Sorry for the late reply. It takes a lot of time to absorb some new terms, problems of my own and Q&A of others. I am trying to squeeze in as much as I can.

Yes, I know stock cannot be considered as investing. It's moving too fast for me sometimes and I had to have my friend's mother help me look after my own investment. I hate being dependent on others but while working, I really cant find the time to monitor it. I understand your point.

I will live with my parents for a while. I would like to correct something. Honestly, my gf IS from a very rich family. I am from an average family that runs a freight business. Her family are kind and never demand for anything from me. We can live a normal lifestyle away from my parents. We are prepared for that. We know not everyone in the world is so fortunate to go on living a dream.

I will take your advise on reading up on the Edge before investing. And I also know its not wise to put all my money into the house I will be living in but that's the way it is right now. I am trying to find more ways to get more income.

I do not have 4 houses indeed. Shared between my parents is correct. I am the only son. A sister is PR in Australia and another is very very young - still in secondary school.

ejleemy,

Thank for the URL and now I have REAL DATA to argue with you.

Choose PSF and date range of 3/1/2007 to 17/7/2007

PSF return is 22.59%
KLCI return is 22.57%

Please tell me why am I paying 6% to 7% load plus 1% to 1.5% annual maintenance fee to beat the market aka KLCI by (22.59% - 22.57%) = 0.02%??

In fact, after factor the fee and load, I am a few percents below market benchmark aka KLCI.

Why am I paying MORE to get LESS?

I would have get a better return if the ETF is available in the early part of this year.

Now, who is IGNORANCE?

Dreamer

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Added on July 19, 2007, 1:57 amCasanova,

1) Check out FBM30etf. Do more reading on edge. This might be a good low cost long term investment product.

2) Fish do not know the existent of water. Average family do not live in a bungalow. So, both of you are from a higher income families. My question is more along the line of how are you living in a lifestyle that both of you can support?? Currently, your life style is partially support by your parents.

3) There is a problem of living among people in bungalow. The peer pressure will force you into a luxury life style and you will not even realize it.

<<Yes, I know stock cannot be considered as investing. It's moving too fast for me sometimes and I had to have my friend's mother help me look after my own investment. I hate being dependent on others but while working, I really cant find the time to monitor it. I understand your point. >>

4) This is fine as long as you do not put ALL your money in it. You need to set a limit.

Dreamer

This post has been edited by dreamer101: Jul 19 2007, 01:57 AM

dreamer,
do we need a license to build for sell houses? i heard you need some sort of license known as development license, and are those only granted to bumiputra only?

and how about build for rent, or build motels(rumah tumpangan)? coz i got an idea of doing motels business... as part form of long term investment...as prices of land hardly falls, and many tourist looking for budget motels in that area.

ah_suknat,

I do not know.

Dreamer

DO YOU KNOW HOW TO INVEST IN MUTUAL FUND AT ALL ? You go for long term. Yours only a half-year period comparison. People are suggested to go for a minimum 3-year period. If we are looking at 3 year period, see the chart. Compare a person who invested in USA with your index fund with a person invested in this PSF 3 years ago, tell me who would gain more ?

Another fact is Public Saving Fund is not even the best performing funds. It's just an old fund offered by Public Mutual with a good long consistent record. There are many many other funds that do much better. In terms of risk and adjusted risk return (you can get the data from morningstar), a good fund often enjoy LOWER volatility and HIGHER return than an index fund at the same time.

Dreamer, seriously you have to learn to see things objectively. Wake up !!! There are pros and cons for both index fund and mutual funds. No clear winner in every case for every investment vehicle.

To the people out there,

REITS is another big thing coming, the charges are moderate to high, but return is always better than FD in long run and very stable. While both index and mutual funds might suffer short term fluctuations greatly, REITS can get a stable return in most economy conditions. It could be a good investment choice for those retired people.

This post has been edited by ejleemy: Jul 19 2007, 08:44 AM


Attached thumbnail(s)

KLSE return is 62.39%
Public savings fund return is 75.37%
Public industry fund return is 98.54%

Assuming a front end load of 7%, the actual total return of

Public saving fund is 75.37% * ( 1 - 7%) = 70.09% ~ 7% better over 3 years
Public industry fund is 98.54% * (1 - 7%) = 91.64% ~ 30% better over 3 years

So, those funds are good. And, it is beating the market index.

<<REITS is another big thing coming, the charges are moderate to high, but return is always better than FD in long run and very stable. While both index and mutual funds might suffer short term fluctuations greatly, REITS can get a stable return in most economy conditions. It could be a good investment choice for those retired people.>>

REITS in which country that you refer to? Malaysia?? I will be VERY CAREFUL investing on REIT in Malaysia. The law separating the management company and the actual REIT property is not that strong.

<<If we are looking at 3 year period, see the chart. Compare a person who invested in USA with your index fund with a person invested in this PSF 3 years ago, tell me who would gain more ? >>

1) Who cares?? That is NOT my goal anyhow. I would not put MOST of my money in Malaysia anyhow. Plus, I refuse to support/invest on those 90+% companies.

2) I have NO CONFIDENT that Malaysia economy will survive in 5 years.

3) I do not TRUST the economy of any single country in the world including USA. And, I do not have to. My goal is to make money under ALL circumstances.

4) I do not do market timing.

Dreamer

This post has been edited by dreamer101: Jul 19 2007, 09:43 AM

Ok, good work Dreamer. That's the way to calculate net gain over 3 years. I think there's a typo somewhere, but nvm, the calculation is clear and close enough.

REITs are pretty new in Msia and there are not many REITs in Msia. There's a huge REITs market in Australia, HK etc.

As for local market, I believe Starhill REITs has the potential. The rental yield is expected to go up. It could be a decent stable investment. Risk and return wise should be somewhere between bonds and stock market.
However, I think REITs investors do not enjoy as much tax benefits as a mutual fund does in M'sia. Need to do more research on that matter.

ejleemy,

I invest on REIT in USA plus REIT around the world.

World REIT

http://finance.yahoo.com/q?d=t&s=RWX

US REIT

http://finance.yahoo.com/q?d=t&s=VNQ

Both are ETF of REIT index aka they cover all the companies in their index. I do not pick and choose. I invest on the whole market. Not a single country real estate market can take me down.

This is what we call asset allocation and REAL diversification.

Do you understand something here?? You are talking about tactic and products. I am talking about STRATEGY. I do not rely on timing or any single asset classes. I do REAL diversification and INDEX investing. I do not beat the market by pick the RIGHT fund. I use my portfolio to diversify and re-balancing to provide GOOD risk adjusted return.

It WILL NOT give you the BEST return since it is diversified. But, you can tune your portfolio to give you the BEST risk adjusted return for the amount of risk that you are willing to bear.

My goal is to have a portfolio that is across multiple asset classes and across the world with minimal cost.

Dreamer

MY comment about REIT law in Malaysia is in comparison to the REIT law in USA. USA has tougher law to prevent the management company from doing unreasonable thing with the REIT. Those laws does not exist in Malaysia.

http://www.nareit.com/portfoliomag/default.shtml

There are some good stuff about REIT in general on the above URL. Please note that it is US centric. There are a lot of stuff that is NOT available in Malaysia yet. But, the way to do calculation and valuation of REIT is the same.


This post has been edited by dreamer101: Jul 19 2007, 10:19 AM

Dreamer, I know your desire to invest with the highest possible diversification possible and do not care to outperform the market by picking any fund or region.

There are also other kinds of investors who would like to outperform the market. These people will pursue other methods like stockpicking, investing in a good mutual fund, investing in a selected good regional market etc.

There's no best investment method really. Every method has its pros and cons. Your method works well for a low risk taker who has no intention to beat the market. Other methods like stockpicking, mutual fund investment work better for a moderate to high risk taker with extra time devoted to study the market.

Hedge funds have gained a lot of popularity in USA lately, they are the fastest growing funds there. There's none in Msia. Since you have been investing in USA, I know you dont have any involvement with them, Im curious on how do you look at these hedge funds ? Do you think it could be a good investment choice for a moderate to high risk takers like some of us ?

http://www.investopedia.com/terms/h/hedgefund.asp

<<In the U.S., laws require that the majority of investors in the fund be accredited. That is, they must earn a minimum amount of money annually and have a net worth of over $1 million, along with a significant amount of investment knowledge.>>

You need to have a net worth of USD 1 million before you can invest on this.

Seriously, if you want to take risk why don't you get Warren Buffet to invest for you??

http://finance.yahoo.com/q?d=t&s=BRK-B

BRK-B is around USD $3,649 per share.

Dreamer

Actually, I thought before investing with Warren Buffet but not now as majority of its subsidiary companies are still operating mainly in USA. Will wait till the USD fall to a reasonable level. But, he might be retired by then.

Warren Buffet stock is classified as a moderate risk stock whereas the hedge fund is at high risk. Can't really compare them directly. Statistically, some hedge funds do have a very high alpha value compared with other investment.

There are so many hedge funds out there and many good ones are charging insanely high. Some managers are getting paid for 1 bil USD per year to manage these funds. For the richer group in Msia, is it wise for them to give it a try ? Not to put majority assets into it of course, just a mere 5-10% portfolio value will do.

ejleemy,

No idea. But, all the studies shown that most hedge fund's investors are not doing well.

1) The question here is how to pick the right one.

2) Current US bull market will not last. The prediction is US will pull out of Iraq war after 11/2008 presidential election. And, historically, recession comes after a war.

Dreamer

This post has been edited by dreamer101: Jul 19 2007, 07:13 PM

bump up a vry nice topic from dreamer....

Basic Financial Calculations

Present value = PV -> The amount of money in the beginning

Future value = FV -> The amount of money in the end

Periodic payment = PMT -> The amount of money that you pay in every period

Number of payment period = N -> Number of period

Interest/ return of a period = I -> Interest rate and return per period

Those are the basic terms.

In finance, the goal is stated in a series of cash flow. You put money into something and you hope/plan to get the money back. And, you measure/calculate how much money you get back.

For those 5 terms, PV, FV, PMT, N, I , in most cases, if you know 4 oout of 5 parameters, you can find out the fifth terms. All those functions existed in Excel as financial calculations.

Let start with a simple example. Let say someone come to you and say if you put in RM500 every month for 10 years. And, after 10 years, you get 100K. Is this a good deal?? How do you know?? What is the return?

You always compare it to FD. Assuming you put in one year FD at 3.7%.

So,

PV = 0 -> you start with no money
PMT = -500 -> you put in 500 every month so it is negative
N = 12 * 10 = 120 -> 120 period
I = 3.7% / 12 -> Remember it is interest for the period. In this case, the period is one month for your annual interest rate of 3.7% need to be divided by 12

You are trying to find FV aka Future Value. How much do you get in the future?

In excel, you key in this
= FV(0.037/12,120,-500,0,0)

And, you get $72,472

And then, you play around with interest rate

=FV(0.095/12,120,-500,0,0)

And, you get $99,540

So, if you invest in FD, you get $72,472. And, this is risk free. If you invest in whatever the person is selling, you return rate is annual rate of 9.5%. Now, is it worth take the risk??

The return rate is 9.5% versus 3.7%. The amount is 72K versus $100K about 28K more. How risky is the investment??

Now, you can make a calculated decision comparing a risk free option (FD) versus this investment.

Dreamer

P.S.: We learnt 50% of this in our old days for our primary standard 5 SRJK© math class. Does anyone still teach this?

This post has been edited by dreamer101: Jul 21 2007, 08:06 PM

yes, but i learnt this in corporate finance degree course *swt*

Dreamer,
briefly, can u explain the Renong reverse takeover matter? I think knowing this knowledge cud help us understand more on GLC stocks and make better decisions. Thx.

sharesa,

This is TOO SENSITIVE. Just google "Renong UEM reverse takeover" and you will find the story.

Dreamer

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Added on July 24, 2007, 3:14 amhttp://www.fundadvice.com/fehtml/bhstrategies/0108/0108a.html

All,

The ultimate buy and hold strategy. And, this is available to Malaysian investor opening a US stock brokerage A/C and buying ETF.

Can we do it via Malaysian UT?

Dreamer

This post has been edited by dreamer101: Jul 24 2007, 03:14 AM

Hi guys,

I'm really interested with opening a US stock brokerage account and buying their ETF. How can i do that? The www.etrade.com website can't really help. Please advice.

Also, I was thinking about the BLR and how central bank will play around with it to maintain the economy. Correct me if i'm wrong here.

If the economy is too good (too hot), central bank will normally raise the interest rates (BLR). This is to control inflation. If the economy is not good, central bank will lower the interest rates to spur economy and encourage spending.

My question is, now that our economy is considered "good" and when the recession do come, the interest rates will fall, right? So when people say that when during recession some can buy hot property at hot price, how can that be?

Interest rate will be lowered so people can still buy it. Unless those who have no money to even pay the monthly amount due to burn in stock market.

Any advice on this.

AC

achcmy,

1) Post a new topic on main forum and ask. Someone had done this before.

2) Our economy sucks big time. It is our stock market that having a bull run which does not reflect the actual economy. So, the stock market will crash. It is just a question of when. Probably after general election.

<<If the economy is too good (too hot), central bank will normally raise the interest rates (BLR). This is to control inflation. If the economy is not good, central bank will lower the interest rates to spur economy and encourage spending. >>

3) Our economy is no good and our interest rate is at historical low. Bank has too much money now. People that has money just choose not to invest or they are investing outside of Malaysia. So, lowering BLR will not help anything.

4) If people has no job/income, bank will not loan them money. Low interest rate does not help.

<<So when people say that when during recession some can buy hot property at hot price, how can that be? >>

5) At that point of time, cash is king. Whoever that can pay cash to buy stuff wins.

<<Interest rate will be lowered so people can still buy it. Unless those who have no money to even pay the monthly amount due to burn in stock market.>>

6) If interest is lower, RM will drop. People will move money out of Malaysia.

Dreamer

Thanks Dreamer for the nice thread. Still digesting the info slowly. One question regarding your "buy low sell high" rule: I'd imagine you do the exact reverse when speculating in the short term, yes?