the chances of the bank collapse is as low as striking a lottery. even if that happens, the government will pay RM 10 Billion to bail them up. Worry not.

The limit is 60K per A/C. I do not know whether each separate FD is consider one A/C or multiple A/C. If you have more than that, spread your money across banks if you worry about that.


Dreamer

Hi dreamer, I checked with my frens working in bank. It's RM60k per person/ID number.

Cheers,
Max

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Added on June 21, 2007, 10:21 amHi deadalus,

Where do you think our government put their money in? If the bank in Malaysia can collapse, I don't think our government can pay that amount to bail them.

Our banking industry is quite regulated so for it to collapse meaning the whole banking system is screwed. Which means, those banks are doing fishy loan deals with some fishy companies in malaysia.

Just like the EPF. Only time will tell when it will collapse. They have no transparency on their investment strategy. They started off with bailing small companies. Over the time their appetite grow. Now you see them taking over RHB with no concrete reason or business strategy. Soon, probably you will see more as they are getting more daring.

Cheers,
max

This post has been edited by maxwoo: Jun 21 2007, 10:21 AM

For those who are concerned with the sales charge, effective from 1st July 2007 the unit trust industry will implement a Single Pricing Regime. This means that the buying price and the selling price will not exist, and there will only be one price to buy and sell.

This means that any additional sales charges are effectively 'added' to your investment. For example, if I wanted to invest RM1000 in a fund, and the sales charge is 5%, then I would have to put in RM1050 to invest. Of course, similar to paying charges when transferring money overseas, you can minus the sales charge from the principal amount (ie total invest RM950+RM50 sales charge).

This also means that unit trust companies are to disclose all the sales charges in different distribution channels. For example, thru agents, the sales charge could be between 5-7%, thru the banks could be 3%, or thru online distribution could be 1.5%.

The difference in charges is to reflect the value of each channel. If the agent is extremely good in managing your investment and able to give you high returns with his monitoring and advice, and you don't have the time to do all of the work, then probably the 5-7% is worth it. If you are somehow investment savvy, then you can choose the online distribution where you do all the work yourself (switching, reading up on trends, etc.)

The Single Pricing Regime will also have the effect of lowering the total industry average for sales charge, so expect it to go down to 4-5% sales charge per fund for investing thru agent (effectively lowering down agent commissions at the same time. ).

The Single Pricing system only changing the way of the unit trust quote about their NAV and pricing, no real effect on the reduction of entry/service charge unless they annouce the reduction of the charges later on which I seriously doubt they will do it unless there is some pressure from BNM or competition from overseas fund (direct overseas fund not global fund launched here) which still not permitted by BNM.
Currently, finance instituition are more like 'sucking blood' everything also want to charge on to maximise their profit so they have no reason to reduce something that earn them millions of profit (without much risk) that has been quite in place quite long.

This post has been edited by cherroy: Jun 21 2007, 11:15 AM

maxwoo,

As you said, if banks in Msia bankrupt, mean the banking system already screwed. I think, before the banks bankrupt, more than 90% of the listed companies already bankrupt and even unit trust companies also bankrupt. Means, no matter what investment you do, you also loss money...so, FD is still the safest investment.

Jayen,

Currently, there is no online distribution of unit trust in Msia (except additional investment). The service charge of buying from agent and buying from bank is same now.

The charges arent likely to go down by much in the near term as our unit trust industry is not as competitive as in USA. One needs to acquire SC approval to sell a fund in Malaysia. If SC doesnt open up the market to more new big players, there will still be the same players who control the market ie public mutual, OSK, CIMB etc.

Presently, there are some mutual funds selling at lower initial service charge, but when you sell the funds, they charge you again on repurchase fee which end up still about the same to the industry standard of 5-7%.

Another kind of fund like islamic fund charges you close to nothing when you enter the market, but they take profit sharing of 15% from the fund. Depending on the horizon of your investment, it could well be over the 5-7% charges in long term.

All in all, these companies are setup to make money. If you think you are well equipped to invest on your own, go ahead. Nobody would stop you.

From an investor perspective, if you wait for the charges to be reduced to minimal, it could take many years... And you are losing because of the present opportunity cost to make money. Yes, a bit less after the service charge, but still greater than FD in long term, dont ya agree ?

Leek,

That is quite true. No risk, no return. High risk, high return. I guess that's the rule. How about investing in properties, gold or open an account in our neighbouring countries as a hedge plan?

Cheers.

If you have no idea what you are doing, you can get high risk and low return too.

Dreamer

I guess that's the reason why so many forumers asking for advice from seasoned investor in this forum. We seek for advice on investment so that we won't make the same mistake again. There's just too little time to make the mistake and learn from it. We want to learn from others mistake and avoid doing it.

Everyone is saying that the recession is coming and KLSE might burst soon. I need to ask those who have gone through 85-87 recession and 97-99 recession. How many actually predicted that it will happen and left virtually unscathed from it?

Everyone I know is waiting for the KLSE index to crash so that they can by then buy so-called cheap, good fundamental shares. But is this really so easy and predictable?

It really seems that everyone can save their bullet for now and wait until KLSE crash and start buying shares like Public Bank, YTL, TOTO, DLADY, etc. Then everyone will make money...

What i noticed is experienced investor in this forum are reluctant to share about how to start a proper investment program. While we(the young going-to-be-investor) are not expecting any spoon-feeding, we would definitely appreciate any hint.

Thank you..

No one can predict correctly how economy will be. But one thing is true is that current economy has some how slow down a bit already, recession or not, only god know. Look at IPI, new vehicles sales, export figure etc. already give you hint about the current economy situation. Everyone has his/her opinion, that's why in market there always got buyers and sellers.

Current stock price is not really cheap nor really expensive that will prompt for long term investors jump into it with full force. I am not saying you can't invest totally, might still can gain if market go higher but for sure I would't invest my fund (that has allocated for stock/UT) more than 70-80% at current price.
You reduce exposure when market is high but not totally out of it since market might still go higher if economy indeed improve. You can't get it right evertime, what you do is maximise the chance of get it right.

One thing is important is that always be prepared allocated a portion of the fund for the wors even though there is only 1% chance of the worst.
Current marke is somehow in the 'fair' value range. The future direction of market largely depends on earning improvement of the listed company.

Hi! Just to inform that EPF is not allowing investments into funds that have foreign exposure. You can confirm with unit trust companies customer service:

Public Mutual - all funds are affected, meaning you cannot invest EPF money into Public Mutual funds

CIMB - some funds affected, so you still have other choices to invest in the funds

TA - some funds affected, so you still have other choices to invest in the funds

HWANG DBS- some funds affected, so you still have other choices to invest in the funds

OSK - some funds affected, so you still have other choices to invest in the funds

I'll update other companies as soon as I can confirm.

This probably means that the Govt wants the local market to go higher, since if EPF money is invested overseas is not benefitting the national economy since the money is outside the country.

This post has been edited by jayen: Jun 21 2007, 03:00 PM

Why wait? Malaysian can open an US stock brokerage A/C with e-trade and buy ETF. For USD 1K, the cost of trading is 1% and most ETF annual maintenance fee is 0.5% or less. With this approach, you can buy index fund to cover the whole world at very low cost.

Dreamer

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Added on June 21, 2007, 9:37 pmmaxwoo,

Unless you are buying some kind of index fund/UT (does not exist in Malaysia), you are buying the whole market. So, you are actually NOT buying the market. You are buying individual counter.

Then, the next question is are you investing or trading?? In my definition, to invest means that you buy something and you can go to sleep and do nothing for 5 years. Anything else is trading.

Now, if you are investing, you should know at what price, the stock/counter is worth buying. This is like shopping for anything else.

<<Everyone is saying that the recession is coming and KLSE might burst soon. I need to ask those who have gone through 85-87 recession and 97-99 recession. How many actually predicted that it will happen and left virtually unscathed from it? >>

Isn't the answer to this question simple and obvious?? You could have done some research and find out which counter survive and do well for this two recession?

There are ONLY less that 5 counters worth investing in KLSE. It is not that hard to find out who they are.

My system is what people call dividend yield investing. Buy blue chip stock with consistent high and growing dividend yield. And, buy the stock when the yield is high enough.

There are only a few industries in Malaysia where the company in the industries are GUARANTEED to make money. In those industries, there are ONLY a few companies worth investing.

Dreamer


This post has been edited by dreamer101: Jun 21 2007, 09:37 PM

Investing in foreign currency expose you to additional risk, especially with the USD not looking so promising to many people. There are other issues like liquidity as well, how long its gotta take to sell off your foreign investment, convert the USD to RM and wire back to my local bank at minimal cost ? I do not have an account with ETrade, perhaps someone who does can tell us more about it.

If you think it justifies the extra risk, go ahead. I personally dont recommend anyone to invest like this with more than 20% of the portfolio. There are quite a few local unit trusts that outperform the KLCI index even after the service charge too if you havent noticed.

If not mistaken, I read from Personal Money, there will a new financial portal offering unit trust with very low service charge. Just wait for it, should be out by end of this year.

Having this kind of company, I think the traditional players might reevaluate their service charge and fee. Important is, this benefits investors.

Agree with Dreamer...don't invest in something you do not know.

Hope so, competition always good for the customers. Just hope, not 'talk' only.

Any idea what portal is that ? Tune money ? If its Tune Money, then CIMB will be involved. Other big players like Public Mutual, OSK position wouldnt get affected much also.

yes, it is tune money. tony fernandes from airasia came up with it along with his friends and partner with CIMB.

i don;t know whose trust is going to be sold online. but right now, CIMB is not one of the top performing fund. plus, the new online funds does not have track record which can at least give me an assumption how it is performing compared to it's peers.

If Im not mistaken, what I understand from the personal money, Tune Money will launch their own funds, mean they are a new unit trust company. CIMB is cooperating with them, but not really directly involve in the unit trust offered.

Their feature is, everything done online with a low charge and fee.

low charges and fees are good, but it is also important that the funds perform - maybe they will offer UT that will feed into other funds, because I don't think tune money can attract established fund managers

plus the fact that global equities and bond markets are in flux - if you choose a UT with inexperienced fund managers which are not as adept at managing risks and choosing their portfolios, you might be in for a tough time in terms of returns on investment