eBlog Entrepreneur

Links for 2012-05-09 [del.icio.us]

2012-05-10T00:00:00-07:00

15 Ways to Make Money with Your Website
I came across a lot of articles that are talking about making money from websites but somehow most of the articles are not very complete because some of the links provided by the articles are not working. Since those articles are giving out-dated information, in this article I will try my best to provide the most accurate information about making money using websites.

Links for 2012-05-05 [del.icio.us]

2012-05-06T00:00:00-07:00

What Will Happen to Our Blog After We Die?
Have you think about this question? What will happen to our blog after we die? Will it continue growing or it will stop growing and slowly become obsolete? I come across this question when I suddenly think of "What if a blogger stop blogging and suddenly disappear from the world of blogging?", "he is not answering comments", "he is not responding to emails" and etc., he just disappear. Well, life is so short and so fragile. What will happen to our blog if we die?

Links for 2012-04-26 [del.icio.us]

2012-04-27T00:00:00-07:00

40 Ways that Lead to Blogging Failure
Similar to blogging success, blogging failure also has its root causes. If a blogger failed to identify the problems,then his/her blog is slowly moving towards failure. Here, I have listed out all the 40 ways that will lead bloggers to blogging failure. I hope you can use it as a reference to avoid blogging failure.

Links for 2012-01-08 [del.icio.us]

2012-01-09T00:00:00-08:00

Make Money Online by Starting Your Own Online Store and Sell Your Own Customized
There are a lot of people making money online by selling physical products. If you are not sure how people are making money online by selling physical products, then you should think of eBay and Amazon.com. eBay allows users to sell their products online by using the bid system while Amazon sells books and now they involve in selling other physical products as well as e-books.

Links for 2012-01-05 [del.icio.us]

2012-01-06T00:00:00-08:00

Make Money Online by Designing Logos | CrowdSpring.com
If you are a graphic designer, designing logos would not be a hard task for you. It might be very simple for you but for me, it is way too hard. Actually, do you know that you can make money online by designing logos? If you are not sure how, this post will share with you one of the websites to make money online by designing logos.

Links for 2011-12-31 [del.icio.us]

2012-01-01T00:00:00-08:00

www.computertotvx.com
Turn Computer to TV using this great software....

Links for 2011-12-23 [del.icio.us]

2011-12-24T00:00:00-08:00

Blogging Tips: 7000 Words Per Post or 450 Words Per Post?
When it comes to blogging, we know that we all need to write blog posts, create fresh contents, provide new updates to our blog and of course, give useful and high quality information to our blog readers. So, when it comes to the time for me to write new blog post, I always wonder, "Should I write my blog post in 7000 words or just write 450 words blog post?".

Is REIT Investment Better Than Trading The Stock?

2011-12-20T06:42:00.000-08:00

Recently, I am investing in Real Estate Investment Trust (REIT). I found that REIT is far better investment than any other stocks as it give investors annual dividends and investors can take advantage of the market fluctuation due to news and announcements.

In my previous post about REIT, I explain about REIT and the future. It is true that REIT is having good future. Why?

Why REIT is a Good Investment for Future
As we all know, REIT is real estate investment trust. REIT pool money of investors and invest in real estate. Those real estate such as offices, store, towers etc are rented for income. And, those income are shared among investors as dividend annually. Since most of the REIT are required to payout as high as 90% of the income, this is great for investors as an investment.

Reasons to Invest in REIT
1. How do you think the price of real estate properties will become in the future?

"The price of real estate properties are always going up, if you want to buy real estate properties, buy fast or else the price will go up!".

We always hear this everywhere - in fish market, in coffee shop, while talking to cousins, talking to friends etc. Everyone knows price of real estate will go up in the long term and it is going up FAST!

So, REIT is where we can make more money. As he price of real estate goes up, price of REIT will go up in the long term. Why? It is because rental income will go up as well - year after year.

2. Prices of real estate went up, rental fees when up, what is next?
Next, it will be dividend income from REIt investment will go up as well. In addition to dividend income, we can take advantage of stock price appreciation. The REIT stock price will go up as well because of net tangible asset (NTA) goes up.

3. Rental income went up, Earning Per Share (EPS) will go u as well
Eventually, earning per share (EPS) will go up provided that the total share in the market remains the same. When earning per share increases, it will be reflected in the stock price. So, stock prices have to change accordingly. EPS up, stock price up.

How to Choose REIT for Investment - Criteria for Great REIT

1. Price to Earning Ratio (PE)
Low PE is good as we are buying at lower price at low PE. Try to find REIT stocks with PE lower than 10.
Refer to Fundamental Stock Analysis: Price to Earnings Ratio (PE)

2. Earning Per Share (EPS)
Earning per share (EPS) is another important factor. Try to find REIT stock that are giving positive EPS every quarter.
Refer to Fundamental Stock Analysis: Earning per share (EPS)

3. Dividends per year

The best yearly dividends for REIT investment should be around 6% to 14% per year. So, try to find REIT that gives around 6% to 14% dividend per year.
Refer to Fundamental Stock Analysis: Dividend Yield

When you can find REIT that meets these criteria, then it is a good investment. Hold it for long term and make money forever.

Investing in Mutual Funds Benefits

2010-11-23T05:45:00.000-08:00

Mutual funds is also known as unit trust. Mutual Funds are an investment vehicle that pool together the money of a lot of people to invest in other investment vehicles such as stocks, bonds or other assets. In simple terms, we can view mutual funds as a basket that holds a lot of stocks, bonds and other assets such as real estate. So, as investors, we are actually buying a piece of the fund's asset.

By investing in mutual funds, we are indirectly investing in a large amount of different assets such as stocks, bonds and real estates. It is a good way to gain more return using less amount of money.

Please read on to learn more benefits of mutual funds.
The benefits of mutual funds are diversification and professional management. Both of the benefits are very important because it helps to lower the risk of investment.

Diversification:
Diversification means that we are investing in more than one asset at one time. By using little money, we can invest in a lot of assets such as stocks, bonds, real estates, currency and more. Some of the mutual funds invest in different countries while some invest within their own country. Our money will be invested in diversified asset types to get the highest return possible.

Professional management:
The mutual funds we invested in is managed by a group of professional fund manager. That is why we have to pay certain amount of fees during investment. That is the fees for managers of the fund. If we are not good at stocks investment, it is advisable to invest in mutual funds because professional managers can help us get the best return using our money.

Mutual funds or unit trust is a good investment vehicle. We can invest for long term and it would be a good buy especially during the economic crisis.

Personally, I have made 38% return from my unit trust investment in less than 1 year time after the crisis of economy.

How to Save 50% of Your Income and Retire Young

2010-07-25T04:46:00.000-07:00

Do you want to continue working in your sixties? I think that most of us would not want to continue working when we are 60 years old. So, how can we become rich before we reach 60 years old? The key to the answer is to be frugal and save 50% or more of your income. Your saved income should be invested properly to make it grow faster.

In this article, I am going to share some ideas to make more income and retire young. If your are interested, please continue reading the full post. In order to retire young and save 50% of your income, firstly you have to be frugal. You should always try to spend less and save more. Try not to spend on those things that you do not need, try to spend only on those things that are a must. One of the best ways to monitor your spending is to write down all your expenses properly and you will see where your money goes to.

Secondly, create multiple stream of income. Multiple stream of income means creating extra income aside from the income of your job. There are a lot of ways to create extra income. For example, you can use Internet as your extra income by blogging, online freelance job and so on and so forth. Besides, you can also join part time job such as unit trust agent, insurance agent, small business and so on. Multiple stream of income can help you increase your income dramatically and help you retire faster.

Thirdly, make your money grow faster and make your money grow continuously. Now, you are frugal and having quite an amount of savings, you can proceed to make your money grow. The way to make your money to grow is to invest your money. You need to invest your money properly so that your money can grow fast in shorter period of time. For example, if you are putting your savings in fixed deposit account for 2.5% to 3.5% per year, you can look for other investments that can provide higher return such as 5% to 10% per year. If you are good, you can find investment that can provide 8% to 15% per year. So, your money is working harder for you to make even more money.

By using the 3 methods above, you can reach retirement early and if you apply the methods properly, it would not be hard to save 50% of your income and retire rich.

Dividend: TA Enterprise Bhd First & Final Dividend 2.5%

2010-05-18T01:28:00.000-07:00

Recently, I found that there is an undervalued stock called TA Enterprise Bhd (Ticker symbol: TA) is going to give dividend. The dividend TA going to give is 2.5% First & Final Dividend. From some of the resources I found online, the Net Tangible Asset of TA Enterprise Bhd is around RM 1.45. The current price of TA is RM 0.67. This is a stock trading at more than 50% discount in which less people are aware of. So, I bought myself some shares of TA to take advantage of the dividend earning.

Net Tangible Asset (NTA)

Current Price

RM 1.45

RM 0.67

According to NTA, this stock is trading at 53.79% discount.

From the fundamental analysis point of view, this is a good stock to buy because the trading price is far below the Net Tangible Asset. If you have forgotten about Net Tangible Asset (NTA), it is the total asset divided by total number of shares, in other words, it means the real value per share.

Please continue reading for the dividend computation.

The above is the dividend declared by TA Enterprise Bhd including the Ex-date, payment date and lodgement date.

I am going to explain the dividend computation of TA First & Final Dividend 2.5% below:

Par Value 1.00

Dividend 2.5 %

Dividend per share 1.00 x 2.5% = RM 0.025 per share

Current price per share RM 0.67

Investment Return 0.025 / 0.67 x 100% = 3.73%

The above is the computation I made for my own reference and for sharing purpose, you can use it as reference but if you would like to invest in TA, please consult your broker, financial consultant and so on.

The calculation is calculated using Par value, in case you have forgotten about the calculation, please read here.

Overall, I feel that this is a good stock to invest because it is having large discount of more than 50% discount in price and it is going to give dividend soon.

Fundamental Analysis: Dividend Yield (DY)

2010-05-10T08:40:00.000-07:00

In this post, I will share another fundamental approach towards stock investment which is the dividend yield analysis. Dividend yield measures the amount of cash return you get from the company you invested in. Dividend can be viewed as yearly interest rate for your investment in the company or you can view dividend as the profit you get according to the amount of shares you are holding.

Normally, annual interest rate for Fixed Deposit in bank is around 2.5% to 3% per year. So, if you can find a stock that is fundamentally good and produces more return than the Fixed Deposit rate of bank, why not invest in the stock to get higher return?

The dividend yield of stock can be calculated as follow:

Dividend Yield = (Dividend per share / Share price per share) x 100%

Normally, investors like to buy high dividend yield stocks such as BJTOTO, CARLSBERG, British American Tobacco (BAT) and so on and so forth. If you like high dividend, you might want to have a look at REITS, REITS provide high dividend yield and stable dividend every year.

It is important to learn the way to calculate dividend yield. Companies use two methods to declare dividends to shareholders, cents per share and percentage per share. You can refer to the tables below to earn to calculate the dividend yield:

Assuming Stock AAA is currently trading at RM 2.50 per share and it is giving RM 0.05 dividend per share.

Table 1: Cents per share

Par Value Dividends Per Share Dividend Yield

RM 1.00 RM 0.05 RM 0.05
x 100% =

2 %

RM2.50 market price per share

RM 0.50 RM 0.05 RM 0.05
x 100% =

2 %

RM2.50 market price per share

RM 0.10 RM 0.05 RM 0.05
x 100% =

2 %

RM2.50 market price per share

Now, assuming Stock AAA is currently trading at RM 2.50 per share and it is giving 2% dividend per share.

Table 2: Percentage per share

Par Value Dividends Per Share Dividend Yield

RM 1.00 2% 2% x RM 1.00 par value
x 100% =

0.8 %

RM2.50 market price per share

RM 0.50 2% 2% x RM 0.50 par value
x 100% =

0.4 %

RM2.50 market price per share

RM 0.10 2% 2% x RM 0.10 par value
x 100% =

0.08 %

RM2.50 market price per share

From the table above, I hope that you will understand how to calculate dividend yield and earn more using dividend investing approach. It is important to calculate the dividend yield and compare among different stocks to find the best and high yielding stocks for your portfolio.

Happy investing and earn more dividends!

Rent VS Buy A Home

2010-04-21T08:40:00.000-07:00

Everyone wish to own a home. But it is crucial to find out whether it is time for you to buy a house now or rent a house. The cash flow when deciding to buy a house is important for your personal finance because you would not want to get into deep financial problem after buying a house.

I found a video from YouTube which is quite good for simple explanation of renting and buying a house. It shows the cashflow for both cases (renting and buying a house). So, please take your time to watch the video and see whether your current financial status allow you to buy a house or just rent a house.

Whether you are now financially capable of buying a house or still financially incapable, I have found a simple approach to share with you to effectively reduce your burden of buying a house. Actually, there are some approaches we can take to effectively reduce the burden of buying and owning a house. For me, the approaches are REIT and passive income. You can take some time to read my previous on Real Estate Investment Trust (REIT) so that you will be more familiar with what I'm going to share with you soon in the coming posts.

Calculating Electricity Charges and Usage in Malaysia

2010-02-10T00:59:00.000-08:00

Recently, I am having quite a lot of things on my side to be done and I find that I neglected my blog for quite a long time. Sorry to all readers who are following my blog. Today, I am going to talk about electricity, the charges and the way to calculate electricity charges as well as usage in Malaysia.

For quite a long time, I have been wondering how is the electricity is calculated and how much charges are incurred on electricity. I have fond some useful detail and I would want to share it with all of you who are reading my blog. So, read on, prepare a piece of paper and a calculator, try to calculate your monthly electricity usage and charges.

Tariff Sarawak Electricity Supply Corporation (SESCO) (Domestic):
1st 100 units ----------------------- RM 0.34 per unit
Next 300 units ---------------------- RM 0.29 per unit
For each additional unit per month -- RM 0.33
Minimum Charges --------------------- RM 5.00

Reference: SESCO Tariff

Tariff Tenaga Nasional Berhad (TNB):
1st 200 units ----------------------- RM 0.218 per unit
Next 200 units ---------------------- RM 0.334 per unit
For each additional unit per month -- RM 0.334
Minimum Charges --------------------- RM 3.00

Reference: TNB Tariff

From the table above, we can see that it is quite a large different in tariff rate in West Malaysia and East Malaysia. So, please refer to the correct table to calculate the charges.

Now, let us proceed to examples. I give 3 examples here, I hope that you will be able to understand and if I did it wrongly, please let me know.

Example 1:

If we are using 14W bulb such as a Phillip bulb for 5 hours a day.

The calculation is as below:
14W x 5 hours / 1000 = 0.07 kWh
SESCO:
Charge for 5 hours = 0.07 x RM 0.34 = RM 0.0238
TNB:
Charge for 5 hours = 0.07 x RM 0.218 = RM 0.01526

It is quite a small amount of money for 5 hours per day. If you are to calculate it for a period of one month with several 14W bulbs operating at 5 hours per day, then the amount will add up.

1 month with if using five 14W bulbs:
SESCO:
Charges per month = 5 bulbs x RM 0.0238 x 30 = RM 3.57
TNB:
Charges per month = 5 bulbs x RM 0.01526 x 30 = RM 2.289

Ok, that is for 5 light bulbs.

Example 2:
Next, we calculate the charges for using a 55W standing fan. Since Malaysia is quite hot during the day when it is not raining, I choose to use 10 hours per day for using standing fan.

The calculation will be:
55W x 10 hours / 1000 = 0.55 kWh
SESCO:
Charge for 10 hours = 0.55 x RM 0.34 = RM 0.187
TNB:
Charge for 10 hours = 0.55 x RM 0.218 = RM 0.1199

That is for calculation of 1 day period.

For 1 month period:
SESCO:
Charges per month = 1 fan x RM 0.187 x 30 = RM 5.61
TNB:
Charges per month = 1 bulbs x RM 0.1199 x 30 = RM 3.597

Ok, there is the cost of using 1 standing fan for 10 hours per day and I am sure you will be using more than 10 hours.

Example 3:
Now, let us calculate the cost of using air-condition (10000BTU that is 1200W) at night when you sleep. Let say you sleep at 11pm and wake up at 6am, that would be 7 hours per day.

The calculation is as below:
1200W x 7 hours / 1000 = 8.4 kWh
SESCO:
Charge for 7 hours = 8.4 x RM 0.34 = RM 2.856

TNB:
Charge for 7 hours = 8.4 x RM 0.218 = RM 1.8312

For 1 month period:
SESCO:
Charges per month = 1 aircon x RM 2.856 x 30 = RM 85.68
TNB:
Charges per month = 1 aircon x RM 1.8312 x 30 = RM 54.936

Done. That is the cost of using 1 air-condition for 7 hours a day for 1 month. I don't think that you are using only 1 air-condition at home right? Most people have more than 1 air-condition at home that is operating at the same time.

Summary of Monthly Electric Charges of Above Example:
SESCO:
Light bulbs = RM 3.57
Standing Fan = RM 5.61
Air-Condition= RM 85.68
----------------------------
RM 94.86

TNB:
Light bulbs = RM 2.289
Standing Fan = RM 3.597
Air-Condition= RM 54.936
----------------------------
RM 60.822

So, that is the payment per month.

In conclusion, it is important to use energy wisely or else you will be spending more on utilities bills. Use energy wisely and save money for your investment.

Remember: We have not calculated refrigerator that operate 24 hours a day, water heater, electric oven or microwave oven, television, radio, computers, electric kettle and so on and so forth. In other words, the monthly payment for electricity will be quite high.

Fundamental Analysis: Price to Earning Ratio (PE Ratio)

2010-01-17T07:19:00.000-08:00

Price to Earning ratio is commonly known as PE ratio. PE ratio is a very commonly used ratio to find some good deal in the market and to spot the under-priced stocks. PE ratio can be calculated using Price per share and Earning Per Share (EPS). By referring to PE ratio, you actually know how long would it takes to recoup your money. If you are unsure what it means "how long would it takes to recoup your money", then read on to learn about it.

The formula to calculate PE ratio is as below:

PE Ratio = Price Per Share / EPS

I have included 2 examples to share with you the calculation of Price to Earning ratio (PE ratio).

Example 1: A company stock, ABC is currently selling at RM 5.00 per share and its EPS over the past year was RM 1.00. So, in this example, we can calculate PE ratio as below:
PE ratio = 5.00/1.00 = 5
This means that if you invest RM 5000 in this stock, you will need 5 years to recoup your investment because the company is making Earning Per Share (EPS) RM 1000 per year.

Let's move on to the next example. I hope that you are can understand PE ratio with the example given.

Example 2: Another stock DEF is currently selling at RM 20.00 per share and it has a EPS ratio of RM 10.00 per year. So, in this case, the PE ratio can be calculated as:
PE ratio = RM20.00 / RM10.00 = 2
So, from this, we can see that for we only need 2 years to recoup our money invested in stock DEF. This means DEF is a better investment choice as compared to stock ABC.

In other word, the lower the PE ratio, the more attractive the stock is. Normally, we will compare the PE ratio of the stocks in the same industry. For example, we compare PE ratio of MAYBANK with CIMB, CIMB with AMMB, MAYBANK with AMMB and so on because they are all from Finance sector.

You can easily obtained the PE ratio from the newspaper in the "Business" section of the newspaper. You can compare PE ratio among different stocks to find the best deal for your investment.

If you are looking for the latest PE ratio, you can use the date from the latest Annual Report of companies and calculate the PE ratio yourself or else, you can login to you trading account to find out more.

Low PE ratio is crucial because stocks with low PE ratio is more resilient towards market crashes and buying low PE ratio stocks means you are buying low priced stocks.

Fundamental analysis is important to identify good stocks in the market. Happy Investing!!!

Fundamental Analysis: Share Buysback

2009-12-22T22:54:00.000-08:00

Share Buybacks basically means the company of the stock is buying back their own shares in the market. This means that the total number of shares in the market will be reduced due to the act of Share Buybacks.

Share Buybacks is a good action taken by the company if the company has excessive cash or fund. This is because Share buybacks will reduced the total number of shares in the market and thus will create several benefits as follow:

Benefits of Share Buybacks:
1. Increase the Earning Per Share (EPS). I hope you still remember what is EPS, if you have forgotten, you can read it again.
2. When shares are being bought back by the company, this means the number of outstanding shares in the market is being reduced and the shares you are holding become more valuable.
3. A company that is executing Share Buybacks gives investors and traders a clear opportunities. This is because company that is buying back their own shares means that they are confident with the company's performance and Share Buybacks gives investors and traders a signal of better future growth. (Think of it this way: If Company A is buying back their own shares in the market, surely the company is very confident that their company will perform better in near future. It might also means that the price of the stock will be going up soon.)

Recently, there is a company constantly buying back their shares in the market. I am constantly checking and I found a company that is buying back their shares at large amount from the market.

What might it means?
It might be a signal of share price growth in near future due to large amount of share buybacks. So, it is a chance for investors and traders to take the opportunity to buy the stock.

The Company I found that is constantly buying back their shares:
BJTOTO is the company buying back their shares at large amount these few days. I include the details in the picture below:

I can only show you the data of two days (Data obtained from TheStar.com.my) because old data is not shown. I was checking few days ago (3 days) and BJTOTO is buying back their shares at large amount. As you can see the company is buying back at large amount for 3 days. Since the company is so sure and buying back their shares at such a large amount, it might means something good is going to happen soon. So, what do you think investors and traders should do? I am sure you have the answer yourself.

Share Buybacks is beneficial for the company and it is beneficial for investors and traders as well. Try to look at BJTOTO for a few days and look at the price movements, if it shows positive signals, do not hesitate to buy.

Personally:
I have bought some BJTOTO at RM4.21. If my analysis on Share Buybacks are correct, the stock price will go up in near future and I will be able to gain some good return from BJTOTO.

Happy investing and Merry Christmas!!

Controlling Your Holiday Spending using Prepaid Credit Card

2009-12-15T03:20:00.000-08:00

Prepaid means paying first before you actually spend. By using prepaid credit card, we can control your spending and you will not overspend because you will stop buying when the credits in the prepaid credit card reaches the limit.

A lot of people starts to buy a lot of things when it is nearing the end of years especially during holidays and festive seasons. Prepaid credit cards can be very useful to help control our spending habits. Overspending is a bad habit of almost everyone having a credit card. This is because buying things using credit cards need no cash at all, all we need to do is to bring the card and we pay for the things we buy using it. This will cause overspending and buying a lot of things that are not needed.

PrePaid Credit Cards are useful to help all of us control of spending. We can only spend up to the amount of money we deposited for the card. So, after the credit reaches the limit, we can no longer buy anything. This is a great way to control ourselves from overspending.

If you are using a credit card, you always overspend due to the credit cards and you find that your credit card debt are increasing that is hard to payoff, I recommend you to use a prepaid credit card to control your spending habit and payoff your credit card debt as soon as possible.

Control your spending habits and create a better financial future.

Fundamental Analysis: Earning Per Share

2009-12-07T06:08:00.000-08:00

Earning Per Share or commonly known as EPS is a common term among investors. Earning Per Share is calculated to know the earning power of a company per share. This means that the larger the value of Earning Per Share, the better the earning power of the company. Some of you might already be very familiar with EPS because it is a basic analysis that will be used by investors when buying a stock. This is the basic reference for investor to get an idea of the earning power of a company before investing.

Earning Per Share can be calculated quite easily. You need to have the two values below to calculate Earning Per Share:

1. Total Company's Earning
2. Total Share Outstanding

In case you do not understand what is meant by Total Company's Earning an Total Share Outstanding, you might find this post useful to help you identify the two values and calculate EPS.

Total Company's Earning is normally Net Earning. For me, I find it easier to take "Net Profit After Tax" as the value.
Total Share Outstanding is the total number of shares that are currently in the hands of public or investors.

After you know both of the values, you can now calculate the EPS of a stock. The Earning Per Share formula is as below:

EPS = Total Company Earning / Total Shares Outstanding

Please refer to the example to have a clearer idea about EPS.

For example:
BJTOTO BJTOTO is the stock ticker for Berjaya Sports Toto. The EPS based on year 2008 is as follows:
EPS = Net Profit after Tax / Total Shares Outstanding
= 349 millions / 1351 millions
= RM 0.2583 per share.
This is an approximate values of EPS for BJTOTO. It can be seen that EPS = RM 0.2583 per share. this means that for every BJTOTO share you hold, the earning is RM 0.2583.

I hope that the above example can help you understand Earning Per Share (EPS). Start analyzing the EPS of the stock you are holding or planning to buy. You will find some interesting information from the analysis.

Happy investing!

Fundamental Analysis: Enterprise Value (EV)

2009-12-01T22:39:00.000-08:00

In the two previous posts, I discussed about two methods of Technical Analysis for stock investment. Today, let us explore one of the fundamental (Fundamental Analysis) approach to stock investment called Enterprise Value.

Enterprise Value is one of the Investment Valuation ratios. There are some other ratios such as Price/Earnings ratio, Price/Book Value ratio, Price/Sales ratio, Price/Cash Flow ratio and so on. Those ratios will be discussed in the coming post.

Investment Valuation Ratios:
Investment Valuation Ratios are ratios used to identify the fundamental of a company (stock) before making the decision to buy or not to buy. As mentioned earlier, some other ratios are Price/Earnings ratio, Price/Book Value ratio, Price/Sales ratio, Price/Cash Flow ratio and so on.

Enterprise Value can be calculated as follow:

Enterprise Value = Market Capitalization + Debt - Cash
Market Capitalization = No. of Shares Outstanding x Price per share

Enterprise value measures the total cost if someone want to takeover the company by buying all the shares, paying off the debt and take out cash that is left over. A company with large enterprise value means that it is harder to be taken over (acquisition) by other company. In other words, enterprise value measures the value of a company.

By using enterprise value, investors can compare between other companies in the same industry to check whether a company is undervalued or overvalued.

Real Estate Investment Trust (REIT)

2009-11-28T05:26:00.000-08:00

Real Estate Investment Trust or commonly known as REIT or REITs is more like unit trust than stocks. REITs are listed on Bursa Malaysia and you can easily check the changes in prices everyday as long as the Bursa Malaysia is open for trading. REITs are quite for long term investors but it is not that suitable for short term investors.

What are REITs similar to Unit Trust:

Basically, REITs are a pool of money from investors and REITs companies will use the money to invest in real estate or commonly known as property such as houses, shops, shopping complexes and so on. The structure of REITs are similar to unit trusts.

What are the difference between REITs and Unit Trust:

The differences between unit trust and REITs are REITs are more liquid as compared to unit trust and you have the control to choose the REITs companies you wish to invest (In unit trusts, you cannot control which companies in the Bursa Malaysia to invest in because all the decisions are made by the unit trust fund manager.). Investing in REITs give you the control to choose the right REITs companies and you can buy and sell at lower cost (fees) as compared to unit trust funds (The minimum fees (RM1000) per Buy & Sell is around RM30 which is lower as compared to unit trust with fees around RM55. Some unit trust do offers free or no fees service.). The fees mentioned here is the fees incurred per trade, the fees might be different for different banks or stock brokers.

Most of the income of REITs companies are rental income from real estate. REITs are required to payout 90% of the income as dividend to the investors. So, this is a great advantage for investors who wish to invest for long term and invest for income.

Long term investors can really benefits from REITs because the dividend or known as Income Distribution for REITs is huge percentage as compared to stocks in Bursa Malaysia and of course, most of REITs income distribution gives much higher percentage than the fixed deposit interest rate. So, long term investors who seek to get income from investment will find this a gold mine of investments.

Huge Potential in the Future:

REITs is still considered new to Malaysian investors. The REITs sector in our Bursa Malaysia is very small. The total market capital of REITs is not even 1% of the total market capital of Bursa Malaysia. So, REITs still have a long way to go before it reaches maturity.

Invest in REITs provides us with high dividend income (income distribution) and higher chances of capital gain in the future. It is not a bad choice and I would say it is a good choice to invest in REITs. And, invest for long term.

REITs to Look at:
Axis (AXREIT), Atrium, AmFirst, StarHill REIT, Tower REIT, Hektar, UOA REIT, Alaqar KPJ, Amanah Raya REIT and BSD Reit.

Stock Tehnical Indicator: Parabolic Stop And Reversal (SAR)

2009-11-25T07:04:00.000-08:00

Parabolic Stop And Reversal is also known as Parabolic SAR. This indicator shows the trend of certain stocks and stock traders can take position of buying and selling according to the indicator.

Parabolic SAR indicator is useful and quite accurate in strong trend market. Stock traders can buy and sell according to the indicator. Basically, parabolic SAR indicator shows that the market always move up and down. By referring to this indicator, you can actually see whether the trend is moving upward or moving downward. Parabolic SAR indicator is useful as a reference for stock traders to learn the trend of the market. It is important to know the market trend if you are a stock trader because following the right trend can help you to succeed in stock trading.

Why Following the Trend:
Trend following is like swimming in the sea. If you are swimming at the same direction of the sea current, you can swim with ease.But, if you are swimming against the current, then you will find it hard to swim and you get exhausted easily.

So, knowing the trend of the stock market is very important to trade stock with ease and parabolic SAR indicator can be a guidance for you to know the trend of the market.

An example of Parabolic SAR Trade:

The picture (taken from ChartNexus) above is the chart of GENTING. The picture shows the Parabolic SAR indicator which is indicated as Green dots and Red dots in the chart. The Green dot shows the up trend while Red dots shows the down trend.

From the picture, it ca be seen that a Buy Signal is created when the price move above the Red dots and Sell Signal is created when price move below the Green dots. This is a successful trade using Parabolic SAR in a strong trend market. [Please click on the picture to see the notes I wrote on it.]

Parabolic SAR indicator can show the trend of the market. If you can spot the trend and buy at the correct trend, then you can trade successfully in the stock market.

Note: It is advisable to refer to multiple indicators to confirm a trade.

Stock Technical Indicator: Chaikin Money Flow

2009-11-24T05:46:00.000-08:00

Chaikin Money Flow is calculated from the Accumulation/Distribution line indicator over 21 days. Accumulation shows the buying pressure on certain stocks while Distribution shows the selling pressure on certain stocks. By using Chaikin Money Flow, we can obtain the idea of the buying and selling pressure on certain stocks and we can buy or sell the stocks according to the indicator.

The above picture (taken from ChartNexus) shows an example of Chaikin Money Flow of PBBANK. The Blue color shows positive money flow into the stock while Green color shows money flowing out of the stock.

Since stock price movement is created by supply and demand. So, as a technical trader, you can use this information to predict the movement of the stock by referring to the inflow or outflow of money into the stock.

If there are more inflow of money, it means that people are buying the stock and logically, the supply is lowered due to higher demand. Price of the stock will be affected accordingly.

If there are more outflow of money, it means that people are selling the stock and the supply is now higher due to lower demand. Price of the stock will also be affected.

An example of Chaikin Money Flow Trade:

The above picture shows an example of Chaikin Money Flow to predict the future price movement of a stock. The example we used is MAYBANK.

It can be seen from the graph that the price movement of MAYBANK is consistent with the Chaikin Money Flow indicator. You can click on the picture to see the larger view of the movement of the price and Chaikin Money Flow.

According to Chaikin Money Flow, the outflow of cash is slowly reducing and money is starting to move into MAYBANK. This inflow of cash affected the price of MAYBANK and created and uptrend for MAYBANK. [Please click on the picture to see the lines I marked and the notes I wrote on the picture.]

The inflow of cash into MAYBANK pushes the price of MAYBANK higher. Thus, if stock traders can spot this inflow of cash into MAYBANK, stock traders can gain huge profit from this trade.

Note: It is advisable to refer to multiple indicators to confirm a trade.

Free Giveaway: Milan Doshi 22 Advices to Investment

2009-10-04T05:43:00.000-07:00

Milan Doshi is a millionaire property investor as well as stock investor. He has written several books and he is one of the best selling authors. If you have done some research on investments then you might know who is Milan Doshi and how he become successful in investment.

Today, I want to give all readers free download of Milan Doshi 22 advices on investment. Personally, I have bought and read Milan's books and his books are simple and easy to understand. Thanks to Milan Doshi for sharing such a great ebook with 22 investment advices. It would be very helpful for investors to be successful in investment. You can download it for free. Please visit read more to find the download link.

Download Milan Doshi 22 Advices on Investment:
Download here

Enjoy the reading and remember the advices throughout your investment journey.

What are Mutual Funds or Unit Trusts

2009-09-28T06:23:00.000-07:00

If you are really new to investment, you might not know what unit trusts or mutual funds are. So, this post will explain about mutual fund or unit trusts. Mutual funds is a great investment vehicle for investors to get started. It is a great way to diversified your investment and have professional fund managers to manage your investment.

If you are getting started to invest your money, you can try to use mutual funds to learn about the world of investment. Personally, I think that mutual fund investment is a good way to get started and it is a good way to learn the basic. Anyway, if you would like to learn the basic and learn more advance knowledge in investment, then I would suggest you buy some investment books and start reading. Finally, start applying what you learn and invest.

What is Mutual Funds or Unit Trusts?
Mutual funds are also known as unit trusts. Mutual funds are collective of large pool of money from a lot of investors to be invested in stocks that are relevant to the objectives of the funds.

In simple words, there are a lot of people or investors are investing their money to the funds, therefore, that fund are having large amount of money (a pool of money) and mutual funds managers will use their professional investing techniques to invest the money in stocks. Investors can save time because they have professionals helping them to invest and most of the time, the return of investment can be higher than the normal fixed deposit (FD) rate. [ Find out more: The Story of My Friend Become Rich Using Mutual Funds in His 30s! ]

Mutual funds investment is offered by most banks. You can try to ask about mutual funds investment in different banks such as Maybank, Public Bank and Public Mutual, Ambank, CIMB and so on and so forth. Personally, I invest my money in Public Bank and Public Mutual. I am not saying that Public Mutual and Public Bank is the best place to invest but I have experienced great return so far and it gains several awards over the past few years due to excellence in mutual funds investment.

Anyway, you can try to search for better banks that provides better investment opportunities. Mutual funds investment normally will incur high charges as the management fees. So, this would be a fee that every investor must pay to invest in mutual funds.

From my observation and experience, I know that there are banks that offer free of charge to invest in mutual funds of their banks. So, you do not need to pay any fees to get professional to help you invest but bear in mind that these types of funds normally will not have high performance if compared to funds that charges fees.

In short, it is up to you o choose the funds that suit your investment. Start invest early in life and make your money grow faster. I hope that this post will help you to understand mutual funds better. If you would like to look for other investment vehicles, you can try stock investment. [ Find out more: Mutual Funds VS Stock Market ]

The Story of My Friend Become Rich using Mutual Funds

2009-09-26T20:48:00.000-07:00

As mentioned in the previous post "Mutual Funds VS Stock Investment", I mentioned that I have a friend becoming rich using Mutual Funds (Unit trust) investment. Today, I am going to share his story but I will not disclose his name in this post. So, I use a random name instead. Throughout this post I will use Alan as my friend's name.

I learn from him and I found that becoming rich using mutual funds or some like to call it unit trust is really possible. It depends on the strategy you use and how persistent you are in the mutual funds investment.

So, I hope that you can continue to read to know some of the ideas of becoming rich using mutual funds.

My friend, Alan is a normal people just like all of us, having full time job, get paid every month and lead a simple life. Personally, I think that his salary is in the range of RM3000 to RM4000 but I do not know the exact amount because it is confidential.

Just like most of us, Alan does not own any businesses and he does not have large amount of inheritance from his parents. He is like anyone of us, simple life, simple income, like to save his hard earned money and hardworking. He was introduced to mutual funds few years ago and he does consistent investment over the years.

Ok, that is enough for his simplistic life. Now, let us get into the real stuff.

How he become rich using Mutual Funds?

He save quite a lot of money from his 10 to 15 years of working life. And, his investment in mutual funds reaches the peak at the beginning of year 2008. He had reached his investment goal and he sold all his units in the mutual funds he invested in.

That was his first success in the mutual funds investment

He used the money he earned from mutual funds and buy 2 properties (2 houses). The houses he bought are ranging from RM150,000 to RM250,000. Since he has a lot of cash at hand, so it is not a problem for him to pay large amount of down payment and take small amount of loans for the 2 houses.

Later, the stock market crashed in the middle of year 2008. He saw the opportunity and he invested part of his saving into the funds that he like most. At that time, market is getting worse and he kept on buying and he bought a lot of units at cheap price. In other words, he bought unit trust at large discount.

Two months ago,he sold all his units and he made a large profit again. Again, he used the profit he gained to buy another property.

Now, Alan is in the beginning of his 30s and he already owned 3 houses. He is almost reaching his goal to become a millionaire and he is now close to million in his property and saving.

Personally, I think that he really has the courage to buy mutual funds when all people are afraid of buying.

There's a famous saying, 'Buy at the peak of pessimism'. That is the faith Alan has in his investment.

Personal Analysis on His Investment Technique:
1. Is it a good thing to invest in economic downturn?
He did the right move, buy at the economic downturn and sell when economic recover. Economic downturn is the MEGA SALES for investment vehicles such as mutual funds, stocks as well as properties.
2. Is it too ricky?
Not at all, because mutual funds or unit trust is a large pool of money investing in businesses within the country and foreign countries. So, mutual funds will not disappear unless the all businesses the fund invested in gone bankrupt. (That case would hardly happen.)
3. What are the rules and regulations mutual funds companies to sell funds?
In our country, Malaysia, mutual funds companies have to proposed their new funds to a government bodies to get approval. Only after that government bodies approved the funds, then the bank or mutual funds companies can sell the funds to the public. In other words, unit trust funds that are currently available is approved by government bodies and it is considered as safe investment. (I forgot what is the name of that bodies. Will update about it soon.)

So, buy when the economic is bad and buy a lot. Mutual fund will not disappear (it is a rare case to happen) in economic downturn. Economic downturn is the time to buy at discount.

And so, Alan did it. I am sure that he will do it again when the next chance come.

You might want to read about "Dividends of Unit Trust/Mutual Funds" and learn how it can help you make money.

Mutual Funds VS Stock Investment

2009-09-25T07:58:00.000-07:00

A lot of people prefer to invest in mutual funds over stock investment while some claim that stock investment is providing much better return than mutual funds. It cannot be denied that both investment vehicles are providing good investment opportunities for investors but investors should always look for the better ones that could give the required return over the long term.

So, in this post, I am going to share with you the Advantage and Disadvantages of Mutual Funds and Stock Investments.

Mutual funds and stock investments are known to be the popular investment vehicles for investors all over the world. There are people becoming very rich using mutual funds while there are people become very rich through stock investments, to name one - Warren Buffett.

One of my friends is becoming very rich and wealthy through mutual funds investment. You can read The Story of My Friend Becoming Rich using Mutual Funds. So, who say mutual funds cannot make you rich?

Anyway, investing is all about discipline and strategy. No matter it is mutual funds or stocks, you can be very rich, if and only if you are disciplined and have a proper strategy in your investment plan, nothing will go wrong.

So, let us go into the advantages and disadvantages of Mutual Funds and Stocks Investment.

Mutual Funds	Stocks Investment
ADVANTAGES
· Managed by professionals fund managers and fund managers always get the financial news faster than any people out there because managing funds is their full time job.	· You have all the control in your hand and you make decision yourself based on your own analysis on the stock you want to buy. Investing is not your full time job.
· Fund managers are well trained professionals. They have the tools, software, the knowledge and skills to manage funds.	· You know what you are investing in. You can set your investment style such as dividend style or trading style.
· Proper portfolio diversification.	· Diversification based on your own strategy.
DISADVANTAGES
· Professionals will also make wrong decisions.	· You have to learn stock investment from the basic.
· The financial goal of fund manager might be different from yours. Most of the time you don not know what they are investing in. You will only know when you get the report.	· You are not well trained in the field of investment. You might be lacked of knowledge and software to help you analysis your investment.
· The return is not up to your expectation.	· Learning and analyzing will take a lot of time and efforts.
· Only perform well in bull market.	· Performance is based on your investment strategy.

It should be noted that Mutual Funds is charging very high fees as the management fees. So, make sure you consult your mutual fund agent before making any investment. As for stock investment, the fees are very low, it is around 10 times lower than the fees charged by mutual funds. (The fees differ from bank to bank, so please consult the agent about it.)

From the table above, you can see that both of the investment vehicles have the good and bad. It depends on your investment style. If you believe in professional, then make sure you find the really good professional fund managers for your investment.

If you believe more on your own ability to invest, then you can try to learn the basic and start invest in the stock market. Do not jump directly into stock investment if you are not sure what you are doing.

Time is an important factor for successful investment. So, do not hesitate to invest your money. Let your money work hard for you to earn more money.

Either way, investing in mutual funds is actually investing in stock market because fund managers will help you invest your money in stock market. You can read my "What is Mutual Funds or unit Trust" in the post to come.

What is Right Issue?

2009-09-07T04:01:00.000-07:00

Some people might be confused with the term "Right Issue" by some of the company in the market. Personally, I was confused with "Right Issue" too and after reading books and asking my broker about "What is Stock Right?" and "How Stock Rights Works?", I finally understand "Right" and its usage.

If you are unsure about Right Issue of stock, then this post would be very helpful to help you understand it.I hope my explanation will be clear and easy to understand. Right Issue is where a company offer shareholders a special price to buy the stock (mother share) at much lower price than the market price. An issue of right is a great way to cost average the stock shareholders are holding.

Example:
Stock AAA issues right to the shareholders of 1:1 at RM1.00. This means that shareholders get 1 right for 1 share he/she is holding.
Let say:
Mr. A has 1000 units of stock of company AAA which he bought at RM2.00 per share. [RM2000 for 1000 units of shares]
After right issue, Mr will have 1000 unit of rights.
Now, it is up to Mr. A whether he wants to buy or sell the 1000 rights.
If he want to buy, so he has to pay:
RM1000 plus Fees [1000 units of rights x RM 1.00]
So, now Mr. A will have 2000 units of share of company AAA.
Cost average
= (initial cost + cost of right)/Total Units
= (RM2000 + RM1000)/2000
= RM1.50 per share
So,this will reduce the price of the initial investment cost of RM 2.00 per share. Now,the price per share becomes RM 1.50 per share.
If Mr. A wants to sell:
1000 units will be sold according to the price of the right in the market. Normally, the name of right in the market will have "-OR".So, right of stock AAA will be AAA-OR.
If the price of the AAA-OR in the market is RM1.20 per unit and Mr. A sell 1000 units. He will earn RM1200.00.

So, right issue is a good thing for shareholders because shareholders can cost average their stock or get cash by selling off their rights. Either way, the right issue benefit the shareholders.

Notice: Remember that right issue means the company is creating more shares in the market. So, normally after right issue, the price of the share will drop.

Personal Finance: The 4 Do's You Should Have

2009-08-18T04:28:00.000-07:00

Personal finance is all about preparing a better life for your retirement as well as having proper planning for the money you earn. Managing money properly is important no matter what job you are having - employees, employers, business owner, self-employed, freelance worker and so on. You need to have a proper plan to care for your money and the plan should be helping you to achieve a better financial position when you retire.

There are 4 important Do's you should follow to make your personal financial plan work inline with your life. I am sure that you surely do not want a personal financial plan that you do not like or a plan that force you into an extremely tight lifestyle.

So, there are the 4 Do's you should consider to build up your personal financial plan.

DO KEEP AT LEAST 10% OF YOUR INCOME FOR SAVING
It is important to keep a part of your income into your saving account. Normally, you should save 10% of your income as saving. If you are earning RM3000.00 per month, saving 10% of it will be RM300.00 per month. After one year, it would be a total of RM3600.00.

You can use the money for investment to make it grow even faster. Remember to compound your money. If you are not sure what is compounding and why compounding, then you can read my previous post "The Power of Compounding".

For me, it is no point to save money in fixed deposit account because the interest is way too low around 2% to 3% per annum. There are a lot more better investment vehicle out there, providing much better return per annum. Take for example, unit trust or mutual fund, some of the funds are giving around 9% to 10% per annum.Read "How Unit Trust Transform RM100,000 into RM1,375,173.00 after 10 years" for more details about unit trust.

DO HAVE EXTRA CASH AT HAND

You should not invest all your money without having cash at hand. With no cash at hand, you are in big risk. This is because you might not have money in case of emergency. Life is full of unexpected events, so you will need to have cash at hand to prepare for the sudden events in life.

Since you have 10% of your income go for your saving and investment. Then, you can have another 5% go into bank account for daily purposes. By having 5% of your income going into your bank account, you can prepare yourself for the worse. At least, you can withdraw your money from ATM when problems occur.

DO CONSIDER STOCK MARKET AS AN INVESTMENT
Stock market is a good investment vehicle. Personally, I haven invested RM7000.00 only into the stock market. Now, after half year, my return is around 14%. That is a great return right? I am expecting even higher return by the end of this year.

Stock market is a good long term investment vehicle. For most people, stock market is risky but if you know how, you do not have to be a risky investor in the stock market. You can read "How Stock Market Works?" to learn more about stock market.

Investing in stock market is just like driving a car. Driving a car is risky because you are risking your life to reach your destination. But, you do not have to be a risky driver. Buckle your sit belt, drive carefully and slowly.

Investing in stock market is one of the way to reach your financial goal. You can go slowly by earning yearly dividend from the company you invested in or you can do it the risky way by trading stock market.

Personally, I am investing to get the dividend every year. Dividend is providing a very good return if you get the good company that pays high dividend. Normally, it can range from 10% to 15% per year depending on the price of the stock you get and depend on the company payment.

Stock market is an investment vehicle, it can be viewed as your vehicle such as car, boat, aeroplane, jet, F1 or any other. You do not have to be a risky investor, you can do it safely to reach your financial goal.

DO HAVE AN INSURANCE PLAN
Insurance is another important investment vehicle to help you reach your financial goal. Insurance is important because it helps you when have trouble especially large medical bills.

As mentioned earlier, "Life is full of unexpected events". Who knows something bad happens such as illness, accident, unable to work and so on. With proper investment in insurance, you can protect yourself in case any bad situation happens to your life. Insurance will help you cover all the expenses and help you to get along with your life if you no longer able to work due to some reasons.

So, choose an insurance plan properly and carefully. Make sure the insurance plan meets your need. Normally, one insurance plan is required. You do not need to have too many insurance plans. Instead, channel your money for other investment purposes.

In short, personal financial planning covers all the aspects from cash and investment to insurance plan. So, do it properly and slowly. Follow your plan carefully and you will reach your financial goal in the time you set.

What is Share Buy Back and The Benefits

2009-07-31T06:07:00.001-07:00

If you are already investing in the stock market or you are reading financial news from newspaper, you might have came across news about Share Buy Back. So, what actually Share Buy Back means? What are the benefits of Share Buy Back?

In this post, I am going to discuss about Share Buy Back and the effect of Share Buy Back towards the stock price of a company. Basically, from the words itself, "Share Buy Back", you can easily guess that it means buying back share. But, who will be buying back the shares? Let's make it simple. Share Buy Back means a company declare that it is going to buy back their company's outstanding shares in the market. (In case you do not understand what is outstanding shares, it means shares in the market.)

Company will buy back their outstanding shares in the market with large sum of money and the share buy back is normally large quantity of shares. In other terms, Share Buy Back also means repurchase of outstanding shares.

Company will buys back their share due to some reasons:
1. Buying back their outstanding shares can increase the price of share [Why share price will increase?]
2. Buying back their outstanding shares in order to eliminate threat of being controlled or eliminate shareholders who might be trying to take control of the company.
3. Reducing the number of shares in the market.

Share Buy Back can be beneficial to shareholders. Share Buy Back reduces the number of outstanding shares in the market and thus this reduce the supply of certain stocks in the market.

For example:
Comapny A has 100,000 outstanding shares. Now, the company is declaring Share Buy Back of 20,000 outstanding shares.
The Number of Outstanding Shares after Share Buy Back
= 100,000 - 20,000 = 80,000 outstanding shares.

Thus, we can see that the outstanding shares have been reduced to 80,000 shares. If we have less share of Company A in the market, this means that the share of Company A we are holding now worth more than before, right?

How Does it Affects the Price of the Stock? [Why Share Price will Increase?]
Ok, here we need to do some simple calculation.

Let say that the share price of Company A is RM1.00 with 100,000 outstanding shares. This means that if all the 100,000 shares are being sold to shareholders, then Company A will get RM100,000 to invest in their business.

Now, that Company A, Buy Back 20,000 shares from the market and only 80,000 shares are left in the market. What do you think the price of the shares will be?

Originally: RM 1.00 per share 100,000 outstanding shares
After Share Buy Back: 80,000 outstanding shares

So, now, in order to get RM 100,000 from 80,000 outstanding shares, the price of share should be increased.Right?
The price per share after Share Buy Back = RM 100,000/80,000 = RM 1.25 per share.
The new price of the share would become = RM 1.25 per share.

So, if you have bought share of Company A at RM 1.00 per share, you would have profited with gain of RM 0.25 per share.

From the calculation, we can see an increase of share price of Company A. Bear in mind that, this calculation is basically theoretical idea. The price of the share will have high tendency of moving up but other factors will also affect the price change.

Other Benefit of Share Buy Back:
Share Buy Back also affects Earning Per Share. This part will be further discussed in another post because I do not want to confuse you with too many calculations and theories. Read this post again if you do not understand at first read.Try to do some calculation using your calculator. You would find it interesting to know about Share Buy Back.

Top Up Your Unit Trust/Mutual Funds

2009-07-10T21:14:00.001-07:00

The stock market and economy is not in the best shape yet but it is a good chance for investors to start rack in large number of cheap investment products. In this topic, I will discuss about top up unit trust or mutual funds investment.

Unit trust or also known as mutual funds are well known for long term investing. Unit trust is a diversified funds that invest in large number of stocks in order to improve the return over longer period of time. If you already purchase unit trust, it would be good to top up during the bad time of economy and take advantage to gain higher return in the long run.

Currently, the economy has not recover back to the previous high and it still has a large potential to move up further in the long term. So, topping up your unit trust now is considered a good time.

Advantages of topping up during bad economy:
1. You can gain more units using the same amount of money.
2. You can lower down the price per unit or commonly known as cost averaging technique.

By topping up unit trust during bad economy, you can take advantage to increase the total units in your unit trust portfolio.

Let us do some mathematics:
Calculation for Advantage 1:
Assume that you want to top up RM 1000 at NAV RM 0.15. You will get 6666.67 units.
As compared with:
Investing RM 1000 at original NAV of RM 0.25. You will only get 4000 units.
This means that you gain 2666.67 units more by using RM 1000.
Calculation for Advantage 2:
Assume that your initial investment in a unit trust is RM1000.00 at RM0.25 NAV with 4000 units at hand.
Assume you want to top up RM1000 at RM0.15 NAV. You will get 6666.67 units. After top up, your total units will be 6666.67 + 4000 = 10666.67 units
Therefore,
Your new NAV per unit = RM 2000/10666.67 = RM 0.1875 NAV.
You can see that you effectively reduce the NAV from RM 0.25 to RM 0.1875.

So, when market go back to its original and unit trust recover back to original NAV, your unit trust portfolio is making profit instead of losing money.

It is recommended to invest in dividend funds because you will get dividend every year and this will further improve your investment return. I have got my dividend from the unit trust fund I invested in [Read here].

How the Stock Market Works

2009-06-08T07:30:00.000-07:00

This is a simple idea about the stock market.

Just to relax you mind and enjoy a simple funny comic about the stock market. The later part of this posts will include a simple explanation of stock market.

Basically, stock market is the place where people buy and sell stocks. For example, in a business, people also buy stocks and sell stocks. So, if you look at the stock market, it is actually a place for all the businesses to gather, people can buy and sell stocks at the price they feel affordable and at the correct price.

Don't make it hard to trade the stocks you like in stocks market. Just look at stock market as the place for you to do business. Sell your stocks at higher price, buy stocks at lower price. That is the way businesses make profit.

Enjoy!

Par Value	1.00
Dividend	2.5 %
Dividend per share	1.00 x 2.5% = RM 0.025 per share
Current price per share	RM 0.67
Investment Return	0.025 / 0.67 x 100% = 3.73%

Par Value	Dividends Per Share	Dividend Yield
RM 1.00	RM 0.05	RM 0.05	x 100% =	2 %
		RM2.50 market price per share
RM 0.50	RM 0.05	RM 0.05	x 100% =	2 %
		RM2.50 market price per share
RM 0.10	RM 0.05	RM 0.05	x 100% =	2 %
		RM2.50 market price per share