Even easier now to top up your ASM and ASW!

Looks like the Malaysian government is really desperate for cash. Amanah Saham Berhad(ASB) has just enabled their trust holders to top up using online banking. The only drawback to this is that you can only do it with Maybank2U. Read more here.

Maybank Newsroom Statement
The Star's Report

ASW & ASM is back again

Missed the opportunity to grab ASW and ASM trust fund last year? Don't worry, 3.3 billion units will be out for grabs starting tomorrow. Each person can only purchase up to 20,0000 units. Be careful when you are queuing with your loaded bag of money. :) . Here is the details:

http://www.thestar.com.my/news/story.asp?file=/2009/4/20/nation/20090420114255&sec=nation

Did you queued for Sukuk Bonds?

Excerpts from TheStar report on 17th April:

KUALA LUMPUR: The RM2.5bil Sukuk Simpanan Rakyat government bond launched Tuesday is all snapped up.

The bond issue has been increased and Malaysians can continue to buy the bonds, the Ministry of Finance said in a statement Friday.

Go to www.treasury.gov.my or www.bnm.gov.my/sukuksimpanan for details or contact Bank Negara Malaysia TELELINK at 1300 88 5465.

http://thestar.com.my/news/story.asp?file=/2009/4/17/nation/20090417172535&sec=nation

It is never a surprise to see such news, especially with the current gloomy state of economy. In the past, people have been queuing outside the bank as early as 5 a.m just to get a share of Amanah Saham Wawasan and Amanah Saham Malaysia(ASM). However, how many people really know how Sukuk works ?

This is one of the problem with Malaysians, the "herd mentality" and "kiasu"(scared to lose) spirit. Many jumps into the bandwagon without even a single knowledge of what Sukuk uses as their investment vehicle. Malaysians seems to be very confident with the government when it comes to bonds and trust funds as compared to government policies. *grin*

Back to Sukuk. Since interest bearing bonds are not permissible in Islam, hence Sukuk are securities that comply with the Islamic law and its investment principles, which prohibits the charging, or paying of interest. Sukuk normally invests in HALAL assets by providing short term LOAN and revenue collected from these assets will be distributed as dividend to bond holders. A simple scenario would be investing (as a short term investor) in toll concessionaire or even real estates (by providing loan for development and expansion) which in turn generates steady fixed income.

Here comes the question many will ask when they make an investment.(but surprisingly not when they invest in Sukuk!) What happens if the investment loses money? Well, in Islamic finance, the risk is SHARED. However, when it comes to Sukuk bonds issued by Malaysian government, the risk will be guaranteed by the Malaysian government. (though I am not sure what is the level of guarantee, but I am sure that the coalition government does not want to lose their next election,:))

Sukuk bonds provides you with 5% annual return, to be distributed on quarterly basis. The bond will mature after 3 years. For those who didn't manage to grab a share of it, here's the good news from BNM. For more information on Sukuk, http://en.wikipedia.org/wiki/Sukuk

How to buy GOLD in Malaysia?

It has been a long long time I have not appeared in the blog space. So sorry my dear friends as I am busy lately.

I have been advocating on buying GOLD to safeguard your wealth. I am not saying that you should used up all your wealth to purchase gold. But rather, try to spend 5-10 % of your wealth to buy some GOLD to hedge against economic crisis.

A lot of people are new to GOLD investment and most of the are thinking that you should keep physical gold bars at home. Well, some people might be doing this but I am not. Let me introduce you a simpler and safer way to invest in GOLD.

There are 3 commercial banks in Malaysia that offers gold savings investment. All you need to do is to open an account with them and all your gold savings will be recorded on the savings passbook in gold units (grams). You can open an account with any of the following banks: Maybank, Public Bank or Ambank. Personally, I prefer Public Bank as their spread for buying and selling is much lower than the other 2.

Check out this page and get more information from here.
http://www.pbebank.com/en/en_content/personal/investments/gold.html

For latest GOLD rates, you can refer to
Public Bank Rates
Bank Negara Malaysia or
Gold.org for international gold rates

Have fun!

Why averaging up is better than averaging down?

We are in the midst of financial turmoil, again. I can appreciate the "turmoil" better now as I am relatively wealthier than I was 10 years back. Many has started to pop me with this question: "Is this the right time to buy shares? When can we buy ?"
There is no best answer to this. Even if Warren Buffet tells you to be greedy when everyone else is fearful, you got to have "bullets"(money) to be greedy! However, I would like to share my thoughts on averaging.
Many have told me that they have started to "average down" following the turmoil. These includes averaging down their trust funds, stock holdings or even bonds. For financial idiots, averaging down means buying the same equity/trust/shares at a lower price compared to the price you have bought previously to lower down your average purchase price for all units held, vice versa for averaging up. Why I prefer to average up instead of down?

1. The Percentage Trick
If you have bought ABC share at RM 1 each last month and now the price has fallen to RM 0.50, you loss 50 % of your share's value in your investment. Think about this, if you were to break even again, you need the share to gain a 100% increase. In order to make a same amount of RM0.50 gain , you need the share price to perform 200 % gain for the share to move from RM0.50 to RM1.50. Which do you think is harder ? To move down from RM 1 to RM 0.50 or to move up from RM 0.50 to RM 1? Mind you that we are talking about the same value of 50 cents here with a different gearing ratio.

2. Bull and Bear sequence
Strong bull does not visit share market often, so does the bear. If you notice, our market is stagnant most of the time, with less than 15% variance over 3-6 months. A stable market is always the best time to make good decisions. Stable market normally occurs after a great bear market. You can take your own sweet time to average up.

3. Catching a Falling Knife
Have you experienced that before ? Have you ever averaged down, causing your portfolio to stay in red for a very long time? This statement is very true, you will bleed. I have a friend who recently told me about the hidden potential of IOI group, as their stock price have fallen from RM 8.60 to RM 4. I have advised him to put that purchase on hold. IOI shares has since fallen from RM4 to RM2 now in just 2-3 weeks. During a turmoil, you will finally find out all the risk that a company is exposed to.

4. 真金不怕红炉火- Genuine Gold is able to endure the fire
During the good times, everyone is concerned about share price gain rather than dividend yield. Who cares how much dividend you make as long as the company is making big money and share price is up exponentially. Most of the time, investors are not told about the investment risk a company is exposed to and the debts-translated-benefits during the good times. All these will gradually surface during a crisis as companies are desperate to keep their books looking good. Unfortunate incidents on risk exposure(such as Enron, IOICORP) will less likely to happen when the market is picking up.

So, when the market is bottoming out? Or, would it be better to say, when the market is picking up again? My personal gauge, when the market is moving up 15 % again over a period of 3-6 months, it would be a good time for averaging up. It's always better to be safe than sorry, don't you think so?