Friday, June 19, 2009

To Sell or Not to Sell

A friend of mine, SY, asked whether she should sell off her ING Annual Income Climate Structured Fund yesterday as her net profit is approximately 16%+ in 8 months+/-. What do you think?

Me - I asked for more information like:
  1. What kind of fund is it?
    Her response: Capital protected fund with guaranteed minimum returns of 5% per annum for 3 years.
  2. What was her goal / intention when getting into that fund?
    Her response: For income generation + a possibility of bettering 5% pa.
  3. Any ideas / opportunities for the lump sum money if redeemed / sold off?
    Her response: Yup.
  4. Hungry for much better returns than the current if sold/redeemed now?
    Her response: Nope
 Hehehe - after asking the above questions, she herself already answered her own question of whether to hold or sell / redeem. Sometimes, I think it's not that we do not know the answer we seek, but we may have asked ourselves the wrong question or lost our targets / goals / reasons for getting into something (not just investments) ;P.

What other questions would you have asked?

Wednesday, June 17, 2009

Stock Market Jitters - Time to start looking for investments on Sale

It's that time again - FEAR and uncertainty is sinking-in after the stock market had a fast & crazy run-up for the past few months. Again, my friends & aquantances are having fear & uncertainty - hm.. smells like time to look around for investments on Sale ;P.

Another friend of mine, PL who's in Singapore, is also going "Woohoo! I'm going to get me a piece of that action. " as she said she "missed" the fast & crazy run-up. Heheh - the total opposite of the Fear factor, greed :D.

Me, I'm in blah blah land (as opposed to la la land ;P) - ie. Neutral (neither estatic or scared shitless) because I believe:
  1. There will always be ups and downs in the market.
  2. Money can be made when the market falls (even without shorting stocks) by selectively picking stocks of companies with good fundamentals and preferably history of consistent dividend payouts which are less than their earnings (if dividends being paid out are more than earnings consistently, something doesn't make sense, right?)
  3. Money can be made when the market runs-up by selective profit-taking and divesting into bonds, REITs, etc AND/OR by riding the latest / fastest trend wave.
  4. In any case, there is always a need for a "big picture" approach like Asset Allocation + exit points before getting in - not JUMPING in with >80% of my capital.
  5. Neutrality allows me to be unexcited and think things through a bit, a definite plus for investing but may be too lacksidal for trading.
Mind you, I am too human at times and do get caught-up with things too, thus, ohm... ohm... need to neutralize.... :D.

By the way, anyone cares to share their views on the coming spike in inflation or deflation? Me - I'd bet on crazy inflation because of simple reasonings:
  1. Printing money like crazy... hmm..
  2. So many people, so little basic resources to go around. Yeah, commodities are now looking down-ish again but I'm betting population growth > resource growth in the mid-term (5 years)

Monday, June 15, 2009

Children and money management: hands-on experiment and experience

I've just started-off Ariel with some simple money management - allowance $2 per week, $1 for saving (accumulated in jar 1) and $1 for fun spending or accumulation for future spending (purse in her bag). I keep asking Ariel to count the dollar notes each week as she allocates her additional savings into the jar, then tell her Papa will give extra $1 when there's $10 inside. Must give some incentive mar, right? :D

So far, she understands the value of her money as she can go on rides (merry-go-around in Ikano $1), buy lollipops/ice-creams ($1) and some "big ticket items" like sticker books using her accumulated unused fun spending money. Heheh - imagine me explaining the numbers and values in terms of weeks to her when she wanted to grab a big puffy Barney soft toy costing $70+.

I say, I still do buy her books and pay for funducation classes out of my own wallet, not her purse but all the "guilt" associated with toys and stuff (non-educational / safety / growth) are gone. Hheheheh - transference of "risk" as the insurance industry says (mine's "guilt") + education in value and handling of money for Ariel.

Sunday, June 14, 2009

Marriage, wedding and a new partnership - just some thoughts & cents

Quite a few people I know are getting hitched within July 2009 till Jan/Feb 2010. A couple of them are divorcees, having gained the courage and want to try build a life with another. Me - I'm still very very selective (yeah, I'm a divorcee too).

A few of these couples getting married have been partners for quite a while (more than 3 years) while some have known each other for less than 6 months - not even a full 4 seasons! I'm just wondering whether they understand what their signing up for - commitment to each other... until someone gets stabbed in the back or basic agreed principles broken (ah.. sweet memories ;P).

Ok ok - back to the topic at hand. Marriage, wedding and managing these costs:
  1. Cost of Wedding
    Hm.. big bash gathering where you MAY make a profit, break-even or loss. Not very good probabilities - even if you profit, the restaurant profits more than your guests and you. I'd rather allocate most of the money to creating a new experience with my new partner - honeymoon, or pre-pay our new home.

  2. Cost of Studio / Outdoor Photography
    From personal experience and friends' sharing, after the first two years, these are often kept in the back of the wardrobe or somewhere, never to see the light of day (or artificial lights for that matter). However, as a "captured on photo" experience with natural, "unartificial" photos would be a touching keep-sake for the lady. Good to spend on this but not crazy % of your total cost.

  3. Cost of Honeymoon
    Yeehaa! This is where I'd plonk most of my money as this creates shared experience with your partner at some place which both of you want to visit.

  4. Cost of Dowry
    Some older tradition followers demands this. No issues as long as the amount is used to build the partnership's home in the end of the day.

  5. Home
    I've seen books recommending, monthly mortgage from 35% and below to 20% and below your gross or net income OR a total cost of not more than 2 years' gross income, as the "safe" rule-of-thumb.
    Personally, I've bought 3 houses and sold 2 of them, all for living-in. From my own experience, it's best to keep your mortgage below 20% of your monthly net income, income which you are "for sure" to get (as long as you don't screw things up). With such a low commitment, you never have to worry about debts - even "good" debts.

    By the way, I don't suggest you buying "as big a home as possible" assuming you'll be living there "forever". Again, from experience, I did that with the same thinking but within 7 years I moved twice. In addition, such a huge commitment may cause your partner and you sleepless nights and may eat you alive ;P

    Bottomline - you want a home or you want a "thing" that you work your ass off to finance?
How did I finance my ex-marriage several years ago? Simple - from my bonus, after taking my cut of prepaying my mortgage and a few other necessities. If I were to do it again (who knows I may bump into someone perfect for Ariel and I ;P) I'm accumulate the money in my "Specific Goals" account for two years and spend as above.

All constructive criticisms and feedback are welcome via the comments feature in this blog.

Friday, June 12, 2009

Trading - Maybulk

Hm.. hindsight is always 20/20, should have, could have, would have.

MAYBULK trades
In: 15 Jan 2009; $2.60; BDI (Baltic Dry Index) surging since Dec 30th 2008, from 600+ to 900+
Out: 27th Feb 2009: $2.84; to swap for PBBANK, a "blue-er" counter and I've making 8%+ net in less than 2 months, thus getting out before Trailing Stop Loss of 7% is hit
Net: 8.18% in 1.5 months

In: 7th May 2009; $3.18; BDI has been going up several days at 100+ per day
Out: 9th Jun 2009; $3.24; BDI dropped 3 straight days over 200+ per day thus getting out before Trailing Stop Loss of 7% is hit
Net: 0.69% in 1 month-ish

Today: 12th Jun 2009
BDI stopped falling, Maybulk is trading between $3.26 to $3.30

Bottom line: I should have followed my trading plan of 7% Trailing Stop Loss exit OR 21% Net Profit (why entered, why exit, when exit).
The above trades, although making me money, is not worth the risk to rewards ratio that I've planned when getting in. In addition, the trading cost also escalated. Hm.. based on my trading and investing tracking - I seem to have no problems following the planned execution for investments, I've only been short-circuiting my trades. Too much fear, not enough greed OR just too much second-guessing myself? Any advise from traders out there? Perhaps a more slothful approach like what I'm doing with my investing approach rather than a jacked-up caffeine demon trading style :D

Thursday, June 11, 2009

Most heard excuses of not learning to manage money and invest

Hm, I think I should have put this as the very first blog page as a WAKE UP call to arms :D.

Here, I'll share with you the excuses I've heard over the years from friends, relatives, colleagues, etc. - the ones that always seem to have an excuse of some sort from starting to learn and manage their money and investments.
  1. I don't have money, manage what.
    Haven't you noticed the people who don't look like needing to excercise are often the ones you see excercising religiously? These people don't have the thinking of "When I drop 20 pounds first, then I'll start excercising". They know that through the process of going for their goals, they get better - not get better then go for their goals.
    Same thing with money & assets. If you don't manage your money and assets, how do you think you'll have money and assets? We reap what we sow, not reap first then sow.

  2. I don't have the time, I have to work most of the time
    'Alo - like as if I don't have to work full time + family commitments. Most of us work 8-12 hours a day for our bosses / company to make money BUT are unwilling to spend 1 hour a day to learn and manage the money earned and grow it. It just doesn't make sense does it.

  3. I'm not good at numbers
    Ahem.. I'm not good with numbers too, school maths that is. However, I am OK with common-sense + the burning desire to make my money work harder, I learned to use tools like Excel to create simulations for testing investment approaches, tracking, etc. If I can leverage on Excel with average school maths skills, I'm sure everyone else can too.

  4. I trust you 100%, just do it for me when you do it for yourself (ie. you buy, I buy, you sell, I sell)
    OR I'd rather use a "professional"

    So you'd trust your family's & your own future to someone else entirely? Cool - I've got a brige to sell you.. ;P.
    Come on, leveraging on others and totally relying on others are 2 different things.
    Either you're just too trusting OR you don't want to step-up to the responsibility of planning & handling your own future, thus you can blame the "professional" for screwing-up.
Any other common excuses that you've heard and care to share?

Wednesday, June 10, 2009

Book's Gist: The Unemotional Investor

UNEMOTIONAL VALUE APPROACH - Use this + Unemotional Growth if bullish
1. Identify 10 highest yielding Dow Stocks
2. Rank the 10 stocks in ascending order by stock price
3. If the stock with the highest yield = lowest-priced out of the 10, eliminate from list
4. Buy the 4 lowest-priced stocks remaining on list in equal-dollar amount
- Variation
Buy 2X more of the 1st and 2nd cheapest stocks Vs 3rd and 4th
ie - 2: 2: 1: 1 dollar amount ratio for 1st, 2nd, 3rd & 4th
5. Hold for a year, revalue again

1. Get 100 Timely Stocks
2. Get EPS (earnings per share) & RS (relative strength)
3. Sort stocks in desc order by EPS, then desc RS
4. Select top 5 - 10 & buy in equal dollar amout
5. Revisit every month

Book's Gist: The Six Rules for Lazy Investors

Build a million dollar portfolio the easy, boring way

10 or less funds. The six basic strategies used by America's laziest investors, guaranteed to help you diversify, lower risk, level out bull/bear cycles, and generate returns close to or better than market benchmarks:

1. Live below your means & save 10%
The math is so simple: Nothing saved equals nothing invested, equals nothing for retirement. Save at least 10% if you want to be a millionaire investor.

2. Swing for singles & bet on every horse
Millionaires match the averages by diversifying with low-cost, no-load index funds.

3. Trust the explosive power of compounding

4. No market timing, no day trading
Markets are random and unpredictable says Wharton economist Jeremy Siegel, author of "Stocks for the Long-Run." He researched the stock market's 120 biggest up and biggest down days between 1801 and 2001. He said only 25% had a rational explanation.

In a study of 66,400 investors, behavioral finance experts Terry Odean and Brad Barber concluded: "The more you trade the less you earn". The most active traders averaged 11.4% returns while their portfolios turned over 258%. Buy-and-hold investors with 2% portfolio turnover enjoyed 18.5% returns.

Traders lose money due to higher taxes, expenses and transaction costs.

5. Buy quality and never sell
Warren Buffett was once asked about his favorite holding period. "Forever," said the Sage of Omaha, who added that the best time to sell is "never!" Okay, there are some exceptions. But if you buy quality companies and index funds with proven long-term track records, you won't be tempted to sell when the market dips and talking heads on cable news freak out.
Remember, your most important decision is the up-front buy decision: So pick funds and stocks on the assumption you will never sell!

6. The tortoise always beat the hare
In researching 5,000 millionaires, money manager Ric Edelman discovered that they average six minutes a day on personal finance. They don't waste time watching cable news, reading self-serving brokerages reports, attending seminars, studying stocks tables, subscribing to financial newsletters, pondering economic reports, reading daily newspapers, etc., etc.

Millionaires spend six minutes a day on personal finances and live their lives for the other 23 hours and 54 minutes. They create diversified lazy portfolios that operate quietly in the background, generating nice long-term returns with minimal effort.

Most of these portfolios are as simple as Dr William Bernstein's "No-Brainer Portfolio" which is currently averaging just under 10% a year the past decade. Bernstein is the neurologist and money manager who wrote "The Intelligent Asset Allocator." You simply put 25% of your portfolio in each of four index funds (in this case Vanguard index funds) it's that simple, boring, dull and lazy:

Total Stock Market Index
Small-Cap Stock Index
European Stock Index
Total Bond Market Index

Book's Gist: The Millionaire in Me

1. Become a Star Employee
- Learn more about the business, not only your own discipline
- Be more productive
- Continue education
- Expand skills
- Develop yourself
- Network

2. Master human relations (NLP, negotiation, body language, motivation, etc.)

3. Become a Marketable Employee

4. Learn a New Thing that has a market

5. Think as a FREEAGENT

6. Create Additional Sources of Income
- Can be done on Part-Time
- Not much time required, not more than 1hr a day once smoothen
- Not too much management required
- Not too much $ required
- Generate high returns

7. Additional Sources of Income - Focus on ONE
- Part-time Sales - read How to Master the Art of Selling by Tom Hopkins, The Greatest Salesman in the World by Og Mandino
- Lecturing
- Writing
- Editing, ProofReading, Typing
- Consulting
- Adult Education - eg. Aerobics, Money Mgt, Investments, Flower Arrangement, Computer Thinggy
- Singing, Acting, Modelling
- Speaking
- Internet leveraging

8. AfterBurners!
- Royalties
- Syndication
- Dividends
- Interests
- Marketing Information
- Licensing
- Property Rentals

9. How To Save Money
- PAY YOURSELF >= 10% FIRST!! This sum is NEVER TO BE USED unless for growth

10. The BEST Person to Manage YOUR $ is YOU
- Make the decisions
- Leverage on smarter people

11. Give Up Ownership but GET Control
eg. Leveraging on other people's money, skills, time

Book's Gist: Rich Dad, Poor Dad

1. Use $ to work for $ - Invest

2. Buy Assets (income / cashflow generating), NOT Liabilities (doesn't generate income / cashflow)

3. Incorporate!
-Corporations Earn, SPEND, then pay tax
-Individual Earn, pay tax, spend

4. Sharpen Financial IQ
-Accounting / Financial Statements: Ratios, Stats
-Investing: Stocks, Bonds, Funds, Properties, REITs
-The Market
-The Law: Tax breaks, protection from lawsuits, loop holes

5. Higher Risk, Higher Returns
-Learn to manage risk, thus lowering it

6. Work to LEARN Mgt Skills required for Success
-Mgt of CashFlow
-Mgt of Systems
-Mgt of People

7. Obstacles to success
-Fear of losing $
-Cynicism - "sky is falling" / doom sayers
-Bad Habits
-Arrogance = Ego + Ignorance

8. Getting Started
-Need reason greater than reality!
-I CHOOSE daily - Learn, Invest, DO IT
-Choose friends carefully - power of association, knowledge
-Master a formula, then Learn new ones
-Pay yourself first: Discipline to enrich yourself 1st, Keep debts small %, Don't eat into assets
-Be an "Indian Giver" - ROI + Assets gotten in deal, E/P
-Pay brokers / advisors well
-Assets' returns buy luxuries
-Teach & learn

9. Buy more during depression, scare, slump - SALE!

10. Be open to investment opportunities

11. Look for buyers first, then sellers - buy in bulk shares cost, gets bulk discounts! THINK BIG

Book's Gist: Motley Fool Investment Guide

1. What makes a Co. a good investment?
- Powerful brands
- Important and/or repeat-purchase products or services
- Compelling business model
- A track record of consistent, reliable earnings and sales growth
- Lots of potential for future growth
- Strong financial numbers: low or well-managed debt, robust margins, etc.
- Industry leadership and innovation
- Management integrity and quality

2. Right Time To Buy
- Price Dips (non-permanent!)
* Find out why the stock is down
* Determine how reasonable the drop seems. Say the company announces sales growth slowing by 10% over the next six months. Given what you know, should the stock be punished with a 30% drop?
* Is the company financially healthy? Able to pay its debts? Generating strong returns?
* Does it seem able (and likely) to recover from its current situation? Is there a lot of promise in its pipeline? Is it ripe for a "turnaround"?
- Catalysts
* A company is aggressively buying back its own stock (or might begin to do so), which will increase the value of remaining shares
* Perhaps a company you're looking at may be a takeover target. (Companies are often purchased for more than they're currently trading for.)
* A company plans to spin off a division, move into a new line of business, or expand into a new company
* Settlement of a major lawsuit hovering over a company's head could boost investors' interest in it
* New management, new products, new patents, new technology, etc

3. When to Sell
- You need the money within a few years
- You find a much more attractive place to invest your money
- You're hanging on for emotional reasons
- You've lost confidence in the company
- The reasons you bought are no longer valid
- You can't remember why you bought in the first place
- You don't know what the company does and how it makes money
- The stock is significantly overvalued relative to your target price, if you have one
- You can't keep up with the company
- You hold too many stocks
- You hold too few stocks

4. When NOT to sell (maybe)
- If everyone else is selling (frenzy)
- If you've made a significant gain (unless speculating / short-term investing)
- If the stock drops by X% (unless speculating / short-term investing)

Book's Gist: Millionaires are From a Different Planet

1. Clear credit card or high interest debts

2. Create a Dam - Reserves Fund - 6 mths parked in short term Fixed Deposit or Amanah Saham

3. Get right Insurance
- Life + critical illness + disability insured = money maker, NOT dependents, + <= 10% of net pay
- buy term only unless circumstances
- for coverage NOT forced savings
- Mortgage - MRTA / added term life
- House Owner for building
- House Contents for contents

4. Quicker settlement of Mortgage
- pay extra @ time
- pay fortnightly
- pay lump sum when you come into extra $
- renegotiate interest
- refinance if interest drops >=2%

5. Asset Allocation
- Re-evaluate every 3 to 6 months
- Long Term - Put X% in Growth Vehicles like Equities / Properties & rest in FD
X=100 to 125 LESS Age
- 90% ROI is determined by asset allocation

6. Investment Q & A
- What is the PURPOSE of this investment?
- When to EXIT this investment?
- Can my RESOURCE handle this investment?
- Can I live with the RISK involved?

7. Property
- >=20% Downpayment
- Location with jobs + shops + amenities eg. Bangsar SubangJaya BandarUtama
- House for resale & Apartment for rent
- Only from reliable developers OR ready made
- Cyclicle prices - down 1985 1997
- IF buying frenzy WAIT for downturn to buy
- Banks will provide max 33% of income BUT U should take <= 25% BEST < 20%
- Properties Rented Out - U can deduct interest from income tax
- Can write off expenses like business when >=4 rental residential OR 2 residential + 1 shoplot OR 2 shoplots

8. Cars - 2nd hand + <=2years loan + cash is best

9. Stuff - the more useless purchase try buying with cash OR FORGET IT

Book's Gist: Investing Your Savings

1. General Stats
- PE Highest 30X in 1994 when KLCI @ 1300
- PE Lowest in 1987 when KLCI @ 230
- PE 12-18X historical average
- 13-15% average yearly returns for 5 years investment
- Recessions 1960, 1985, 1998
- Differences of risk to returns
FDs 3% is like Composite Video
Bonds 5-9% is like S-Video
Stocks 13% is like DVD Component Input

2. General Stocks & Bonds Picking
- Value Investment = High ROE + Low PE (low teens) + Low PB (<=1) + High Dividend Yield
- IRR >=15% good deal
- Buy cyclical stocks (technology, banking, properties, construction) when specific sector down BUT ensure NOT structural issues with sector
- Shift Stocks to Bonds when stock market in doldrums
OR CULS(Convertable Unsecured Loan Stock)
OR ICULS(Irredeemable Convertable Unsecured Loan Stock)
- Get Bonds with credit rating >= A
- Bonds rated BBB defaults 9.6% within 3 years
- Long term stocks - Life insurance, Medical Care, IRR>=15% AND special concessions (Malakoff, YTL Power, Puncak Niaga, Litrak)

3. Derivatives / Options - Warrants / Rights / Call Options
- VERY risky = Lose capital used to buy warrant BUT possible high returns
- Rights to buy mother share @ specified $ (excercise price) within specified timeframe (maturity)
- Warrant $ X Gearing = Mother $
- Buy cyclical warrants (technology, banking, properties, construction) close to its trough
BUT ensure NOT structural issues with sector
AND ensurem co holds cyclical business
AND good co only
AND maturity date >= 3 years
AND excercise price <= 2X mother $
- eg. maturity date = 5 years AND excercise price = 2X mother $, thus mother $ have to rise 15% @ year (compounded yearly thus 100 X 1.15POW5 = 201.1357) for warrant to be worthwhile (15% @ year possible with cyclical co @low)

4. Mutual Funds / Unit Trusts
- Shift to Equity funds when stock market act
- Shift to Bond funds when stock market in doldrums
- Balance funds = Equities + Bonds mix BUT be careful on possible mix ratio
- Malaysia market - Funds usually beat index

Book's Gist: Idiot's Guide to Getting Rich

1. Top 20 Best $ Moves
-Saving set amt every mth
-Eat right & excercise
-Shopping @ warehouse clubs
-Buying term life, not whole life insurance
-Go to garage sales / 2nd hand sales
-Do own taxes
-Buy generice & store brands
-2ble checking commissioned salesperson
-Buying clothes @ thrift / sales
-Be yr own travel agent
-Find out dealer cost b4 negotiations
-Be debt free & buying most things with cash
-Continuous education / learning, especially economics basics
-Use no-fee checking account
-Eat home meals, not out
-Make extra principal payments on mortgage
-Investing via mutual funds
-Investing in income-producing real estate

2. Stages of Wealth
i. Able to maintain std of living & save enough to meet Targetted Savings Goal (TSG)
Focus on budgeting, living below means and saving
When U live within yr means & actual savings >= TSG, end stage 1
ii. Portfolio generates annual compound growth >= TSG
Focus on living within means & savings + investing properly
When portfolio generates annual compound growth >= 3X TSG, end stage2
iii. Portfolio generates growth enough to cover desired lifestyle and inflation
iv. Portfolio generates growth enough to cover dream lifestyle and inflation
v. Portfolio generates growth well beyond spending ever

3. Calculating Target Savings Goal (TSG)
-Create budget and track
-Find annual expenses from budget & add yearly expected inflation to it until the year targetted to retire
-Target Portfolio Goal = Yearly inflated expenses / Estimated net rate of return from portfolio
eg $300K / 12%
if not going to spend all 12% returns, then estimate how of returns much spent and how much reinvested
eg. $300K / (12% * 75% spent), thus $300K / 9%
-Annual TSG = Annuity per year based on estimated returns to reach TPG

4. Portfolio
Proprietery Investment
Heavily loaded Mutual Funds (Hi > 6%, Med 4%-6%, Low 2%-4%, No load 0%)
Killer B Funds (12b1 fees)
UITs (Unit Investment Trusts)
Limited Partnerships
IPO of Close-End Funds
Penny Stocks
Rumours & Hot Tips
Insurance Products as Investments
Wrap accounts
-KNOW before investing
What exactly am I investing in?
Does it fit into my plan?
What are the risks involved?
Is there a 2ndry market for it (to sell whenever U want)?
What is the total cost?
-FDs/CDs or $ Market, depending on yield - for liquidity & short term
-Stocks: NTA to Price vs P/E vs ROCE
-Equity Mutual Funds
-BONDs (TBonds / Corp Bonds) to reduce risk and maintain principal
-Real Estate
-BEST PORTFOLIO: Diversified vehicles and global

5. ECONOMICs - track all weekly with investments
-Track Inflation / Interest Rates
Inflation UP causes Interest Rates UP (vice-versa) - Bonds DOWN, Stock UP IF bonds < 8%
-Track Producer Price Index (PPI) vs Consumer Price Index (CPI). PPI will move CPI
-Track GDP - The Economist shows current and expected GDP each week
GDP affects & correlates with Stocks

6. WHEN to Buy / Sell Stocks / Mutual Funds
Others fear & pessimism
Others greed & optimism
Everyone in Market
Zero based thinking

7. 10 Portfolio Tactics
-Track Interest rates
Interest rates UP, Bonds (especially longterm bonds) DOWN
Interest rates DOWN, Bonds (especially longterm bonds) UP
-Investing in Pessimism & Optimism
Headlines = Bad, look to Buy coz cheap,
Headlines = Good, look to Sell coz prices up
-Look for Industrial & Geographical Growth
New industries in early growth stage
Mature industries with new products / tech, financial reorg, mission reorg, mgt reorg
Emerging market countries in early growth stage, adopting capitalism
Countries establishing new govt, with falling inflation & economic growth
-Invest in Anticipation of Economic Cycle Change
via estimating GDP growth (announced monthly)
easiest mthd is to watch Monthly Index of Leading Indicators (consisting of 12 leading economic indicators that move b4 business or economic cycle)
When Contracting - move into Bonds
When early Expanding (even in recession) - move into Stocks
-Track Market Cycles
PE ratio per week of Index Stocks = average PE
If average PE > 20(?) , overpriced, look into Value investing or Sell
if average PE < 20, fair or below priced, look into fully invested
-Study Demographics
Baby boom years + 46 years to it = when spending up = bull market, thus get into market prior
US market expected 2007 bull, 2010 slow down
-Track Leaders and Laggards
If new/ex-laggard stock/mutual moves into Top10 = opportunity coming in the new/ex-laggard stock/mutual sector, look to Buy
If new/ex-top stock/mutual moves into Last10 = correction coming in the new/ex-top stock/mutual sector, look to Sell

Book's Gist: How to Make Money from Your Stock Investment Even in the falling Market

Filter based on value
1. ROE > 15% for past 5 to 10 years
2. Avg EPS GR (Growth Rate) - Compare year to year EPS diff and find average > 15% for past 5 to 10 years
3. D/E (Debt / Equity) < 0.5
4. Better Profit Margin than similar industry counters
5. P/E < Avg P/E of similar industry counters
6. Price < Intrinsic Value
7. Price < Fair Price
8. Competitive Advantage

Calculate Intrinsic Value
Data Req:
-Current Year: 2003
-Current Price: $12
-Avg EPS GR (past 10 yrs): 16%
-Current Year EPS: $1.10
-Avg P/E (past 10 yrs): 18.50
-Avg Div Payout (past 10 yrs): 5%

1. Calc Total EPS for next X years (X = years expected to be invested)

2. Calc Price of stock at X+1 year, assuming Y% appreciation yearly (Y=% expected annual returns )

3. Calc Total Dividends for next X years, using Avg Div Payout & EPS

4. Calc Total Returns after X years

5. Calc Intrinsic Value

Book's Gist: The Richest Man in Babylon

1. Keep >=10% of all  earnings for yourself
   -10% to 25%

2. Control expediture, simplify
   -Prioritize spending - Assets & Growth

3. Multiply your keepings
   -Invest only in solid investments
   -Use these as "workers" & their children & their childrens' children

4. Insure your treasures from loss
   -medical, long term care
   -death, critical illness, disability

5. Own your home
   -Take as long a mortgage as possible BUT pay off early (bi-weekly or other plans)

6. Insure a future income
   -Plan & execute your financial freedom requirements

7. Increase ability to earn / create opportunities
   -Learn & grow

Book's Gist: Book Start Late, Finish Rich

Decrease spending
Increase Income + Assets + Savings + Giving
Live rich

1. It's not how much U make, it's how much U spend
-Find Double Latte Factor, then reduce & control them
-Live Simple, Spend Less: Is it necessay? Can it be replaced with something more cost effective?
-Rethink Mobile plans, Internet plans, Club memberships, Bottled water, Satellite TV,  Two Cars, Eating Out, Lottery, etc.

2. Reduce Credit Card Debt, while saving (50% debt reduction / 50% pay yrself) & buying a home
-Pay >= minimum+$10 & on time & get annual fees waived
-Ask for less interest OR credit transfer to 0% card (offer period)
-Dont buy non-assets on credit if you can't afford to pay in cash

3. Pay Yrself First >= 12.5% (aim 25%) of Gross Income
-Find legal ways to take % from Gross Pay BEFORE TAX, eg. EPF & Life Insurance, SSPN, Education & Medical Insurance
-Make it automatic (EPF, insurance via CC, etc)

4. Investments should be boring
-Perfect Pie Asset Allocation: 1/3 Stocks, Equity Funds
+ 1/3 REITs, Properties including home less mortgage
+ 1/3 Bonds, Bond funds

5. Own your home
-Take 30yr loan
- Payback fast via 50% every 2 weeks, 13 mths payment pa

6. Increase yr income
-Would U hire U?
-7 Qs to ask yrself first:
i. What is the most important thing I do for my boss?
ii. What does my boss think I'm uniquely talented at?
iii. What would my boss be aftraid to tell me about my job or how I do it?
iv. What would my boss say I could do to add more value to my job?
v. What could I do to be my boss' "dream team" employee?
vi. Knowing what my boss has learned about me in all the time I worked here, would my boss hire me today?
vii. What would my boss say it would take for me to get a raise in the next 6 mths?
-Create yr own career & income goals OR wait to be forced into one
-Focus on growing the 20% of work that brings 80% of value, reduce the 80% of less worthwhile work

8. Start a business
-Home based
  * Buy 1 property every 2 years (live in it, move, live in it, etc.)
  * Downpayment 35% to 40% needed for positive cash flow,
   +assuming mthly rental = 0.5% of Cost of property
   + 3mths empty every 2 years rental agreement
   + 1mth's rental to agent every 2 years rental agreement
  * Decide where to focus, within 5 to 10 miles from home
  * Get pre-approved loan
  * Find broker
  * Go for "open houses"
  * Concentrate on CASH FLOW
-Direct Selling

Book's Gist: Secrets of the Millionaire Mind

-Mental + Spiritual + Experience = Physical result
-Programming regarding $ -->Thoughts --> Feelings --> Actions --> Results
 *Be aware of destructive / negative programming / conditioning through childhood / teenage / adulthood
 *Understand the destructive programming
 *Disassociate the destructive programming
 *Change or shout down destructive programming
-Reason for wealth accumulation should be positive - giving, protecting, providing, creating
NOT negative - fear, anger, to prove something

1. Rich believes "I create  my life" (no rich victims) VS. Poor believes "Life happens to me" (blames, justifying, complaining)

2. Rich plays to win VS. Poor plays "not to lose"
Aim for stars, worse case land on the moon

3. Rich are committed to being rich VS. Poor wants to be rich
-Clarity & commitment: what is wanted, price willing to pay

4. Rich thinks big VS. Poor thinks small
-U will get the value U give
-Value = supply, demand, quality, quantity
-Easiest to manipulate = quantity (leverage to reach it)

5. Rich focus on opportunities / rewards VS Poor focus on obstacles / risk (fear-based decision making)
-Rich takes educated / calculated risks
-Cautious Optimism
-Ready, fire, aim - no such thing as 100% prepared or researched/known

6. Rich admire other rich & successful VS Poor resents rich & successful

7. Rich associates with positive & successful people VS Poor associates with negatives & unsuccessful people
-energy & ideas are contagious

8. Rich willing to promote themselves & values VS Poor think negatively on sales & promotion'

9. Rich are bigger than their problems VS Poor are smaller than their problems

10. Rich are excellent receivers VS Poor are poor receivers

11. Rich chose to be paid on results VS Poor chose to be paid on time

12. Rich think "both" VS Poor thinks "either/or"

13. Rich focus on Net Worth VS Poor focus on working income
-Focus on increasing passive income to increase net worth, not just active income
-Focus on increasing Income, Savings, Investments / Assets VS Lower Expenses by SIMPLIFYING

14. Rich manage $ well VS Poor mismanage $ well
-10% Financial Freedom
-10% Play (must balance with FF)
-10% Specific Long Term Spending (eg. car)
-10% Education
-10% Giving
-50% Necessities

15. Rich have their $ work hard for them VS Poor work hard for their $
-Focus on building passive income

16. Rich acts in spite of fear VS Poor let fear stop them
-Break comfort zone & grow
-Be willing to pay the price & price will be easily payable

17. Rich constantly learn & grow VS Poor thinks they already know
-Commit to learning & growing

Book's Gist: Crashproof Your Life

  1. Write emails with care & formality
  2. Never use profanity in written docs
  3. No violence / sexuality in written communication
  4. Never acknowledge legal liability unless authorized by legal rep
  5. Respond decisively to offensive emails/mails
  6. Accurately state qualifications & accomplishments in resume
  7. Don't overstate capabilities/deliverables of self/company in writing
  8. Leave short curteous voice-mails after careful consideration
  9. Don't discuss company business in public places
  10. Run meetings with defined agendas & time limits
  11. Rehearse presentations out loud >= 2X
  12. Tell audience what U want to tell
  13. Tell audience
  14. Tell audience what U have told
  15. Use visual aids for presentation
  16. Vary vocal tone for presentation
Four separate A/Cs:
1. Necessities 70%

2. Slush 10%
   - Play
   - Debt clearing
   - Giving

3. Savings 10%
   - min 3mths avg exp & aim for 12mths avg exp
   - once achieved, pump into investments

4. Investments 10%
   - Asset Allocation: stocks, properties/REITs, bonds + Domestic *&Foreign
   - Indexes & funds for riskier assets (eg. foreign small caps)
   - Prepay mortgage >= 1 to 2 mths pa.
   - Own small reserve of gold & silver

New Telephone Con Job! Beware

Out of the usual topics a bit.

I just received a call from 016-5233346 at 11:45am 10th June 2009.

A woman with Indian accent claiming to be from Koperasi dunno what banks (she was talking VERY fast) said I've been selected to receive a gift because I'm a good paymaster to the banks' credit cards.

She then asked me where I'd like the gift to be sent - office or house and got my office address. However, things started getting fishy when she asked which credit card I had, what's the expiry date & what's the "registration number" (which is the credit card number).

When I questioned her why she needs my cards' details when she's from the Koperasi Bank Bank and that I've been selected for being good paymaster for all these credit cards - shouldn't she already have these details? Suddenly the line went dead.

Just posting this to warn everyone.

They're using a Sales technique where they get the "customer" to give opinion, give requirements of gift & where to send to, all about what the "customer" wants, then lastly only ask about credit card details, by then, the "customer" also automatically gives

Tuesday, June 9, 2009

2009 Investment Program & Methods (continuation)

Continuation from the last post 2009 Investment Program & Methods

Cash Investment Methods:
I apportioned 2 areas for my cash investments, REITs and Foreign focussed equity funds, for moving towards my Asset Allocation (REITs/Properties) and diversification (foreign equity) goals.
Note that each transaction is tracked individually, thus enabling me to calculate the transaction's Net Profit or Loss pa + Trailing Stop Loss / Stop Loss.
  1. REITs - 77% of cash investments
    Capital for investing into REITs is accumulated in my SCB Mortgage1 account, thereby knocking-off the amount of interest I have to pay, effectively "earning" me BLR-2.2%.
    a. Filter: The top 5 with
       ROE>=10% for preferably >=2yrs; Consistantcy of good management
       D/E <=0.5; Financing of business is not over reliance on external loan (debt)
    b. Value trigger: The best combination of
      Current Price/Net Asset Per Share (NAPS) <= Average Current Price/NAPS of filtered REITs
      P/E <= Average P/E of filtered REITs
      EPS >= Average P/E of filtered REITs
    c. Buy in >= $2,856 (based on my HLeB account's minimum order to minimize brokerage cost % over transaction cost) and within a balanced/diversified spread of value held in 3 or more REITs, as compared to my available accumulated capital to inject.
    d. Sell off:
       Stop Loss (not Trailing Stop Loss) of 7%: Sell all
       REITs for me are for income + equity growth (like Properties), thus as long I don't lose 7% or more of my initial investment, in the long-run, that investment transaction should be good enough to play its role in my portfolio.
       Price hits a net profit >= 3 X expected DY%: Sell to recover capital
       eg. A capital growth >= 3 x 10% (ie. 30%) will trigger me to sell because 3 years' worth of returns in hand NOW is worth more than in 3 years time due to inflation, risks and opportunity cost

  2. Foreign focussed equity funds - 23% of cash investments
    Same as REITs' capital, the capital for investing into Foreign focussed equity funds is accumulated in my SCB Mortgage1 account, thereby knocking-off the amount of interest I have to pay, effectively "earning" me BLR-2.2%.
       a. Buy in
       Allocate a fixed amount of money every quarter (3 months) to Public Far East Select Fund (PFES) and Public Regional Sector Fund (PRSF) and execute buy-in with Combo program of Dollar Cost Averaging + Value Cost Averaging.
       b. Sell off: To recover capital + expected returns pa
       Look to sell when a transaction hits 200% of my expected returns (10%pa), ie. 20%pa + tempered with the current Trend for that fund (ie. if it's in one of the 3 negative trends - see Trend Buy & Sell Rules 2009 Investment Program & Methods)

Of course I have an OPPORTUNITY or Trading sum put aside from my "windfall" (part of "Feel Good" ;P). That's for another day (thank you Boss! again - else my Trading fund = $0 hehheh).

Monday, June 8, 2009

2009 Investment Program & Methods

Based on my current general Asset Allocation of 33% each for Bonds, REITs and Stocks (exREITs) posted earlier, my investment program is generally broken down to:
  1. EPF--> Bond Funds --> Equity Funds quarterly
  2. 77% of Cash from Net Income's apportioned for investment (see Reloaded & back to basics) --> Direct REITs (ie. Stocks in REITs) based on value
  3. 23% of Cash from Net Income's apportioned for investment (see Reloaded & back to basics) --> Foreign focussed Equity Funds Quarterly
Please note that I consider $ in EPF to be part of Assets held in Bond.

EPF Methods:
There are 2 methods which I'm utilizing for EPF-based investments into Equity mutual funds / unit trusts. Why 2 methods? Simple - to test with real $ and see whether one is much more effective than the other OR similar returns. Nothing beats tracking and managing when it comes to your own money on the line :D.
Please note that I have tested these two methods theoretically via random data and actual historical data + real money in but I've never used both methods on the SAME mutual funds / unit trusts for the same period.
The 2 methods are:
  1. Combo of Dollar Cost Averaging (DCA) + Value Cost Averaging (VCA)
    a. Buy Rules
    Problem for executing a continuous & stable apportionment for this program was solved by taking as much money out of EPF every quarter, ascertaining the average that I can sustain "perpetually", and using that amount as the allocation to Equity funds every quarter
    EPF ---> Public Select Bond Fund:
    $XX,XXX fluctuates due to bonuses, EPF's "age formula" vs. what's left in A/C1
    Then, Public Select Bond Fund ---> Equity Fund:
    $10K every quarter allocated to use in Combo method for Public Index Fund + Public Sector Select Fund (50/50).

    With this Buy Rule, I execute less buy amount ($) when the funds are running high but I still participate in-case of a long crazy bull-run
    + I execute more buy amount ($) when the funds are down and battered using the unused money accumulated in the Bond fund. See the links below:
    Dollar Averaging Vs. Value Averaging Vs. Combo - Concept
    Dollar Averaging Vs. Value Averaging Vs. Combo - real data using Public Far East Select Fund (PFES)

    b. Sell Rules
    As I track each transaction individually, reallocating dividends reinvested based on dates and amount of units held at the date the dividends are distributed, I can track each transaction's Net Profit / Net Loss Per Annum.
    With this tracking + based on experience, historical data and risk appetite - my expectation of "normal profit" is 10% per annum and if any of my transactions' profits are way above my normal expectations, ie. 20%+ pa, I look to switch back to Bond fund and lock-in my capital + expected profits, letting the abnormal profits to continue running. However, I now temper this Sell Rule by checking against my own trend tracking for that specific fund before switching.

    c. Bottom Line
    The Buy Rules above lowers my need for cut losses as it automatically buys less when the market is running high + buys more using unused allocated funds when the market crashes.
    The Sell Rules enables me to take expected profits while allowing me to participate if the run continues upward.


  2. Trend
    Over here, I'm using my ex-DCA funds accumulated until 2008. Here's where I jump into PIX & PSSF or out into PSBF (same funds as the ones using the Combo aproach).
    a. Buy & Sell Rules
    I use my own Trend tracking based on Current NAV Price in relation to the 200 Days' Moving Average (long term) and 50 Days' Moving Average (mid term). Based on Trend, there are 6 phases, 3 "positives" & 3 "negatives":
    "Positives": Recovery, Accumulation, Bullish
    "Negatives": Warning, Distribution, Bearish

    Thus, the "cycle" is
    Recovery --> Accumulation --> Bullish --> Warning --> Distribution --> Bearish;
    where at each phase, the Trend usually stays where it is, goes forward or backwards
    at Recovery, it will usually stay or go forward into Accumulation phase OR backwards into Bearish phase
    at Bullish, it will usually stay or go forward into Warning phase OR backwards into Accumulation phase

    Thus, the most logical rewards-to-risk ratio would be to:
    Buy-in at Accumulation phase
    Sell-off at Distribution phase

    Yup - no 15 or 20 Days' Moving Average (short term) used as I think mutual funds are mid to long term commitments, not a fling/trade as the cost as a % is higher than stocks' trade.

    b. Bottom Line
    Purely based on Trend, this approach does not "stay in the market" for fun or opportunity. It's either In or Out, thereby very useful to avoid large drops and only participate when the investment is picking-up steam. However, there won't be a huge returns expected here as Buy-in is only after the investment has picked-up steam AND Sell-offs are not at the height as well.


Cash Investment Methods:
Holy kaka - long stuff above, to be continued on next posting yar.

Asset Allocation - personal reasoning

Earlier on (see Reloaded & back to basics), I shared that my current general Asset Allocation goal is an even split between Bonds, REITs and Stocks (ex REITs). My reasoning behind such an Asset Allocation goal are below - all constructive criticism or queries are welcomed, that's one of the ways for me to learn better & faster, thus, please feel free to do so.

33% Bonds, 33% REITs, 33% Stocks (exREITs) - 1% "main tikam" ;P
  1. Back to the basis of not having a crystal ball, these three Assets have different correlation to each other and the economy cycle. Yeah, they may not have a totally negative correlation
    - I noticed stocks & bonds falling together on the same days once a blue moon
    - I noticed stocks in REITs and nonREITs stocks falling and running up on the same days but not in similar percentages
  2. By aiming for a general portfolio balance of these, my aim is to have different players playing different roles - like football/soccer:
    - Forwards: Stocks (exREITs) to grow & help me score!
    - MidFielders: REITs to create chances (ie. money via dividends + smallish capital gains) for my attackers + help my defenders in times of crisis (cash flow + to keep ahead of inflation)
    - Defenders: Bonds for defence (cash flow + to keep with inflation)
    - Goalie: Emergency Buffer of 4+ months' average expenses (aiming for 12 months) to stop the necessity of robbing/benching any of my attackers, midfielders & defenders
  3. Why no Gold in there?
    That remaining 1% "main tikam" is for opportunities in Gold and other collectables.
    To me, gold is just another holder of value / valuation - like cash. I'd rather focus on Assets that GENERATES the value, not just hold the value. Any Gold bugs willing to share and educate me better?
  4. Why no "physical" Properties (can touch, can use, can rent out or flip) in there?
    There is a similar Asset class in there - REITs (Real Estate Investment Trust).
    The reason why I chosed REITs instead of Properties (houses, shops, factories) are:
    - illiquidity of Properties vs. REITs
    - lump sums required for Properties (unless limited partnerships are used) vs. REITs
    - hard to diversify due to lump sums required for Properties
    - no crystal ball to tell which new development will be hot if buying off-the-plan
    - buying sub-sale in areas that are hot is like buying a stock at the height of a bull-run
    - leverage is a double-edged sword
    - no matter how creative I get, I still haven't manage get a calculation that shows Properties' returns being better than REITs, given the above shortcomings
    - REITs are easier, IMHO, to value (although the books are "cooked" a bit) and ascertain value. The DY%, NAPS (Net Asset Per Share) vs current market price, D/E, ROE and even the category of REIT (commercial, industrial, etc.) is easily available.
    - I'm still trying to figure and learn how and why people get into Properties when there are REITs these days. Any coach or mentor to share experiences and points?
Please note that although my general Asset Allocation is as above, it does not mean that at any point of time it will be exactly thus. I still pick & choose value purchases (basic fundamentals) and a bit of speculative stocks. That's it - that's my "big view" approach and reasoning (well, most of it anyway) - Asset Allocaiton between Bonds, REITs and Stocks (exREITs).

What's my program or method/approach to achieve this? Heeheh later lah, I promise to share - because I noticed by sharing face-to-face or written, I become clearer in my thoughts and tend to follow-through. The secondary benefits of sharing is that others become more "financially free" possible + different perspectives' feedback helps me look into what I've missed. I've figured out that the more one knows, the more one knows what one still doesn't know :D

Sunday, June 7, 2009

Trailing Stop Loss hit - SHELL

Aargh.. the closing price of SHELL hit my 7% trailing stop loss last Friday 5th June 2009. Sigh, I thought I could hold this for longer - alas, since its ex-dividend, it dropped more than 7% from it's recent high of RM11.20. The good news is I'll make about 30% net profit, including net dividend, from this SHELL transaction, bought at RM8.05 on 30th December 2008.

Hm, maybe I should tweak my "Value/Core buys" trailing stop loss to 10% to keep my churn down and keep my "Trading buys" at 7%. Decisions decisions.. any advise or experience to share?

Addendum 2009/06/08 1:29pm:
Sold SHELL at $10.50 already. Shaking off the "Should haves, could haves, would haves" by consoling myself that 30%+ net profit in 6 months-ish is good enough.... until I decide that it isn't when I've learned more :D

Bonus time! Thank you Boss! Yeehah - REITs here I come.

Thanks to my boss, I should be able to adjust my portfolio a this year to meet my general Asset Allocation goal of 33% Bonds, 33% Stocks (ex REITs) & 33% REITs/Properties. 'Alo - don't lar go asking where I stuffed that 1% ;P.

My current Asset Allocation lopsidedness towards Stocks (ex REITs) is due to quarterly withdrawals from EPF to invest in Mutual Funds / Unit Trusts using a combination of Dollar & Value Cost Averaging program. Thus, my cash investments are mainly focused on REITs + Foreign focused mutual funds / unit trusts like PFES & PRSEC.

I just got a bit of TWRREIT last week, at RM0.975 based on D/E<=0.5 + ROE>=10% + DY>=8%, as part of my investment into REITs - just about 1/3 only. Heheh - I'm an amateur, thus, too chicken to jump in 100% since I don't have a crystal ball + I want to pickup other REITs at value prices to diversify my REITs holdings, just 2 others, BSDREIT + ATRIUM, not too die-worse-i-fried I hope :D. Any opinions, views and advices?

Friday, June 5, 2009

Reloaded & back to basics - Money Management basics

What's been happening
I've been tied-up awhile due to job commitment + searching, learning & planning my next 10 year's of goals, financial & otherwise.

From hindsight, I found what I've been lacking - a basic template for money management. No, not investment money / risk management or sizing but basic money management in terms of allocating net income.

After finding two books - Secrets of the Millionaire Mind + Crashproof Your Life, trying and testing to live within the basic money management (a personalized version from those two books) and finding that it works... good, I thought I'd share the ideas here with you.

Basic Money Management (Net Income Allocation)
The percentages (%) below are allocations of Net Income for each stage, the left over % for each stage are for necessities. Thus, the trick here is to REDUCE necessities, thereby allowing you to reallocate the %.

Now, here's the double whammy - if you reduce necessities AND increase income (active or passive income), you get a serious turbocharging towards Financial Freedoom, where your passive income (investments) are making enough returns to cover your necessities.

10% Emergency Buffer
* to build an emergency buffer for 3 months' to 12 months' average monthly expenses
>2-4 months in savings or liquid area
>2-4 months in high interest accounts (staggered FDs/CDs, transaction accounts like Hong Leong eBroking, flexi mortgages like Standard Chartered's MortgageOne)
>2-4 months in short-term bonds or bond funds
* once you have enough emergency buffer built, the amount should be allocated (in addition) to your investments (see Intermediate below)

10% Feel Good
* play / fun / hobbies (or hobbits, whichever you prefer)
* reduce debts, especially credit card debts & personal loans
* charity - this includes charity to family, team members and of course charitable organi
* anything that feeds your spirit and inner self

10% Investments
* Asset Allocation
>Bonds, Stocks, REITs / Properties, others (eg. gold, commodities, collectables)
* Diversification within Asset Classes
>Domestic & Foreign
>SmallCap & LargeCap
Heheh - this area was where I was mostly focussed on - thus, an unbalanced approach.

10% Education
* family & self education & continuous learning (ie. books, audio books, seminars, etc.)

10% Accumulation for Specific Future Spending Goal
* eg. Car, House, Mortgage Paydown (suggested minimum additional 2 months' prepayment per year)
* this amount may be accumulated in high interest accounts, bonds, bond funds, even REITs given enough time horizon..

Heheh - see, with such a practise, we can play and have fun WHILE being disciplined in growing our assets. I tells you, it feels good to continuously give to charity (via credit card deduction lar, which have "cash back" ;P).

My monthly net income allocation is as above, all the way to Advance, ie. I'm only using 50% of my net income for necessities. In addition, I'm still taking a cut from gross income to contribute into my EPF (CPF / IRA equivalent). "Windfalls" like bonuses are 90% allocated to Investments & 10% to "Feel Good". Of course returns from investments are re-invested or earmarked for re-investment - bad habits die hard ;P.

Ok ok - my personal monthly allocation are:
10% Emergency Buffer
* 3 months in SCB Mortgage One (aiming for 4 months)
by pre-paying my principle, I don't pay interest on it & I can redraw anytime online or via cheque. hey, no one is going to give me 3.55% pa compounded daily ;P
* 1 month+ in bond fund (aiming for 4 months)
better returns, on average, than SCB's Mortgage One's BLR - 2.2%
* 0 months in REITs (aiming for 4 months)
potentially the best returns BUT most "illiquid" in the sense that liquidation during an emergency need may be at a "wrong market timing".

10% Feel Good
* Charity via credit card autodebit for UNICEF & WWF. FYI, SCB's JustOne Titanium Card gives 2% - 5% "cashback" without any need for balances carried forward monthly (ie. cleared monthly)
* Hobbies, family outings, treating friends & team members

10% Investment
* Dollar + Value Cost Averaging for foreign focussed funds
Public Mutual's Public Far East Select Fund (PFES) & Public Regional Sector Fund (PRSF)
DY >=8% & ROE >=10% & $/NAPS<=80% & D/E <=0.5

10% Education
* $250 pm for SSPN for my little Ariel's education account(she's 3 this year). Maximum tax relief pa is $3,000 only, thus the limiter of $250 pm
* $100 pm for Ariel's interest classes
* a set amount for REITs to generate $1,000 pa for my personal books in the future
* the rest for personal books & continuous learning

10% Accumulation for Specific Future Spending
* SCB Mortgage One 4 months prepayments each year
* Holidays
* Notebook replacement

I'm aiming to reduce my necessities from the current 50% of net income, to 40%-45%, thereby allowing me to increase allocation to "Feel Good" & "Investments" by 5% each. Call me crazy - I want to leave behind something significant for my little Ariel, UNICEF & WWF when I'm gone. Gambate!!!

Phew... and recently my boss gave my colleagues and I bonuses - yay!!! Thank you boss!
The 10% from this windfall is funding my holidays in China and the 90% is being used to boost my emergency buffer and investment in REITs - just got another position in TWRREIT, but that's for another day's blog ;P

Still Alive & Kicking

Sorry for being away for awhile - busy on job + testing some money management basics & trend approach to investments.

I'll post my personal findings and views in a bit + start sharing my tweaked approach as I execute monthly. For now, I've uploaded some Excel worksheets into Google Docs and shared them for you to use, generate ideas and feedback. Please feel free to let me know how they can be improved, what you wish to see, ideas, etc. These worksheets are available on the right-navigation bar, bottom-right.

Domo arigato in advance.