In my opinion, women should be better stock buyers. Why? They seem to know a good deal when they see one! Take a look at what they do when you visit Tesco the next time. See how they make a beeline for the weekly promotional brochure on cheapies. E.g. Maggi Tomato sauce at RM1.90.
Jokes aside, buying stocks is all about buying a great company at a good price. Benjamin Graham wrote at length about this concept of "value investing" in his book, "The Intelligent Investor". Some other golden nuggets worth mentioning from this book are:
1. Are you an investor or speculator? Investors are in it for the long haul whereas the speculator
is in it for the quick buck. Odds are the long term investor will amass great wealth while
the speculator will end up on the losing end.
2. Mr. Market.
This refers to the prices of stocks being traded. Some go into panic selling mode when share
prices take a tumble while others become overly exuberant and buy more when share prices
are rising through the roof. The intelligent investor refuses to be swayed by Mr. Market and
makes rational decisions on the buying & selling of stocks. Basically, be very greedy when
others are fearful and be fearful when others are greedy.
3. Margin of safety.
Always add in a safety margin after you have worked out the fair valuation of a stock. Eg.
based on your analysis of Company X, the fair price to pay for a share is RM3.00. Margin of
safety at 15% (of RM3.00) means if Company X hits RM2.55 per share, you pounce.
Wednesday, March 19, 2008
Wednesday, March 12, 2008
Getting out of the Rat Race (Part 2)
Further to my jottings yesterday, I have two more points to add:
1. Work for Money vs. Asking Money to Work for You
The reason most of us wake up every morning to brave traffic jams getting to jobs we barely like is bacause we are working for money. Let us renew our mindset and start thinking how to put the money we have earned to work for us either through investments or our own businesses. Again resist the mentality to earn more so that you can spend more. The opposite should be true, earn more, save more and invest more.
2. Mind your own business.
I am employed as an Internal Audit Manager and this is my PROFESSION. What is my business than? For me its managing my stock portfolio.
The job we cling on to is our profession but the income from our profession must flow into our "business".
Our business must ultimately be able to generate a passive income. E.g. stocks gives you dividends, apartments gives you rental income and a car wash gives you cash collections.
1. Work for Money vs. Asking Money to Work for You
The reason most of us wake up every morning to brave traffic jams getting to jobs we barely like is bacause we are working for money. Let us renew our mindset and start thinking how to put the money we have earned to work for us either through investments or our own businesses. Again resist the mentality to earn more so that you can spend more. The opposite should be true, earn more, save more and invest more.
2. Mind your own business.
I am employed as an Internal Audit Manager and this is my PROFESSION. What is my business than? For me its managing my stock portfolio.
The job we cling on to is our profession but the income from our profession must flow into our "business".
Our business must ultimately be able to generate a passive income. E.g. stocks gives you dividends, apartments gives you rental income and a car wash gives you cash collections.
Tuesday, March 11, 2008
Getting out of the Rat Race (Part 1)
"Rich Dad, Poor Dad" by Robert Kiyosaki & Sharon Lechter is a powerful book dispensing advice on how to get out of the rat race. Read it and be empowered to make changes to how you manage your finances.
My summary of the key principles I took away from this book:
1. Save as much you can.
2. With your savings, purchase ASSETS that will generate income for you. Eg. An apartment
costing RM120,000 that will generate monthly rental income of RM1,000.
3. Avoid the temptation to blow your savings on liabilities. Eg. of liabilities are: a brand new car,
stereo system or a state of the art hand phone.
4. Overcome the fear of losing money.
5. Be generous to those around you, especially the poor and needy.
My summary of the key principles I took away from this book:
1. Save as much you can.
2. With your savings, purchase ASSETS that will generate income for you. Eg. An apartment
costing RM120,000 that will generate monthly rental income of RM1,000.
3. Avoid the temptation to blow your savings on liabilities. Eg. of liabilities are: a brand new car,
stereo system or a state of the art hand phone.
4. Overcome the fear of losing money.
5. Be generous to those around you, especially the poor and needy.
Monday, March 10, 2008
BUY
KLSE has activated the circuit breaker in efforts to curb panic selling on the market. (The ruling coalition has lost their 2/3 majority in Parliament - following General Elections held on 8 March 2008). Market will resume trading at 3.58pm. Time to sell??? Of course NOT. Time to buy. This the the time value investors come awake and start picking up their favourite stocks deemed to be trading below their actual worth. Its like buying an Brand New S Class Mercedes at Proton Prices. Join me at 3.58pm...
Wednesday, March 5, 2008
The Rich in Babylon
In my opinion, the book "The Richest Man in Babylon" by George S. Clayson is a MUST read for anybody thinking about financial freedom. According to WIKIPEDIA the book began in 1926 as a series of informational pamphlets. Banks and insurance companies began to distribute these pamphlets, and the most famous ones were eventually compiled into this book.
Listed below are 7 gems I have learned from this wonderful book:
1. 10% of what you earn is for you to keep
The first thing to do every month before you pay any of your bills is to PAY YOURSELF FIRST. The minimal rate is 10% but the higher the better. Gross or net percentage of your salary? Gross is of course better!
On a personal note:
As a Christian, I pay God 10% through tithes before I pay myself and my creditors. Irregardless of our religious beliefs, we need to acknowledge there is a Superior Being at work and He is the one that enables us to make a living. Do drop me an email if you want to discuss more on the whole area of tithing.
2. Control thy expenditures
Although 90% is for you to spend, spend it wisely. The idea here is delayed gratification and to save more than the suggested 10%. The more you save now, the more you enjoy later.
Illustration:
You starve yourself in order to set aside a budget of RM900 a month for car hp repayments. RM900 per month for the next 7 years gets you a Toyota Vios whereas RM500 per month for the next 5 years gets you a Proton Savvy. My advice, get the Savvy and invest the extra RM400 per month.
3. Multiply thy Gold by making it work for you
The most essential advise, INVEST. If you don't put your money to work it will become lazy and you may eventually lose it. Reinvest your returns and utilise the power of compounding interest.
As they say, money will make money.
4. Don't lose thy principal
This doesn't mean that you should put all your money in FD! At the prevailing interest rate of 3.8% and against a backdrop of an even higher inflation rate, that would not be an entirely wise thing to do. What it does mean is that, get valuable advise from books and experts like bankers and Certified Financial Planners before investing your savings.
Avoid Get Rich Quick Schemes like the plague!
5. Owning your own house
As far as possible, purchase your own home instead of renting it. Do your computations wisely and don't go overboard when buying and renovating a home. Nobody wants their home to end up on the auction block!
6. Insurance
Don't forget to buy insurance especially if you have dependents. How much coverage do I need?
Excellent question which I will touch on one day. Can't wait? Drop me an email.
7. Increase your ability to earn
In the words of George Clayson himself:
"Thus the seventh and last remedy for a lean purse is to cultivate thy own powers, to study and become wiser, to become more skillful, to so act as to respect thyself".
Listed below are 7 gems I have learned from this wonderful book:
1. 10% of what you earn is for you to keep
The first thing to do every month before you pay any of your bills is to PAY YOURSELF FIRST. The minimal rate is 10% but the higher the better. Gross or net percentage of your salary? Gross is of course better!
On a personal note:
As a Christian, I pay God 10% through tithes before I pay myself and my creditors. Irregardless of our religious beliefs, we need to acknowledge there is a Superior Being at work and He is the one that enables us to make a living. Do drop me an email if you want to discuss more on the whole area of tithing.
2. Control thy expenditures
Although 90% is for you to spend, spend it wisely. The idea here is delayed gratification and to save more than the suggested 10%. The more you save now, the more you enjoy later.
Illustration:
You starve yourself in order to set aside a budget of RM900 a month for car hp repayments. RM900 per month for the next 7 years gets you a Toyota Vios whereas RM500 per month for the next 5 years gets you a Proton Savvy. My advice, get the Savvy and invest the extra RM400 per month.
3. Multiply thy Gold by making it work for you
The most essential advise, INVEST. If you don't put your money to work it will become lazy and you may eventually lose it. Reinvest your returns and utilise the power of compounding interest.
As they say, money will make money.
4. Don't lose thy principal
This doesn't mean that you should put all your money in FD! At the prevailing interest rate of 3.8% and against a backdrop of an even higher inflation rate, that would not be an entirely wise thing to do. What it does mean is that, get valuable advise from books and experts like bankers and Certified Financial Planners before investing your savings.
Avoid Get Rich Quick Schemes like the plague!
5. Owning your own house
As far as possible, purchase your own home instead of renting it. Do your computations wisely and don't go overboard when buying and renovating a home. Nobody wants their home to end up on the auction block!
6. Insurance
Don't forget to buy insurance especially if you have dependents. How much coverage do I need?
Excellent question which I will touch on one day. Can't wait? Drop me an email.
7. Increase your ability to earn
In the words of George Clayson himself:
"Thus the seventh and last remedy for a lean purse is to cultivate thy own powers, to study and become wiser, to become more skillful, to so act as to respect thyself".
How it all began
"Is that all I have in my bank account???"
The above question had a dissapointing answer. After 10 years of hard labor, I had proved to be good in managing the wealth of others but my own financial house was in poor condition. The only consolation I had was I had a low level of debt.
In my quest to fatten my purse, I stumbled upon the invaluable advise of Mr. Rajen Devadason on the whole area of financial planning. Please visit his site at www.freecoolarticles.com
His advise together with the book "the Richest Man in Babylon" by George S. Clayson have helped me begin the journey towards financial freedom.
The above question had a dissapointing answer. After 10 years of hard labor, I had proved to be good in managing the wealth of others but my own financial house was in poor condition. The only consolation I had was I had a low level of debt.
In my quest to fatten my purse, I stumbled upon the invaluable advise of Mr. Rajen Devadason on the whole area of financial planning. Please visit his site at www.freecoolarticles.com
His advise together with the book "the Richest Man in Babylon" by George S. Clayson have helped me begin the journey towards financial freedom.
Stocks and (a bit on) Properties
My present investment ideas are confined to two areas; stocks and properties. Between the two, my personal preference is for stocks and I shall allocate a bigger percentage of my blog talking about it.
Rest assured, I am not overtly interested in technical analysis and the bulk of my writing is aimed at the layman investor.
Rest assured, I am not overtly interested in technical analysis and the bulk of my writing is aimed at the layman investor.
Tuesday, March 4, 2008
LEGAL DISCLAIMER
I did not graduate from Harvard Law School but I have been around long enough to understand the importance of a Legal Disclaimer for a Blog of this nature. So here it is:
The information contained on this Blog is intended to furnish visitors with general information on investments or any other matters that they may find to be of interest.
While I have put in effort to offer current and accurate information, errors can occur. I will assume no liability or responsibility whatsoever for any errors or omissions in the content contained on this Blog. Kindly proceed at your own risk.
Truth is, I am a total novice in the area of investments and there are many out there that are far more successful than I.
All feedbacks are welcomed. Kindly email to: eugeneding@hotmail.com
The information contained on this Blog is intended to furnish visitors with general information on investments or any other matters that they may find to be of interest.
While I have put in effort to offer current and accurate information, errors can occur. I will assume no liability or responsibility whatsoever for any errors or omissions in the content contained on this Blog. Kindly proceed at your own risk.
Truth is, I am a total novice in the area of investments and there are many out there that are far more successful than I.
All feedbacks are welcomed. Kindly email to: eugeneding@hotmail.com
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