Unit Trusts (UTs) or mutual funds seem like investment vehicles for the layperson with little or no investing experience. So how do they fit into a savvy investor's portfolio? Firstly, let's examine the unique characteristics of UT investing: - UTs pool together investors' money to buy assets such as shares and bonds. This allows investors with small capital (even $100) to start investing. - There are thousands of UTs in the market, covering a variety of asset classes, geographical regions, sectors, and industries. - UTs are professionally managed by a Fund Manager, and relieve the investors of the active monitoring and trading of their investments. - UTs charge annual management fees, usually about 1 to 2 percent of the asset under management (AUM). This fee is taken out from the AUM, which cause the Net Asset Value (NAV) of the fund to go down. Most funds are priced based on their NAV, and therefore annual management fees indirectly causes the value of an inve
Showing posts from 2013
Getting married involves financial commitments, so get them right to ensure a harmonious life journey together. Here are some findings from a survey conducted by the American Institute of CPAs. More than half of couples argue over unexpected expenses More than one-third of couples fight over insufficient savings Couples aged 45 to 54 argue an average of 4 times a month about finances As you can see, money worries can be a strain on a relationship. Hence, sound financial planning and good money management is integral to a successful and harmonious marriage.
On 3rd September 2013's issue of the Straits Times, the Forum section featured a letter from Ms Wendy Tan, who shared that she was disabled from the waist down due to a spinal cord injury sustained during an accident last year. She could not feel her legs and experiences pain in her lower back. As a result, s he had to leave her banking job which she held on for 12 years, as she is unable to work now. After filing a claim under the Dependents' Protection Scheme (DPS) with NTUC Income, her claim was rejected as she could still perform sedentary work. The policy would only payout upon death or permanent incapacity , which Ms Tan's condition don't qualify.
Did you know that your attitude towards money affects your ability to learn from self-made millionaires to achieve financial freedom? Watch this video to learn about the 5 ways self-made millionaires made their millions and how you can become one of them! (YouTube Video by Brain Tracy) Now you know how self-made millionaires build their wealth, there's no reason why we are not able to become a self-made millionaire in our lifetime!
Loans are double-edged swords. Firstly they work on the assumption of the continuity and certainty of one's future income. Banks only lend you money when they are sure that you can work and pay them off. What if one becomes disabled or retrenched, and loses the future income stream? Secondly they work on leverage. Pay a downpayment (say 20%), borrow the rest (80%). There will be no problem if one has assets equalling or exceeding the 80%. But most people are asset rich and cash poor. If they were to just lose a couple of months of income, their world would come crashing down. With the recent euphoria over property and car purchases (mostly on future income and leverage), there are bound to be many people being burnt by the inability to repay their loans when interest rates rise, or the value of their property falls. Looking at the unhappiness over MAS implementing a 50-60% cap on car loans, it is evident that many people do not have enough assets to make up for the downpaym
Relying on your company insurance may be disastrous. 1. Cover is usually not complete as companies wish to save costs (as shown in the article where only $45 was paid out for stroke). 2. You lose your cover when you leave the company. 3. You may be 'forced' to leave the company in the event of a prolonged illness or disability. 4. You may change job and your new company offers even lesser coverage than the previous one. 5. When you try to apply for personal insurance when points 2, 3, or 4 happens, you realize that your health is not insurable anymore due to your deteriorated health (weight, blood pressure, cholesterol, etc), a past illness, injury or hospitalization. So why take the unnecessary risk? The days of relying on a company for employee welfare are long over. Now is the age where companies' main focus is on profits. Ensure your personal insurance is in good shape and don't leave things to chance, cos you might not be able to afford it when chance h
Sharing a quote I came across on Facebook. And it is super relevant, especially for parents. If you want your child to be successful in life, then you have to first focus on your personal development. Learning how to invest, starting a business, marketing great ideas, building a network, growing wealth, managing time well, and finding balance in life are all important aspect of personal development. Only then could you impart your wisdom and experience to your child and empower them to lead successful lives. CJH
Tip #1 - Getting Your Asset Allocation Right Many investors over-emphasize the importance of picking the right company or bond or country to invest in. There is an equally large group that thinks the correct timing of the markets is the key factor to making profits. Well, they are wrong. According to research, security selection and market timing are not the key contributors to investment profits. In fact these two combined only accounts to less than 5% of investment performance! No wonder most people lose money investing. The most critical factor that contributes to over 90% of investment performance is Asset Allocation . Placing your money in a diversified portfolio across different asset class in the right proportions is the key to investment profits. We have some backtested results (see chart below) showing the difference in performance between 4 of our company's well-allocated portfolios and relevant benchmarks. You will see that the our portfolios performed be