffer are sufficient and clearly distinguished from investment assets, u can go gung-ho with your investment assets when ka-boom comes i.e. go 0% FI 100% EQ
Yup

- 18% seems like too low allocation to fixed income, I might not have enough dry powder to go firing all cylinders when armageddon comes
Yup BUT if 1997/1998 or 2008 DOESNT happen for a few decades... then U win big for being in 18% or less throughout those decades. Just pray U rebalance BEFORE kaka happens tongue.gif

*
on the 2nd point - yes, time in market ... else miss uptick ..
U may also want to check the statistics IF bad drops were avoided how much more one will "make"
Then, knowing we CAN'T avoid for sure those bad drops... if one has enough $ aside to take advantage leh? smile.gif

Simple view (may be wrong yar, pls poke):
33.33% Equities exREITs * 40%+/- drop ('ala 2008 KLCI) = 13%+ loss
33.33% REITs * 20%+/- drop ('ala 2008 KLCI) = 6%+ loss
Total loss: 19%+ to 20%+

If one has >20% +1/2 (ie 30%+/-) around & buys into extreme fear AND can hold (here's where Emergency Buffer comes in), imagine in 3 to 5 years time...

FYI - the above is one of the reasons i find it funny when ppl scream blood / cry when market falls 5% to 10%. No feel lar - not worth time & effort to force a rebalance, especially when i'm doing programmatic value averaging every 3 months or 4 (depending on vehicles).

Just a thought notworthy.gif

This post has been edited by wongmunkeong: Feb 19 2014, 08:35 PM
wongmunkeong
post Feb 19 2014, 09:22 PM

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QUOTE(kaiserwulf @ Feb 19 2014, 09:08 PM)
Your CAGR each year is better than WB!

I will be starting rebalancing portfolio after my upcoming wedding. Your sharing is very insightful. Trying to keep cashflow and reserves right for this since I am paying for marriage solo!
*
bwhahaah - pls pls - when WB was small like moi, his CAGR was astronomical compared to mine.

Keep in mind, net worth or ROE is investments' returns + man at work, not just investments' returns smile.gif
Keep cost low, profit higher - thus, i found that balancing both making & saving = turbo.
yes yes, i'm slow to catch-on that way laugh.gif

This post has been edited by wongmunkeong: Feb 19 2014, 09:37 PM
wongmunkeong
post Feb 20 2014, 07:42 AM

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Just to share:

For those into value investing via ETFs, there is a webpage that shows ETFs' PE ratios. The below link shows for non-leveraged ETFs

http://etfdb.com/compare/lowest-pe-ratio/no-leveraged/
wongmunkeong
post Feb 20 2014, 08:09 AM

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QUOTE(Smurfs @ Feb 20 2014, 07:50 AM)
one quick question to u bro WMK ,

"Once emergency buffer hits 6 months expenses or 8% of my net worth"

Why 8 % and not other figure like 5 / 6 %of the net worth ? i thought normally is just 3-6 months of expenses. Care to elaborate more? Use percentage of networth as a guideline to build up emergency buffer is something new to me.   notworthy.gif
*
8%+/- (ranges from 7% to 10%) was the % on my net worth i calculated based on:
if i were to retire at 50 or 55 or 60
AND to have 3 years' living expenses in "emergency fund", which by retirement will be my living fund 1yr +2yrs emergency fund,
THUS i wont be forced to sell investment assets at the wrong time to fund living needs.

Note:
IF one's home (non-investment asset) makes up for more than 50% of one's net worth
AND one lives frugally,
then this % should be lower.

However by logic, if one's home is a big % of one's net worth,
one's expenses to maintain that home is also more,
thus need more emergency buffer if wall/roof/etc collapses or fly off.

Just a thought notworthy.gif

This post has been edited by wongmunkeong: Feb 20 2014, 08:13 AM
wongmunkeong
post Feb 20 2014, 08:12 AM

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Just sharing:
For those that likes "collecting" long term dividend paying stocks that has kept increasing its dividends payout for 25 years. Note - US stocks thus 30% tax on dividends for "aliens" smile.gif

25-Year Dividend Increasing Stocks
http://www.dividend.com/dividend-stocks/25...sing-stocks.php

hint - wait for the prices to fall, thus DY% increase to hit your NET requirements before buying in (duh tongue.gif)
wongmunkeong
post Feb 22 2014, 02:42 PM

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QUOTE(kaiserwulf @ Feb 19 2014, 09:08 PM)
Your CAGR each year is better than WB!

I will be starting rebalancing portfolio after my upcoming wedding. Your sharing is very insightful. Trying to keep cashflow and reserves right for this since I am paying for marriage solo!
*
If you're interested in statistics (CAGR, Sharpe, Sortino, etc.)
Attached Image

from:
http://mebfaber.com/2013/09/26/how-does-a-...rategy-perform/
wongmunkeong
post Mar 1 2014, 09:07 AM

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QUOTE(timw90 @ Feb 28 2014, 06:44 PM)
Hi WongMunKeong,

Just finish reading through V2 and I must first say thank you for all you effort in helping others in such detailed manner. It has been a great help for me to gauge myself and help me learn.

I myself is a Wong biggrin.gif . 24 this year. Now its my turn to ask for yours and other member's advice. Here are my latest expenditure.

Gross Income: 2600
Net (After EPF): 2300

Food: 350
Fuel & Parking: 200
Medical Insurance: 200
Entertainment: 50

Medical Expenses: 400
-This is killing my wallet atm. Had an accident half a year ago and have been undergoing treatment till now sad.gif. Recovering and hopefully to clear this in 1 or 2 months time.

Total Left: 1100

I have 30k in FD atm (started last year Dec). 10k in Savings. 5k in ASB (Just found out about this last month). No house loan. 2nd hand car fully paid.

My plan now is to wait till this Dec and put all 30k into ASB. I saw you mentioned to have 6 months emergency in FD. However is it okay to put all savings into ASB? Is ASB liquid enough to be emergency fund? My plan is to hopefully max out ASB by age of 30. Then will look into stocks or property. Maybe marriage too.

Any advise to help me be better at my financial management? Any advise is welcomed.

Thank you!
*
Koniciwa timw90,

You're too kind - it's just an interest +killing time while growing my thinking by practice smile.gif.

Anyhow, just quickies before i dive deeper yar (rushing quite a bit these days thanks to my bosses):
1. ASB is only for bumiputeras wor - U can invest into ASB meh? ASM?

2. Assuming ASB or ASM, 30K in FD - i'd suggest U split it between ASB/ASM +foreign equities.
AFTER U put aside >= 3 months' average expenses as emergency funds.
eg.
$30K less [ ($1200 mthly expenses -$400 coz this is just temp)* at least 3mths] = $27K+
thus, take $27K and divide into say
ASB
Developing Mkts like CIMBC25 (China biggest 25 listed in HK ETF), CIMBA40 (ASEAN ETF)
Developed Mkts like URTH ETF or VEA ETF or mutual fund like CIMB Principal Global Titans

The above is assuming U do have EPF yar - which, in my humble opinion acts as "bond funds", thus i didn't suggest bond funds above as investment asset allocation. BTW, if U want - U can even throw in some REITs from SGX (0% tax!) or KLSE REITs (10% tax) for dividends.

3. er.. $ in ASB as emergency funds? i'm unsure how fast U can get to that $ - if within 1 day, ok gua.
Personally, i've about 2/3 of my emergency funds in cash equivalent (flexi mortgage) +remainder in bond funds.
Why?
Coz my flexi-mortgage = immediate cashout if needed & its rates are at 4.x%, which is quite near average long term bond funds' returns of 5%-6%.
That 1/3 in bond funds is just "hope" to beat my 4.x% and yet can get out within 4-5 working days.
er.. note - i've 1+ year's emergency buffer, thus most probably wont even touch that 1/3 (touch wood tongue.gif )

Just a thought notworthy.gif
wongmunkeong
post Mar 1 2014, 02:46 PM

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QUOTE(timw90 @ Mar 1 2014, 10:44 AM)
ASB. Lets just say I have the privilege of being a sino kadazan.  icon_rolleyes.gif

All those foreign equities you mentioned above are stocks? cos I have no idea what you are talking about haha. I have just started reading up on stocks and have not master the language yet. Was introduced to Public Mutual. After reading about it, realize that their service charge is quite high :S so I thought why not read up on stocks yourself.

So even for ASB, you would not recommend putting all eggs into that basket? and I do notice the trend that people are investing outside of the country now. Is it true that the market in other countries are better atm?

Thanks again for your time smile.gif
*
Ah.. so des ka. U are like my Portugese colleague - access to ASB thumbup.gif

Those ETFs are stocks, listed on KLSE (CIMBC25 & CIMBA40) and US (URTH, VEA).
U can google about ETF to learn what are Exchange Traded Funds.
In a nutshell - ETFs are like mutual funds BUT
a. they are listed on stock exchanges, thus can be bought/sold like stocks

b. lower cost to buy - buying stocks cost about 0.5% or less of the "value" received if U buy >= RM2.xxx per transaction VS mutual funds' 1.5% to 5.x% on NAV (think ETF's price as NAV for simplification)

Note - the only downside i see is this, every purchase must be >=RM2,xxxx per transaction else the cost of brokerage is > 2%. However, there are some brokerages like HLeB that offers cash account (ie. U must have exact or more $ than purchased) 0.1% or $8, whichever higher - something to that effect. Poke around.
For US listed ETFs, whoa.. if i do via HLeB, need to buy about USD8K per transaction to make the cost as a % worthwhile. Using OptionsXpress in SG (can open from MY without going over) is cheaper tongue.gif

c. lower yearly management cost - about 0.5% to 1%pa VS mutual funds' 1.5%pa to 2%pa

--------
Ok, on to opining:
d. ASB - personally, if i can buy into ASB, i'd use the ASB loans from CIMB, MBB, etc.
Heck - free $ since i make the spread. Only have to be wary for the 1st year+ payments +if i need to take loans for anything else, this ASB loan will show up in CCRIS (watch out yar - may affect your home buying or biz loans)
Thus i'd use cash into over investments

e. On the item of "market in other countries are better atm":
To me? Yes - specifically BRICs (Brazil, Russia, India, China) +Indonesia +Thailand
Reason: Their market's index's PE, are 10 and below VS KLSE >15 liao.
Google PE - in a nutshell, it's the "Price U pay / Earning expected to get". U want this low if U want to buy lelong value - like when Tesco or Giant have big blowout sales on milk powder max /family 5 packs tongue.gif

Hm.. if U've just started in your journey, don't be in a rush to jump in
IF U really want to jump in & get your feet wet, pls do so up to 50% of your available funds for investments only.
I'd suggest U google /read up (books) on ASSET ALLOCATION, VALUE AVERAGING, EXCHANGE TRADED FUNDS VS MUTUAL FUNDS, VALUE INVESTING.

Good luck with your journey - keep in mind, it's a bloody marathon, not a sprint! laugh.gif
wongmunkeong
post Mar 1 2014, 05:46 PM

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QUOTE(timw90 @ Mar 1 2014, 04:40 PM)
Even after reading through V2.. I still cant catch all the words you say.. :S any book you could recommend for me to start reading up on all this ETF, and stock stuff?

also, for ASB loan. is it like car loan? where by the longer i borrow the more interest I pay? I thought ASB loan wasn't that attractive. That's why I didn't opt for it.

Thank you again for your replies biggrin.gif
*
oops.. my bad - which words unclear ar?
List them or part of the sentence - i can clarify. My bad, sometimes i forgot i took me several umpteen years of reading +hands-on to learn. notworthy.gif

Books?
GENERAL
For investing as well as life in general tongue.gif
http://www.amazon.com/7-Habits-Highly-Effe...1800/ref=sr_1_3?
s=books&ie=UTF8&qid=1393666898&sr=1-3&keywords=7+habits

Simplify +Savings +Investing = Turbo
http://www.amazon.com/Secrets-Millionaire-...rds=T+Harv+Ekar

Cow sense investing
http://www.amazon.com/Four-Pillars-Investi...ds=four+pillars

ASSET ALLOCATION
http://www.amazon.com/About-Asset-Allocati...B6T1T1X7T07DC0R
http://www.amazon.com/The-Intelligent-Asse...B6T1T1X7T07DC0R

VALUE AVERAGING
http://www.amazon.com/Value-Averaging-Stra...s/dp/0470049774

ETF
http://www.amazon.com/Exchange-Traded-Fund...-3&keywords=ETF

VALUE INVESTING
http://www.amazon.com/Little-Value-Investi...value+investing
http://www.amazon.com/Value-Investing-Dumm...value+investing

BTW, pls note, IMHO investing <> trading yar.
Trading IMHO = biz where i buy product at low price & sell higher price, actively growing wealth.
Investing IMHO = systematically buying into companies or properties and passively growing wealth.

On ASB loan - i did a calculation for my colleague and it was worthwhile.. i gotta dig it out.
Did it for her a year back.. can't remember for sure whether flat rate (like car loan) or mortgage style (reducing balance or effective rate pa) - very highly likely = mortgage.
Anyhow, it doesn't matter what style as long as when calculated as "effective rate per annum" VS ASB's returns = makes sense with a spread of at least 2%pa smile.gif
Note though on my worries if U intend to borrow for buying home, biz, etc as ALL borrowings show up on your CCRIS report and your loan office may think U have too high a monthly commitment / too highly leveraged.

Just a thought notworthy.gif

This post has been edited by wongmunkeong: Mar 1 2014, 05:50 PM
wongmunkeong
post Apr 15 2014, 08:56 AM

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QUOTE(Showtime747 @ Apr 15 2014, 08:25 AM)
Very often we hear people say putting money in FD is useless because of inflation that will eat you up alive

Yesterday I was talking to my elder brother, who has retired and has tonnes of money in FD. He is a very risk aversed guy, so the bulk of his money is in FD. I asked him the above question.

He told me FD is not actually that bad. Those who say FD cannot cover inflation is not entirely accurate. He said that income doesn't equal to expense. So if your FD principal is big enough, you can still beat inflation in absolute amount. I run a simple scenario on his theory :

FD - 3.5%, Inflation - 3.5%, Putting FD is worse off ?

He has FD for eg. RM1.2m as principal. Each year he makes RM42k = RM3.5k pm

His expense is for eg. RM2k pm = RM24k pa. So, he still has RM1.5k left over to roll into FD. While the price of goods increases every year, his income also increases. Repeat it over 20 years, he still has positive RM3.5k yearly or ~RM300 pm extra to cover his inflated expenses. And his FD principal has grown into RM1.46m

So, the trick is to have a FD principal that is large enough, and it still can cover inflation. Comparing % may be just the trick of financial planners who try to convince you to buy their products  tongue.gif
*
Agree in principle.
However, if the same $1.2M was asset allocated to equities & fixed income, say 50% 50%,
and a long term CAGR of say 7%pa (prudent enough?)
with the same spending pattern,
your bro would be able to reinvest even more, thus grow even more (long term lar - dont say crash next year tongue.gif)

Personally - for my retirement, i'm aiming to spend 50% of my investment & trading generated income, reinvest the other 50%.
Technically, i should be able to spend 3%pa to 4%pa of my total assets in investments & trading, reinvesting 3%pa to 4%pa - leaving something behind for future generations + rebuilding/healing of our planet

Just a thought notworthy.gif
wongmunkeong
post Apr 16 2014, 05:42 PM

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QUOTE(Showtime747 @ Apr 16 2014, 05:31 PM)
But there are "financial planners" who use inflation as a yardstick to say FD is not a good investment. In a way, they try to promote their product by saying FD is bad. Are they wrong ?
*
each vehicle has its own usage, there is to outright BAD investment or holding vehicle.
any "financial planners" that uses ABSOLUTES give themselves away as ConSultans biggrin.gif
wongmunkeong
post Apr 26 2014, 02:04 PM

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QUOTE(Hapeng @ Apr 26 2014, 11:46 AM)
lol guys i dont need a lesson on how often to trade and on compounding..
im asking is there anything more i can do, or im missing out on.
*
Stocks - worldwide selection or MY/SG only?
Funds - worldwide / developed vs emerging? or just MY?

"Tax relief" or tax impact investments such as PRS for your age and tax bracket explored?
Explored usage of EPF A/C1 for mutual funds or direct KLCI stocks and EPF A/C2 for mortgage repayment (thus cash flow into other investments)?

Generally, i think U are ahead of the curve based on your age unless U happen to be working with investments-related stuff lar. U save well, U have built-up buffers AND U are into equities.
Now - to optimize and to explore the world.

This post has been edited by wongmunkeong: Apr 26 2014, 02:18 PM
wongmunkeong
post Apr 26 2014, 05:28 PM

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QUOTE(Hapeng @ Apr 26 2014, 03:55 PM)
Only investing in mY so far. Will think about venturing into the US in the near future.
Funds - worldwide.

Yes I've started and contributed the RM3000 for the year, anticipating the bonus RM500 from gov.
Thanks for the advice on usage of EPF, will look into it but I've been working for about 1.5 years only, not much EPF yet.

I have a stable job, looking into other opportunities/biz on the weekends.
My next goal is to try help my family get their finances in order. Budget, investments etc.

Thank u sifu.  notworthy.gif
*
hehe - no sifu here, i'm just L-earner with capital L.

U seem to be where i was when i was 29-30 - i'm a slow learner & coach-er tongue.gif.
It's heartening to see another fellow like U getting head & heart straight at a good age - there was another fellow around here too from Ipoh. Only noticed 2 so oomph! thumbup.gif

Keep at it - with a structured asset allocation & sub-allocation in mind.
After awhile, U may find that at times - whole bleeding world also susah to find value stocks or ETFs, OR just too bleh to buy into them in chunks of $20K to $50K.
When U hit that - perhaps look into stocks-related biz or trading with a small % of your investable assets (eg. 5% to less than 10%).

Saw your property thinggy.
Me - not too good at properties. Made just 20% to 25%pa on mine after disposal and including all expenses.
Thus focusing only on paper stuff until kaka happens in local LANDED properties. Gave up on joint-management thinggy and stuff.. rclxub.gif

Just a thought notworthy.gif
wongmunkeong
post Jun 20 2014, 02:29 PM

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personal inflation:
one's total spending increase yoy (personal interpretation for focused effectiveness)
VS
one's spending increase on same items yoy (technically correct)

similar to the "argument" on net worth:
total assets minus total liabilities (technically correct)
Vs
total REAL assets (ignoring doodads that dont make $ AND depreciates AND cost $ to keep like personal cars, bikes, etc.) minus total liabilities (personal interpretation for focused effectiveness)

Those that uses personal interpretations (like me tongue.gif) should lar acknowledge the "technically correct" versions as well lor since that is "universal" gua.
wongmunkeong
post Jun 21 2014, 12:05 PM

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QUOTE(tikaram @ Jun 21 2014, 10:58 AM)
Brother u forgot to add. House that u r living is not an asset and the forsee children cost to bring them up until graduate is liabilities.

at least that was my version.
*
hehe - my home, i rent out the rooms, thus does generate income tongue.gif
Children? what to do - our responsibility as parents mar. they didnt ask to be born laugh.gif
at the very least we can do is to grow them as well as we can.
<what, son? U want that Evo for yr 18th birthday? where's my whip...>

This post has been edited by wongmunkeong: Jun 21 2014, 12:05 PM

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