- If an egg breaks from outside, a life ends; if an egg breaks from within, life begins: Great things always begin from within3:09 PM Jul 22nd via UberTwitter
- If I fall and I fail to get up, then I will never get up - Nick Vujicic2:52 PM Jul 22nd via UberTwitter
- You are allowed to make mistake, but not the same mistake twice2:14 PM Jul 22nd via UberTwitter
- If you want something you have never had, you must do something you never have done" First you build the people, then the people build the Organization " - Brian Tracy10:03 AM Jul 22nd via UberTwitter
Friday, August 13, 2010
Thursday, August 12, 2010
Thoughts: Money and Life
Read an interesting blog entry by famous blogger fourfeetnine.
It's an interesting entry about Wants, Needs and Money. In today's society, especially in Malaysia, it is quite a common scene to see everyone (nearly) drives to work. But yet, there are still a lot of "Car-Less" people out there.
It's nothing unusual to not own a car of your own in other parts of the world, but in our country, a place with poor public transportation system, it is quite a pain in the a$$ to rely on it on a daily basis.
Fresh grads these days could hardly earn enough to save or to live, let alone to finance their own vehicles. To make things worse, cars in Malaysia are rather expensive. Low pay, overpriced cars, overpriced property and high cost of living will only lead to one result. Instability.
We have imbalance here. Unfortunately, we don't live in a Perfect World as generally assumed by Economists. This imbalance does not revert to norm at all. When you have low income but high expenditure, you will see huge outflow of talents (well-known case for Malaysia), and for those who stay behind, you hear dissatisfaction day-in day-out.
Either way, it will do the country no good. So, as you can see, the problem of budget deficit or one government could be better than the other does not really solve the problem, if the root issues are not being addressed properly.
When I first graduated from Uni, I called for a family meeting. I told my dad that despite with my qualification, i will be doing a donkey job and earning peanut pay for the 1st few years. What that means is, though your son has great potential to achieve great things, he won't be able to bring back much money to support the family and buy his own property or car in the initial years of working life.
So i suggested to my old folks. You helped me with a car and a property to begin with, that, will help me to focus on making money and saving them up.
as you can see, though i am not from a well to do family, it's simple maths. With their years of savings, naturally the car they can afford would be better than what my peanut pay can afford. Similarly, they can afford to buy a nicer property with huge potential for appreciation, versus what i can do with my peanuts.
Think about it in long term: They have buffer now but i don't. Without the need to divert my savings into houses and cars, I can roll my savings into investments or businesses which can help my wealth accumulation. 10 years later, i should be able to build up my buffer, whilst they will be more or less use up theirs. So then, with a house and a car in hand (financed by Family Fund), i can use the money saved to take good care of them. So in the end, the whole family benefits.
But what if i do what most Gen Y do? At the start, parents' funds will most likely sitting in Fixed Deposits generating peanut interest. I as a freshie, making peanuts and have to save about 5 years before i can put down the down payment for my car or house (with a 30 year loan somemore). Then after another 5 year later, my cash flow remains super tight, as i don't have investment (all spent on financing the cars and house), nor i have much flexibility (because salary does not rise in tandem with inflation), whilst parents are using up their savings bits by bits (it will escalate to "chunks by chunks" if they don't have insurance plan and there's health issues). After 10 years, in scenario 2, the whole family will suffer.
With the way the economy is going, we know one thing for sure. Young people is going to suffer. And with them going down, i don't think the older generation can last any longer too.
Wants. Needs. Money. It's hard to juggle at times... but before you can talk about Wants and Needs, you will need to sort out the financial blueprint for your family first.
Friday, August 06, 2010
Investment 101 - Benchmark
Let’s talk about investment.
Rule #1 of investing, you must know your own benchmark.
i.e. when you get your return on investment (ROI), you must be able to see, whether has it been a profitable investment, or otherwise.
For instance, in Malaysia,
- The inflation rate is about 3% a year, whereas
- 12-months fixed deposits (FD) give you about 3.70% per annum.
-Unit trust A, with 100% equities exposure gives you 8% return a year.
- Direct investment in stock B listed on KLCI 15% p.a. (tell me if you can find one!)
- 1 banana is selling for RM1. (c’mon, tell me you do have some sense of humour!)
Ok, so what does all these numbers and facts mean?
Let’s start with a simple scenario. You’re 25 years old. Work your arse off for 2 years and manage to save up RM 5,000. What an achievement.
But you know for sure RM5k savings won’t bring you anywhere. So you have decided to take a bold move and ready for some investment.
Naturally, and traditionally, most of our “investments” are in Banks’ FD. Correct?
If, and only if, you keep your savings underneath your pillow, so what have you actually “lose”?
CASE 1:
Beginning of the year you have RM5k, in terms of purchasing power, you can afford to buy 5,000 bananas. Wow. Ok, then you decide to put 5k underneath your pillow.
After 1 year, you dig out your RM5k notes, go to Giant or Tesco and want to reward yourself with 5k bananas, only to find out that due to inflation, 1 banana now costs you RM 1.03.
So in terms of purchasing power, your RM 5k no longer can buy you 5k bananas, but only RM 5k / RM 1.03 = 4,854 bananas, 146 bananas less than one year before!
So in the end, you still have your money in hand, but, it has lost its value. Thanks to the erosion caused by Inflation!
CASE 2:
Same scenario as before, but you use the RM5k at the beginning of the year to buy RM5k worth of bananas, i.e. you have 5,000 bananas in store. Assume that you can store it in superb condition for a year (ignoring storage costs……); at the end of the year, you sell all the bananas at market price of RM 1.03. At the end of the year, you have RM 5,000 * RM 1.03 = RM 5,150.
Oh wait, have I made 150 bucks for trading bananas? Not bad eh! But wait a minute, something is not right here.
Actual return on investment = RM 150 / RM 5000 = 3% = inflation rate p.a.!
So you thought you made some, but in the end, you only manage to hedge your savings!
CASE 3:
So instead of buying bananas, you put your money into FD. Smart move.
After one year, you have RM 5,000 plus 3.70% interests = RM 5,185. Not bad.
You withdraw all the money from the bank and go get yourself some banana.
At the end of year banana price of RM 1.03, you can buy RM 5,185 / RM 1.03 = 5,034 bananas! Crikey! 180 more than case 1, 34 more than case 2!
That’s investment!
You want more bananas?
CASE 4 & 5:
Just lump the two investments together, basically they will tell the same story.
Instead of putting in the FD, you have decided to buy Unit Trust A or direct investment into stock B.
Maybe it’s pure luck or maybe you’re inspired by financial geeks, you get 8% return back from investment A and / or 15% back from investment B. Bravo!
So how much have I made? You asked yourself. Let’s get back to the real finance and stop playing so much with bananas.
You should know by now that inflation will eat into the amount of bananas that you can buy at the end of year. Good.
So now you have made 8% (15% for B). But which benchmark do you compare against?
Both the investments have beaten inflation rate of 3% like how Bruce Lee smashesfinancial_cicak. If you lose me here, it means that you can buy yourself a lot more bananas.
But is that your real benchmark? You should be smart enough to put your savings in FD.
Instead of putting your money with the bank which gives you 3.70%, now you’re investing in unit trusts or share.
So by not investing in FD has become an opportunity cost for you! Is it really worth it?
Absolutely. Investment A gives you an extra 5% return while investing in stock market gives you a handsome 12% return!
Thus your actual benchmark is … your next best investment opportunity! In this case, FD.
But hey, are we missing out something here? I am afraid so.
Rule #2 of investing – Risks vs Return
The above example has one major flaw. It has totally ignored one of the most important elements in terms of investing. RISK!
Basically the illustration here assume that all the investments, either in bananas, hide underneath pillow, FD, A or B have similar risks. Is this the case?
No no… so how do we measure risks? That's another story altogether that deserves a whole chapter to itself...
Rule #1 of investing, you must know your own benchmark.
i.e. when you get your return on investment (ROI), you must be able to see, whether has it been a profitable investment, or otherwise.
For instance, in Malaysia,
- The inflation rate is about 3% a year, whereas
- 12-months fixed deposits (FD) give you about 3.70% per annum.
-Unit trust A, with 100% equities exposure gives you 8% return a year.
- Direct investment in stock B listed on KLCI 15% p.a. (tell me if you can find one!)
- 1 banana is selling for RM1. (c’mon, tell me you do have some sense of humour!)
Ok, so what does all these numbers and facts mean?
Let’s start with a simple scenario. You’re 25 years old. Work your arse off for 2 years and manage to save up RM 5,000. What an achievement.
But you know for sure RM5k savings won’t bring you anywhere. So you have decided to take a bold move and ready for some investment.
Naturally, and traditionally, most of our “investments” are in Banks’ FD. Correct?
If, and only if, you keep your savings underneath your pillow, so what have you actually “lose”?
CASE 1:
Beginning of the year you have RM5k, in terms of purchasing power, you can afford to buy 5,000 bananas. Wow. Ok, then you decide to put 5k underneath your pillow.
After 1 year, you dig out your RM5k notes, go to Giant or Tesco and want to reward yourself with 5k bananas, only to find out that due to inflation, 1 banana now costs you RM 1.03.
So in terms of purchasing power, your RM 5k no longer can buy you 5k bananas, but only RM 5k / RM 1.03 = 4,854 bananas, 146 bananas less than one year before!
So in the end, you still have your money in hand, but, it has lost its value. Thanks to the erosion caused by Inflation!
CASE 2:
Same scenario as before, but you use the RM5k at the beginning of the year to buy RM5k worth of bananas, i.e. you have 5,000 bananas in store. Assume that you can store it in superb condition for a year (ignoring storage costs……); at the end of the year, you sell all the bananas at market price of RM 1.03. At the end of the year, you have RM 5,000 * RM 1.03 = RM 5,150.
Oh wait, have I made 150 bucks for trading bananas? Not bad eh! But wait a minute, something is not right here.
Actual return on investment = RM 150 / RM 5000 = 3% = inflation rate p.a.!
So you thought you made some, but in the end, you only manage to hedge your savings!
CASE 3:
So instead of buying bananas, you put your money into FD. Smart move.
After one year, you have RM 5,000 plus 3.70% interests = RM 5,185. Not bad.
You withdraw all the money from the bank and go get yourself some banana.
At the end of year banana price of RM 1.03, you can buy RM 5,185 / RM 1.03 = 5,034 bananas! Crikey! 180 more than case 1, 34 more than case 2!
That’s investment!
You want more bananas?
CASE 4 & 5:
Just lump the two investments together, basically they will tell the same story.
Instead of putting in the FD, you have decided to buy Unit Trust A or direct investment into stock B.
Maybe it’s pure luck or maybe you’re inspired by financial geeks, you get 8% return back from investment A and / or 15% back from investment B. Bravo!
So how much have I made? You asked yourself. Let’s get back to the real finance and stop playing so much with bananas.
You should know by now that inflation will eat into the amount of bananas that you can buy at the end of year. Good.
So now you have made 8% (15% for B). But which benchmark do you compare against?
Both the investments have beaten inflation rate of 3% like how Bruce Lee smashesfinancial_cicak. If you lose me here, it means that you can buy yourself a lot more bananas.
But is that your real benchmark? You should be smart enough to put your savings in FD.
Instead of putting your money with the bank which gives you 3.70%, now you’re investing in unit trusts or share.
So by not investing in FD has become an opportunity cost for you! Is it really worth it?
Absolutely. Investment A gives you an extra 5% return while investing in stock market gives you a handsome 12% return!
Thus your actual benchmark is … your next best investment opportunity! In this case, FD.
But hey, are we missing out something here? I am afraid so.
Rule #2 of investing – Risks vs Return
The above example has one major flaw. It has totally ignored one of the most important elements in terms of investing. RISK!
Basically the illustration here assume that all the investments, either in bananas, hide underneath pillow, FD, A or B have similar risks. Is this the case?
No no… so how do we measure risks? That's another story altogether that deserves a whole chapter to itself...
Wednesday, August 04, 2010
This is a story about ...
I was reading blogs online and i found this interesting entry by Paul. (well, not as entertaining as Joe's one since he's suffering in Pakistan right now...). Anyway, back to Paul's.
Written in Chinese, Paul mentioned about how his ancestor had to evacuate China and come all the way to Malaysia in the early days. Interestingly, apparently, his ancestor is a kung fu master. He was oppressed by some rich government officials and he accidentally hurt them. So he has to flee to save his life.
This story reminded me of the story my dad used to tell me. I think it would interesting for me to share this little history of my family on my blog here.
Once, i asked my dad, "Dad, can you tell me more about our ancestor? Any great war time hero story?"
Dad said,"well, let's see. During Ching dynasty, there were a few of our ancestors working as government official in Fujian province. We're not very rich, but decently well-known family there."
"Apparently one day, one of our ancestor had a quarrel with somebody. Then they fought. In the end he won, but he thought he accidentally killed him (he did not actually)"
"So the whole family fled Fujian, and traveled west to Guang Dong province."
"They walked for days, carrying all their luggages on their shoulders by bamboo sticks. They have no idea where to go, just hoped that they could travel far enough not to be caught by the police"
"One fine day, when they were still on the road, out of a sudden, one of the bamboo stick snapped and broken into half."
"So they stopped, and they looked around and found that, hey, this place ain't too shabby"
"Let's settle down here."
and the place is called Yellow Bamboo Yang, Mei Xian, Guang Dong (黄竹洋，广东梅县）
Looking at google map, think they had traveled over 500 kilometres before the bamboo stick snapped. Wonder how long did they take actually...
Though he does not sound like a kung fu master, but then, at least my ancestor was not on the losing end of a fight :)
and this is a small unrecorded history of my ancestors.
Saturday, July 31, 2010
That was close...
Bangkok hasn't been the safest place on earth in recent years. With the Red Shirt's protests and the clamp down of it this year, coupled with the burning of few good buildings (like Big C and CentralWorld in the heart of Bangkok city for instance), we haven't been able to pay our trade visit to Thailand for a long while.
Then when the dusts finally settle down, we seized the opportunity to visit Bangkok last week. Well, we used to stay at Pathumwan Princess Hotel, which is great as it's a very nice hotel with beautiful breakfast, and what makes it more lovely is the fact it is connected to MBK mall! Genius.
Then when the dusts finally settle down, we seized the opportunity to visit Bangkok last week. Well, we used to stay at Pathumwan Princess Hotel, which is great as it's a very nice hotel with beautiful breakfast, and what makes it more lovely is the fact it is connected to MBK mall! Genius.
But, of course, there's always a 'but' - the fare is actually, not quite within our budget.
So we found this new lovely hotel called the Pullman KingPower Hotel. Well, the name is kinda funny and unusual, but it's new and, to be frank, very elegant and beautiful. Right next to the hotel is a nice huge Duty Free Shopping Mall called the KingPower Duty Free Shops, where tourists from overseas can shop for duty free items and collect them at the airport before you depart the country.
Furthermore, the hotel provides free 'tuk tuk' service to fetch its customers to its nearest BTS station, which is the Victory Monument Station. Well, it only takes about 5 mins walk to reach the BTS station, but, the hotel decides to pamper you with alternatives if you're just too lazy to walk.
So here we stay, did our work and enjoy our stay there. There's this road called Rang Nam road, right outside of the hotel, is where my colleague and I loitered the most for the short 3 days visit. We were walking up and down, looking for massage parlours and some nice dinner places, only to find ourselves eating at one of the many 7-Eleven along that road and a superly overpriced massage place which was highly recommended by the concierge... Despite all that, we still think that perhaps, we can make this hotel as our first choice going forward.
Then, the following week, this news startled us
"Grenade explodes near shopping centre" - BangkokPost
"The grenade blast in the heart of Bangkok early Friday morning was clearly an attempt to discredit the government... the grenade, which was put in a plastic rubbish bag and dropped on a pile of garbage in front of a house in Rang Nam Road opposite the King Power duty-free shopping centre, went off about 1.30am..."
That was close...
Guess it's time for us to find ourselves new hotels to stay in, if, we are going there anytime soon that is...
Friday, July 30, 2010
Some Old Blogs - 一个字
一个字
无他, 只因一个字
懒.
懒归懒, 但别人一问我, "你最近在干嘛?"
我总会答
忙.
忙与盲之间,总能挤出一点时间来八一八天下大事
结果看到的是一个字
乱.
乱的,不止是疯狂的金融市场,还有戏剧性比溏心风暴更戏剧性的政治闹剧
偶尔的闹剧还好,但一旦看多了就会
腻.
腻的感觉,以前好像只会在吃太多后才出现的
但最近感觉总比较容易腻,可能是我已
老.
老朋友们都陆续结婚了.看着照片时,心情总有点复杂,充斥着开心,兴奋与失落
失落的是因为我都因工作而没能出席,但开心的是看到朋友们都能聚在一块.
来.
来得快,去的也快. 我说的是珍贵的周末时光.
星期五总会为周末编排节目,但周末一到,却只想当宅男. 只因我
懒.
懒是因为我太忙了.我忙因为这世间太乱了.
乱是因为某人腻了现状,腻却是因为东西老了.
老是因为时间来的太快,去的也快...原来,我的时间被懒掉了..
Tuesday, July 27, 2010
Imagine...
Imagine, if there is a regulation in the country requires every single offspring of a politician to be educated in our country only. I.e., the children of all politicians in the country are required, by law, to go to a Malaysian school for their primary till tertiary education, I think, that will solve a lot of the problem that we are facing right now.
First of all, the quality of our public education will have to improve. I mean, I don't think they will want their children to be less competitive right?
Secondly, there will be less likely for them to park their money overseas as there's no "incentive" to buy fancy houses and cars in London nor Australia anymore.
That, in turn, will help to reduce corruption (if there's any that is), and will induce and encourage them to spend within the country. I mean, of course, undoubtedly corruption is bad, but even worst is if they corrupt and the wealth of the nation got channeled out of the country. That's sad.
So, better local education system and standard will raise the Malaysian's quality of life, lesser corruption and better economy as more money being spent domestically, wouldn't it be great for all?
Maybe should employ someone to do the inception on them... Hm...
First of all, the quality of our public education will have to improve. I mean, I don't think they will want their children to be less competitive right?
Secondly, there will be less likely for them to park their money overseas as there's no "incentive" to buy fancy houses and cars in London nor Australia anymore.
That, in turn, will help to reduce corruption (if there's any that is), and will induce and encourage them to spend within the country. I mean, of course, undoubtedly corruption is bad, but even worst is if they corrupt and the wealth of the nation got channeled out of the country. That's sad.
So, better local education system and standard will raise the Malaysian's quality of life, lesser corruption and better economy as more money being spent domestically, wouldn't it be great for all?
Maybe should employ someone to do the inception on them... Hm...
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