Tuesday, November 10, 2015

Image result for 10 golden rules

The Golden Rules of Investing are essentially a common sensical approach which largely comes down to the emotional aspects such as Discipline, Patience, Greed & Fear.
Remember these 10 golden rules of Investing.

1. Risk is inevitable – What is Risk? Understanding Risk is the first part and then learning to Manage it.
2. Start early – Benefit from compounding. Einstein has acknowledged Compounding as the 8th wonder of the world.
3. Have realistic expectations – Greed is bad. How much is too much? You never know what is enough, until you know what is more than enough.
4. Invest regularly – Not even God can time the markets. Timing/Forecasting the markets is an illusion.
5. Stay Invested – Be a marathon runner. Markets tests patience and rewards conviction.
6. Don’t churn your investments – It only increases costs. If you like gambling, go to a casino. For serious investing, stay put.
7. Spread your corpus – Each investment class is important. Don’t put all your eggs in one basket.
8. Sell your losers – Hope doesn’t make money, Wisdom does. We are biased against actions that lead to regret. People attach too much weight to gains and losses rather than wealth.
9. Hot tips usually burn your investments – Avoid them. Remember the reverse of TIP is PIT. So a tip usually dumps you in a PIT almost always.
10. Taxes are important – But not at the cost of a bad investment. Only Death and Taxes are certain, true ~ But don’t make bad investments just to save tax. Don’t be Penny Wise Pound Foolish.

Article from: EnrichWise

Saturday, October 31, 2015

Loan Street:Upping your game: Residential to commercial properties

In the vast field of investment options, property investment is traditionally perceived as safe and long-term. However, within this sphere itself, there exist two different worlds: residential and commercial property. While housing is a generally safe investment, wading into the commercial property market is a whole different ball game.One major reason why shifting from residential to commercial property is considered upping your game is that while investors are only allowed 70% financing for their 3rd home loan onwards, there are no such regulations for commercial properties; there are no policies to force lower financing margins whether it’s your 1st or 10th purchase. So, if you’ve gotten your feet wet with residential property investment, and are looking for your 3rd piece, shifting to the commercial property sector means that you wouldn’t have to deal with higher down payments. Let’s explore the other key differences from an investor’s point of view. Risk & Return
In the residential world, demand and supply are the hero factors, whereas in commercial property, risk fluctuates in tandem with the Malaysian economy – worse conditions mean less purchasing power, leading to lower demand for retail spaces and ultimately lower property value and rental rates. However, the adage higher risks higher returns rings true here, as the lucrative prospects generally offset the gambles.
Less stress on tenant management
In this area, commercial property investment comes out champion by a long shot. For residential property, furnishings and renovations are pretty much a necessity to rent out your unit in competitive areas. On the other hand, commercial property tenants prefer their units bare, as they usually want to design and renovate them to their liking.
Subsequently, tenant management is much easier, comparatively. Residential property owners often face problems of frequent complaints and runaway tenants leaving outstanding rent and utilities. Commercial property tenants, conversely, generally pose much less problems and are more likely to adhere to the terms of tenancy agreements.
Additionally, if your commercial unit is in a competitive area, tenants would be lining up should your existing one choose to terminate or not renew his tenancy, sparing you the hassle of finding new tenants. Finally, as tenancy periods for commercial units are longer compared to residential ones, you save on agent commissions.
A lucrative market
Yes, in general, property prices have been surging recently, but in the commercial property sector, especially for prime areas, property value appreciation in general is much higher and faster. The reason for this is that for commercial property, rental rates have a direct and more relevant impact on property value, as opposed to the residential sector, where demand and supply play a bigger part.
Additionally, rental rates for prime commercial units shoot up substantially higher and faster than for residential units. It isn’t uncommon today for commercial units’ rental rates in busy areas to revolve around the tens of thousands, many times more than a residential piece of the same square footage in the same area. So, the benefit here is two-fold: higher property value and higher rental rates.
Financing your purchase
If you have ever taken a home loan, you would know that banks in general aren’t particular about the type of property they’re financing, be it apartments or houses. But when it comes to commercial property loans, banks become hyper-selective about the type of property and may give you a lower margin of finance and/or shorter loan tenure based on the property type. If you do get offered a bum deal on a commercial property loan, shop around – different banks tend to like different types of commercial properties, so you might get a better deal at a different bank.
To sum it up, although you stand to gain more in the commercial property market as opposed to residential units, there are many caveats you should look out for, as factors like location, property type and economic conditions have much bigger impact on your investment.

Wednesday, October 28, 2015

Hidden gems in Bursa Malaysia

Image result for undervalued stocks
FOLLOWING the recent run-up on the KL stock market, would there be still many undervalued stocks with potential?
“Yes, there are some like Tenaga Nasional, banks which are still undervalued although prospects are weakening, and plantations as El Nino is supposed to hit hard,” said Chris Eng, head of research, Etiqa Insurance and Takaful.
“There are not many screaming buys left after the recent run-up but Maybank, IJM and Genting Bhd as well as some small caps like Yee Lee and Sunway REIT are good ones,” said Vincent Khoo, head of research, UOB Kayhian.
A stock with domestic exposure, low cost of production and high return on equity is Teo Seng, said a senior analyst.
Due to some very bearish views on property, certain property stocks have been bashed down.
“UEM Sunrise was at a 70% discount to its revalued net asset value which is very steep. It should be at a reasonable 50% which means it has an upside of 50%,” said Danny Wong, CEO, Areca Capital, who also sees value in LBS Bina.
There are concerns that property prices still on the high side.
“I am worried about property, looking at the unsold properties and non-performing loans creeping up in commercial real estate, although in small amounts, over the past one-and-half years,” said Pong Teng Siew, head of research, Inter-Pacific Securities.
Wong agrees there may be an oversupply issue in some high-end condominiums but he does not think there is a property bubble.
Plantation stocks have been coming to the fore in the recent run-up.
Khoo sees a moderate upside for plantation stocks on the advent of El Nino which brings about substantial dry weather, but he is not bullish on hard commodities.
“Generally, I think some Bursa stocks are undervalued due to poor sentiment and this includes plantation stocks. If sentiment returns to normal, I believe these stocks will rebound. But there are other sectors that have better value,” said Wong.
“One can take a quick ride on the technical rebound of commodities that includes metals like aluminium. These are evident in the rise of Felda Global Ventures and Press Metal,” said the senior analyst.
This commodities rebound may last for a month; there will probably be a short spike up for the stockmarket, supported by government funds and to some extent, more stability in the China markets, said the senior analyst.
A note of caution: when the price of crude palm oil reached RM4,000 per tonne in 2008, many companies had planted a lot of palm oil which takes seven to eight years to reach peak production.
“That is hitting us now,” said Pong Teng Siew, head of research, Inter-Pacific Securities.
The US Fed’s holding off on interest rate hike is viewed as potentially offering some reprieve for the ringgit but the upside for the KL stock market may be modest, as emerging markets are still struggling, said Khoo.
“Temporarily, it will allow the rally on the KL stockmarket to continue,” said Pong, who views that the US Fed may be too late to raise rates in this cycle as a recession will possibly arrive before they will seriously consider raising rates.
Moreover, US economic data is seriously weakening, adds Pong.
Khoo thinks the Fed will hike rates this year but it should be obvious to the market that the depth of the hike in this cycle will not be big.
“I do see a chance for the Fed to at least narrow the Fed rate band (for example, fix it at 0.25% instead of a range) by year end. I hope it will be normalised to 2% in a steady manner by 2016. The longer it delays, the worse it will be for markets and currencies,” said Wong.
(As of Dec 16, 2008, the Fed funds target rate was changed in the form of a 75 to 100 basis point cut from 1.0% to a range of zero to 0.25%).
Independent economist Lee Heng Guie sees an even chance of the Fed lift-off happening this year as the committee sees the risks to the US economic outlook and labour market as nearly balanced.
“In fact, the Fed has upped its economic outlook projection and expects the unemployment rate to tick lower,’’ said Lee.
“If external global conditions had not deteriorated further, US fundamentals would have been ready for a small hike this year.”
Peck Boon Soon, head of Asean research, RHB Institute, views the ringgit could appreciate marginally in the near term; however, concerns over the budget deficit and narrowing current account surplus due to depressed crude oil, liquefied natural gas and other commodity prices as well as political issues could dampen the outlook for the ringgit.
Columnist Yap Leng Kuen sees more causes of concern arising from the Fed’s decision to stay put on rates.

Monday, August 10, 2015

1990s Come Back to Haunt Malaysia

Malaysia's ongoing currency crash has many causes: a worsening global outlook, plunging commodity prices and, of course, the political scandal enveloping Prime Minister Najib Razak. But the real culprit is the year 1997.
The conventional wisdom is that Malaysia's then-leader Mahathir Mohamad saved the country from the worst ravages of the Asian financial crisis when he imposed capital controls, pegged the ringgit and waged verbal war against speculators. It's true that Malaysia avoided much of the chaos that toppled economies in Indonesia, South Korea and Thailand. But events today show why, 18 years later, Malaysia may wind up the biggest loser in the region.
Malaysia's neighbors recovered by improving transparency, strengthening their financial systems, and limiting collusion between public and private sectors. Such urgency never swept Malaysia, where the ruling coalition has held power for almost six decades.
Improvements in Malaysian corporate governance have been slow and uneven. Hopes for an end to 46 years of affirmative action -- which benefits the Malay majority while sapping productivity and repelling foreign investors -- have been for naught. Efforts to weed out corruption and ween the economy off energy exports have been tepid.
Today's economic troubles are the product of that complacency. Had the Malaysian government worked harder to strengthen economic fundamentals and win the trust of global investors, Najib's scandal might not be sending the ringgit to its lowest level in 17 years. Had officials in Putrajaya, the country's administrative capital, done more to internationalize Malaysia's business culture, foreign investors wouldn't now be rushing for the door. The FTSE Bursa Malaysia KLCI Index has fallen more than 11 percent from its April 21 peak, while official foreign-exchange reserves dropped below $100 billion for the first time since 2010.
As has been well reported, Najib faces questions about $700 million that allegedly moved through government agencies and state-linked companies to accounts bearing his name. (Najib denies it, while Malaysia's anti-graft commission says it was a "donation.") But foreign investors' mistrust of the Malaysian government traces back to policies pursued over the past 18 years.
Perhaps the most notorious was Mahathir's September 1998 decision to sack Deputy Prime Minister and Finance Minister Anwar Ibrahim. After months of sparring with Anwar over post-crisis reforms, Mahathir fired him and named himself finance minister, an awkward centralization of power that persists today and enabled Najib to create and oversee scandal-plagued state investment company 1Malaysia Development Bhd. And when Najib recently fired Deputy Prime Minister Muhyiddin Yassin, who was demanding answers from the prime minister, it seemed like history repeating itself. Just as in 1997 and 1998, the government is more concerned with closing ranks than retooling the economy.
Indonesia, Korea and Thailand are also having their share of troubles as China wobbles and the Federal Reserve prepares to hike interest rates. But Malaysia's accelerating capital flight is particularly worrisome.
Malaysia's central bank appears to be struggling to slow the ringgit's 18 percent plunge over the past 12 months. The currency is now the lowest since Anwar's departure in September 1998. That makes for an inauspicious economic bookend: Mahathir is now among those suggesting Malaysia peg the ringgit anew.
There's certainly less stigma attached to such policies than there once was. In 1998, the International Monetary Fund called Malaysia's peg a "retrograde step." By December 2002, the IMF was terming it a "stability anchor." And the IMF notably didn't slap Greece for imposing capital controls, the way it did Mahathir in the late 1990s.
But the mere mention of another peg suggests Malaysia's political establishment is still more concerned with the symptoms of the country's problems than the underlying causes. The ringgit isn't sliding because speculators like George Soros (who Mahathir blamed in 1997) are attacking it. Malaysian assets are suffering because the government failed to do basic economic maintenance -- in part because it avoided the worst of 1997 and 1998, in ways Bangkok, Jakarta and Seoul couldn't.
As that dawns on investors, the pressure to sell will intensify. Overseas ownership of Malaysian government and corporate debt fell 2.4 percent in July as a sense of crisis began to permeate the air.
Malaysia isn't about to collapse. With its moderate growth and the highly-respected Zeti Akhtar Aziz helming the central bank, meltdown risks are limited. But Malaysian officials are wrong to argue that the ringgit's slide doesn’t reflect underlying fundamentals. It does indeed, and that's the real problem -- one that can be traced back to 1997.