Monday, March 17, 2008

Why bother about investment? I got enough money for retirement?

Look at this article and you will find out why you need to achieve financial freedom early:
http://www.bernama.com/bernama/v3/news_features.php?id=320996

You want to depend on your next generation when you retire or you want to travel around the world using your own money?

Personally I just found out that for the first generation in your family that would like to achieve financial freedom, it is double of the normal efforts for second generation to achieve the same purpose. Why?

The reason is pretty simple, your previous generation still rely on you for their retirement plan and you need to prepare for your own retirement plan. So, you will need double of the amount stated in the link above. Scary huh?

Saturday, March 15, 2008

Investment is a guy's thing?

Nope. Everyone should be investing, including our fellow females. Regardless which society you are coming from, growing more trees is better than not having any tree to provide shade for you when you are old. For female, you can depend less on your male spouse, male partner, father etc. Isn't it always good to have your own money for you to spend?

Invest = Gamble?

No, investment is different from gamble. You can say that they have something in common, but nope, they have different approarch.

Investment need to have proper strategy and perform analysis before you can succeed. The activities of buy and sell is controlled by you.

You can get rich if you have good investment in your hands. You can get broke if you gamble too much.

Investment is not about gambling, but it is about how do you grow your money as time passes.

If you have one thousand dollar, can you make another thousand dollar out of it? That's the challenge that I mentioned to people around me.

Buy low sell high

Always buy low and sell high. Even a kid could understand this theory. Get something while it is cheap and sell it at higher price later.

If you look into detail, you will find out there are four instances in the buy low and sell high scenario:
1. An investment object for sale.
2. You to buy that investment object.
3. Someone to buy your investment object.
4. Time lapsed.

Out of all four instances above, from the point of investor's view, the one that in our control is really item #2, if we think deeply. Therefore, try not to worry too much about sell high because that's should be relatively easy.

My personal suggestion is to pay serious attention regarding buying low. It is pretty easy to buy low in supermarket whenever there is a sale. How do you know about the sale? From advertisements from the supermarket, from the people around you, from your regular visit to the supermarket etc. To the bottom line, "someone" inform you about it.

The difference between the "sale" of investment object and supermarket sale is that, there could be no one inform you regarding the sale. That's why you are not aware of when to buy.

Good investors are pretty good in noting the "investment sale" around them, similarly through the "advertisements", "people around them" and also regular visit to their favourite "investment store".

Overall market indices, news, broker's tips, government's announcement to rescue the investment market, internal people are buying a lot etc. could be potentially good inputs for you to buy low. Pay a little bit more attention to all of these information and you could buy low easily. Be proactive all the time.

Remember to filter out the deceiving news while you are reading the news.

Investing fundamental

Personally I recommend http://investopedia.com/ as fundamental for you to read up to understand more regarding investments.

There are a lot of investment objects that might interest you, stock, bond, foreign exchange, properties and so on. Choose the investment object that interest you the most. The rationale is that the investment object that you interest the most is most likely the one that you understand the best. People usually excel in working with things that they understand the most, including you.

Lessons learnt from Warren Buffett's Gurus

From this article (http://biz.thestar.com.my/news/story.asp?file=/2008/2/28/business/20453680&sec=business), from the perspective of long term investors, we can agree with the terms quoted by Phillip Fisher "If the job has been correctly done when a common stock is purchased, the time to sell it is almost never".

Long investors buy an investment object when it is way below its intrinsic value. And if it is a good investment, they will never need to sell it.

Let's bring it to layman's term: If you own a company that guarantees you 50% of annual profit for each dollar that you have spent for it and it will remain that way for the next 50 years, you will never need to sell your company off, right?

Friday, March 14, 2008

Investment checklist

When you would like to invest, think about the following:

1. Do you have low risk savings that enable you to live for another 6 months from today onwards as if you have lost your job today?
2. Are you using your own money to invest?
3. Are you using your current money/savings instead of future money/savings?
4. Are you not planning to use those money for at least one year?
5. Are you willing to lost all of those money?
6. Do you have x% confident that your investment will guarantee the y% of return of investment every year? (Where x is above 90% and y is your target)

Answer the questions above sincerely to yourself before you would like to invest.

Theoritically according to financial expert, as our age grows and we are getting older, we should place most of our money into low risk profile. However personally I noticed that the successful and rich investors (Warran Buffett, Li Ka-shing etc.) are putting almost 100% of their investment in high risk profile.

So, does age really matter? Or is it the investment strategy that really matters?

Short term stock investment - Contra

Contra investment is to buy the stock today and sell it off after 3 days. This is what do we called it in Malaysia. Probably this technique has different name in your place.

Investing in stock is like owning that company. Can you own a company and then expect it to grow and make money within that 3 days so that you can sell it off?

Well, some people might have good strategy to make Contra technique works, but for long term investor point of view, this is rather impossible.

Wednesday, March 12, 2008

When to buy your investment?

When you have the right investment and you know deep in your heart that it will grow as time passing by, buy it down when the discount rate is at maximum or somewhere near to it. It is similar to the regular shopping activities that you are doing, "BUY when there is x% of discount!".

Take note the keyword of right investment. If it is not a right investment, then you are in big trouble.

Investment is like growing a tree

Starting your investment is like growing your tree. The younger you start growing your trees, the earlier you will enjoy the shade provided by the tree. Similar concept applies for investment.

- Internet Lam, 12th March 2008