How to trade US stock?

Last week, finally i had my US stock account opened, and i applied through TD ammeritrade, which is a reputable online brokerage based at US.

I chosen this online broker as it is reliable with good support, from the experience of few of my friends. Also i'd tried out the tools that you can get them for free after signed up. The trading tools are amazing, both for technical and fundamental analysis.

Also i'm an iPhone user, so i'm enjoying using the iPhone real time trading tool as well.

The application steps are easy, you can straight go and apply online by yourself. Or you can choose to be referred by me, which you will be able to enjoy special offer which is 500 free trades. To be referred by me, please drop down a comment of your full name and email address, or email me at danielong1982@yahoo.com with title of "TD Ammeritrade application".

After you filled in the online application form, you need to print the completed form (Open Your Account.htm) out, and then you need to sign on it. Bear in mind to save this page after you finish filled in the details. Else you will need to reapply later or filled in the form manually.

The documents that you will need are as below:

1. W-8BEN - this is the only form that you need to mail to them.
2. Photocopy of your passport.
3. Your bank statement with your full name on it.
4. You pay slip - this is optional.
5. Online account application form (Open Your Account.htm), which is the one that i mentioned to save the page after you fill in the details online.

After your account being approved, you can start to fund your accounts. You can find the details from this page. I personally chose to electronic transfer my stocks from other online account.

Please feel free to drop me any questions.

Also i'm going to start introduce US stocks start from next week, stay tune.

Buy DXN (KLSE 5074)

I bought in this stock DXN (KLSE 5074) last 2 weeks, when the price fell down to RM1.31 due to the Japanese crisis.


DXN Holdings Berhad is the investment holding and management company of DXN Group. DXN´s high regard for quality earned the company many outstanding citations and recognitions from various health and business organizations. Along with the solid foundation and sustainable development, DXN has rapidly diversified into other business activities, which include property, renewable energy, information technology, etc. In its core business of network marketing, the rapid global expansion of DXN is recognized internationally by its vast growth of members worldwide and its amplification of footprint in key strategic locations. With over four million registered distributors worldwide, DXN is solidifying its position as the world leader in Ganoderma products.


I actually knew about this company quite sometimes ago, long before i actually invested in stock market. Is because my girl friend is one of the leader in DXN network marketing. She had been staying with DXN for >7 years now, and enjoying handsome passive income.

So actually i'm quite familiar with the network system DXN is using, and with the system, i believe that the network marketing segment will continue to boom around the world. With the recognized certificates (TGA, GMP, Halal & etc), of cause with great products and marketing plan, DXN is ranked 40th direct selling worldwide in "DSN Global 100", also it had enter 154 countries for now. With 'One Dragon' concept, DXN able to control the cost, and able to come out with affordable quality products.

The EPS ended Nov 2010 is RM0.174, with the price of RM1.31, the PE is ~7.5. The net profit CAGR is ~11%, up from 2006 RM21m up to 2010 RM39.5m. With my own understanding on this company, the global market is still booming, and i expect the EPS for 2011 to be ~RM0.20. With the PE of 10, the target price will be ~RM2.

Also the ROE for this company is meeting my expectation, which is average ~15% for the past 5 years.

Another two stocks that i bought last 2 weeks - DXN & SUNCITY

Last week after the massive earthquake at Japan and Libya incident, i decided to buy in some stocks that i eyed on.

Lastly, i bought in DXN & SUNCITY. Well, i will comment more on these two stocks when i'm free this weekend.

Also i'm studying US stock as well, hope that i will come out with one good pick this week. :)

Unit trust, is it a good choice?

I'd attended a seminar/training organized by my uncle, which is an experienced financial planner. The seminar is to introduce about an investment product, which is unit trust or mutual fund.

I did mentioned in my blog earlier that the percentage of the funds to outperform the market is very less. And to pick a reliable unit trust, one need to really study the fund's performance history. Instead, i would like to invest in stock market by myself which i know it would give me better return.

I did asked some questions during the seminar, and it started to change my perspective on unit trust. 

Firstly, there are many people around that might not really good in investment, and most of them just leave their saving in the bank, mostly fixed deposit. Well, with the low interest, it even not able to cater your personal inflation. 

Also, nowadays Malaysian able to invest in unit trust through EPF (Employee Provident Fund). This is a great news, interest that you earned from EPF is averagely 5.25%, and it can merely cater the personal inflation rate. So why don't we go and look for a unit trust that can averagely give you better return each year, probably 10% will do. I didn't aim for very high return, as i think for high return investment, i already had it, with my investment in stock market. And i prefer to have a consistent return of ~10% with the risk that i can afford, as i'm not the one that determine which or where to invest. :) Anyway, i did study unit trust these few days, and able to look for some funds that return ~10% annually.

Below is a table refers to the total base savings that you must have in your EPF account 1 before you are allowed to invest in unit trust.

Base Savings Table for EPF

You can only invest 20% of the amount after you deduct the total in account 1 with the base saving. Let's say you are 29 years old now, and in your EPF account 1, you have total of RM36,000. So meaning that you can only invest RM4000 (20%x(RM36000-RM16000)). This seems to be not much, but you can invest every 3 months! You can always withdraw 20% of the total in your account 1 after deduct it with the base saving every 3 months, and it will end up as a big amount.

Well, i decided to invest in unit trust with my EPF, as i want to earn >5.25% each year with my EPF contribution. For those that are not familiar, it will be wise to find a reliable agent that can provide professional advice per your requirement. Also please bear in mind, invest in unit trust should be long term, as the service charge that you need to pay for the first time is 3%, and there will be management fee ~1.5%, so it is not worth for me if you just plan to invest for short term.

SUCCESS (KLSE 7207) - Success Transformer Corporation Berhad - Part II

Let's continue with yesterday analysis, for the ROE (return of Equity), it is ~19.23% year 2009 which is the highest among the industry. Also for the past 5 years, the ROE is consistently >15% which met my criteria of ROE > 15%.

For the NTA (Net Tangible Asset), is RM136m vs market capital of RM123M, which mean the NTA/share is ~RM1.135.

Now, let's look at the cash flow, cash from from operating activities increased from RM5.7m to RM29.5m y2005 to y2009, giving a growth rate of 39%. By using the DCF (Discounted Cash Flow) method by Warren Buffett which i set the growth rate as 30%. The target price is actually RM7.78! Which is >700% than the current price ~RM1.03.

Considering the PE of the industry around 12, i will actually set a target price of RM2 with PE ~10 for now. I think this is reasonable enough for a high growth company like SUCCESS.

Remembered that i mentioned yesterday that i will check on the dropping of the net profit from 2009 to 2010? It is due to lower contribution of its process equipment segment following the listing of SEB (Seremban Engineering Berhad) on Bursa Saham Malaysia, which reduce its stake in SEB from 100% to 65%.

However i believe with the expansion plan eoy 2010, the company will be able to grow rapidly, thus i will recommend to buying in this stock with a very attractive price now.

Rule of 72

What is the greatest mathematical discovery? For me, i think it is the "Rule of 72" discovered by Albert Einstein.

If you divide 72 with the compound interest, you will know approximatively how long you will able to obtain 100% return. Example with the compound interest of 9%, you will need ~8 years (72/8) to get a 100% return.

This is the secret discovered by Albert Einstein long time ago, and Warren Buffett is the one that practice it for >69 years, and making him the third richest man in the world!

So by applying Rule of 72 properly, i believe there's no doubt that anyone will be able to build your wealth and achieve your financial goal easily!

SUCCESS (KLSE 7207) - Success Transformer Corporation Berhad - Part I

Success Transformer Corporation Berhad (SUCCESS) was listed on Bursa Malaysia’s Second Board in January 2005 and subsequently transferred into Main Board in March 2007.

SUCCESS is principally an investment holding company whilst the principal activities of its subsidiary companies are that of manufacturing and trading of electrical apparatus and industrial lighting and fittings, metal stamping parts, metal castings as well as property holdings.

I bought in this stock with the price at RM1.02. With the unaudited Q4 2010 income statement, the EPS (Earning per share) is RM0.2104, which make the PE=4.85 (Price/EPS = RM1.02/0.2104). Meaning that with the amount that I invest today, the company is able to earn back the same amount within 4.85 years.

The revenue of SUCCESS is growing in an uptrend from RM80m to RM207m. However the profit margin is not look like a good sign to me. Looking at the profit margin, they are going down trend for the past 4 years. This might showing a sign that SUCCESS is facing some challenge from competition. Or it might be due to some strategic acquisition of the company that might somehow lower down the profit margin for short term. I will pose this question to the investor relations officer and hope there is a good answer.

Also the dropping of the net profit for year 2010 compare to year 2009 is also a question that I will need to check.

Looking at the dividend, is RM0.03 for year 2009 and proposing RM0.035 for year 2010. With buying price of RM1.02, is ~3% return in term of dividend every year. It might be a bit little, but good thing is SUCCESS is expanding the company to ensure the company will continue to grow. You can check the company website to obtain the acquisition plan.

With the green technology concept and commitment on product development, and continuous expand on the export markets. I believe that the company will continue to grow.

I’ll stop at here for now today; will continue writing on this topic tomorrow.

The Snowball - easiest step to be very rich!

There are so many books that i'd read before, that teach you how to be rich. Well, this is the book that i think provided the simplest yet powerful solution! "The Snowball: Warren Buffett and the Business of Life" is the one that make me realize to become a rich guy, you do not need to be an extra ordinary guy, or come out with an extra ordinary product or idea.

What you need to know is the power of compound interest! Compound interest referring to the interest will be added back to the principal. This is the secret how Warren Buffett become the 3rd richest man is the world, by reinvest all his earning back into the capital with average return of >20% annually.

An easy question, roughly guess how much your RM20k be after 25 years with 20% compound interest? I posted this question to many of my friends. And only 10% of them might get near to the rough amount!

 
Well, i hope you are among the 10%, the answer is ~RM1.9 million. I was shock when i get this answer actually, as I'm among the 90%. :) Well, my friend, this is the beauty of compound interest! Any by applying it in the right way, you will become very rich!

Will earthquake & tsunami in Japan attack the stock market?

Firstly, my sincere sympathy and condolences to the all the victims in the giant earthquake & tsunami. The 8.9 magnitude quake and tsunami had killed hundreds of people. When i first heard that news, i felt that natural disaster happen more and more often now, and is hardly for human kind to avoid. And as a human being, i felt the sympathy for Japan. At that moment, there is no difference between races, countries & etc.

When the earthquake news out, KLSE stock market started to going down ~1.5%. And there was one stock that i eyed for sometimes dropped ~6%. With the tempting price, i bought in immediately with the asking price. Why? Don't i worry of the world economy? Won't the earthquake impact on the stock market?

For me, Japan government is an expert in disaster control and relief mission, especially in earthquake. I believe it will impact Japan economy, but not for long term and it won't be a major impact. And is not an incident that will pull down the global economy.

Considering above factors, i didn't hesitate to buy in the stock that eyed for some times. With the reasonable price, and buying in a good stock which i think is undervalue, is the strategy that can been used no matter what market it is.

Even that the market will crash next Monday, I'm not really worry with the stock on hand, as i know they are good stock that already under value. However, probably is a good chance for me to buy in more of those good stocks. :)

I didn't update any news about stock picking this week. Initially i planned to write today, but this morning I'm not able to access some websites. So stay tune, i will update about one good stock that i already bought it tomorrow.

Property Investment

Yesterday, there was a good friend that told me she was queuing to book a condominium. I was a bit surprise at first. As I never imagine that she would be so desperate to get a house.

And then she told me the main purpose is for investment. Wow! I think is great! As what I know she was not aggressive in investment previously, probably influenced by me who urge people around to me to go invest. Hehe! I want to give her a big round of applause. Is a really good start for her!

Personally, I think 99% she will earn money from her first property investment. Because the down payment is only RM17k compare to the buying price of RM441k. The RM30k is early bird discount from developer, which is tactic to sell the property like a hot cake. With RM337 psf, it beat down another newly launched condominium next to it which is RM355 psf. So I think there is still room for it to rise, probably she will earn RM50-60k after 3 years during sub sale. Is a good profit, which is >300% return within 3 years.

For me, I don’t think there is any different investment in property and stock. If I'm going to buy a house for investment, I will need to go and search around, looking at the environment, check on the developer background and comment and etc. So i didn't go and invest in the project though the return is tempting, as i got the news too last minute and i don't have time to do some research. There is one of my friend that looked over >100 apartments before he bought one. Actually, Peter Lynch recommends that stock investor to buy a house first before they get started in stock market. If you buy a house, meaning that you will work hard to research in and out of it, and most probably you planning to stay there if the price is not yet hitting your target price yet, as you like the house when you bought it.

So if you buy in a stock like the way that you buy in a house for own stay, you are going to become a great stock investor!

Anyway, there will be a seminar by a famous property investor, Milan Doshi will be coming to my company to give a talk next 2 weeks. I will be joining to see if there is anything I can learn from him. I guess the same investment methodology will be able to be applied to stock market as well.

HOMERIZ (KLSE 5160) - Part II

One thing i missed out from the previous analysis is how competitive is HOMERIZ in the industry.

Here is a comparison chart that i used to compare with some competitors that i think are the direct competitor that is making money and might pose challenge to HOMERIZ. Comparing the profit margin, HOMERIZ is the highest among them.

Also comparing the ROE, HOMERIZ is the highest among them, with a ROE of 35%, which is far more higher compare to LIIHEN 15.8% and SHH 7.14%.

If you look into the PE, you might say that they are almost comparable at least for SHH which is 4.5. However if you look into the past data, you will see that LIIHEN & SHH net income suddenly shoot up, and it is still a doubt whether it will sustain.

Also i can't find any details on LIIHEN & SHH target market, so i'm not really sure whether the company going to continue growing. However with HOMERIZ that target on international market, i believe it will continue to grow with positive grow from America market.

With all the above factors, i believe that HOMERIZ is competitive enough and able to sustain in the industry.

My Stock Investment Strategy - Fundamental Analysis

You might be asking how to pick a winning stock. Well, for me, fundamental analysis is all you need.
As i said before, when you buy in a stock, you are actually invest in the company. So you have to think like a businessman. So what will you invest if you are a businessman, will you buy a RM10k company that continuously losing RM1k each year without any sign of recovering? Or will you buy a company that cost you RM100k, but with RM10k of earning each year? Of cause you will buy in the RM100k company if you are a businessman.

Stock market is just the same, my strategy is picking stock base on the company's annual financial report. Only pick those companies that are making profit, but of cause there are still many factors need to consider and study in details. However making profit is the most important factor (thanks Goh for mentioned about this, so that i won;t confuse others). Don't ever bother about the price of the stock, the cheaper it is does not mean that it is really 'cheap'. You have to go through all the annual  financial  reports for at least past 5 years, and preferable for the past 10 years or more.

There are some who actually supported technical analysis, but for me i'm just not good in it. There re too many techniques to be used, it is actually quite simple if you have the tools. However i just don't really get the concept behind. It is totally different from fundamental analysis, without taking consideration of the company financial status.

If you like to go into technical analysis, i would suggest that you just take it as reference, but not using it to pick stock. It is probably good for buy/sell timing from my perspective. However to pick a stock, fundamental analysis is the only correct path!

All the successful stock investors like Benjamin Graham, Warren Buffet & Peter Lynch only rely on fundamental analysis to generate them high return consistently every year. George Soros which is also a very successful investor is relying on both fundamental/technical analysis to pick stock.

Well, i'm not sure if anyone of you knowing any successful investor that rely on technical analysis only. If you don't, then you shouldn't pick a stock using technical analysis.

Buy HOMERIZ (KLSE 5160) - Homeritz Corporation Berhad

Today, I’m going to introduce you all a share that I just bought in. I bought this stock at RM0.38 last week.

Founded in 1997, Homeritz is an integrated designer, manufacturer and exporter of a complete range of upholstered home furniture, comprising leather and fabric-based sofas, dining chairs and bed frames. They had created their own brand name “ERITZ” in 2008. The company has plants at Muar, and expanded to Vietnam last year.

Homeritz built a diverse customers base spanning across more than 55 countries, including Europe, Australia, New Zealand, North and South America, South Africa and the Middle East. Largest market is Europe which contributes to 54.5% of total revenue followed by Australasia region which contribute to 25.4% of sales, while North/South America contribute to 13% of revenue. The company listed in KLSE main board Feb 2010.

After quick glance at the company profile, let me tell you why I bought HOMERITZ share. Firstly, when I look at the low PE (Price/EPS), with the EPS (Earning Per Share) of RM0.089 year 2010, the PE is only 4.3 (RM0.38/0.089)! Which mean that the company just need 4.3 years to earn back the money I invest now. sounds great for me!

Let’s look at the ROE (Return of Equity) then, the ROE is 35% ended Aug 31^st 2010, which is the highest in the same industry.

Compound Annual Growth Rate (CAGR) is around 22% for the past five years. For year 2010, the revenue only increase from RM108.4m to RM110m, which merely contribute to ~1.5 growth rate.

You might start to start worry about it after you see this slow growth rate. Is it meaning that the company had stop growing and the market is saturate? The answer is NO! The drop of revenue mainly contributes to the weakening USD, which drop ~10% last year. With the sales of products in USD, meaning that we should the growth rate of revenue last year should be at least 11%. The other factor contributed to the lower sales from Europe die to the economy downturn there. However with the strong growing sales (up from 7.8% to 13%) from America, I would think the revenue will continue to grow next year. I don’t think that USD is going to continue weakening and it should be the worst case now. So I would forecast that the company will have a CAGR of >20% in the coming years. Same to go the net income, net income dropped from RM20m year 2009 to 17.6m year 2010, but as I said, this is temporary and we shall continue to see the grow.

One thing that I think having pro & con, is the company main share holders is a couple (founder of HOMERITZ - Chua & Tee) which hold 71.8% of company stock. Pro is that the couple believe that company will continue to make money, con is that this stock having low liquidity. With 17m cash on hand, the couple stated during the IPO launching that the main purpose of the IPO is not for expanding, is to build an international reputation together with their brand “ERITZ”!

For the dividend, HOMERITZ distributed RM0.051 as dividend, with the price I bought RM0.38. It will be ~13.4% return. Well this is higher than FD which is only ~2.7%. Homeritz having policy of distributing 40% net profit as dividend. So with estimated RM20m net earnings, the dividend will be ~RM0.04. How I calculate it, with the total shares of 20m, dividend = (RM20m*40%)/20m. This haven’t factor in the growth rate of the company. So with buying price of RM0.38, I will be waiting for a >10% return with the dividend itself.

The total net asset of the company is ~RM63m, which is a bit lower than the market capital ~RM79m with share price of RM0.38. However with the high earning power of the company, this factor should be negligible.

HOMERITZ is almost debf free, with short debt of RM0.6m & long term debt of RM5.5m, the company will be able to survive during economy downturn with cash on hand of RM17m.

With all the above factors, I strongly suggest to buy in HOMERITZ and keep it for long term investment! Without the history cash flow information as is a new company, I won’t be able to calculate the intrinsic value. So i’m going to forecast it using the PE. With the average PE for the industry at 23, I will set the target price to be at least 10 for now, which mean the target price (TP) is ~RM0.80. However, HOMERITZ is a new company, thus I will be continue monitoring, and providing update.

How to trade stock at KLSE/Bursa Saham Malaysia?

After understanding the concept of stock market, I think you might be having question how can I start trading?

I will focus on how to trade stock at KLSE/Bursa Saham Malaysia stock market first, as the application process is simplify and straight forward, and it provides better access for beginners whereby you can immediately call your remisier when you have any doubt.

I’ll covering below topics which is often being questioned by beginners:

• How to Open CDS and trading account and trade in KLSE/Bursa Saham Malaysia?
• Which stock broker to choose and how to deposit money into your trading account?
• Whether to trade either online/offline?

How to Open CDS and trading account and trade in KLSE/Bursa Saham Malaysia?

KLSE (Kuala Lumpur Stock Exchange) or Bursa Saham Malaysia are where all the stocks or shares are listed. In order to trade, you need to have a CDS and trading account. CDS (Central Depository System) is an electronic account maintain by Bursa Depository. Whereby all the shares you bought will be credited to your CDS account on due date, and debited from your CDS account when you sell the shares. However you can’t trade without the trading account.

You can open the CDS and trading account together by presenting yourself to the nearest registered brokers (known as ‘Pacticipating Organisations’ or PO in Bursa Saham Malaysia). You can get the list of brokers from Bursa Saham Malaysia. Some broker companies do offer application though online for those not in Malaysia, but will need to have documents supported by Notary Public like Ambassadors of Malaysia in the respective foreign country.

Documents you needed to prepare are two (2) certified true copies of your Malaysian National Registration Identity Card or foreigner’s passport and income statement. The rest of the documents you can obtain from the PO. Also remember you need to pay RM10 for the CDS account application.

Which stock broker to choose and how to deposit money into your trading account?

There are many so many stock brokers available, and I’m currently using OSK, and I’d been continuing using it since 5 years ago. I’m quite satisfied with the customer service and also the response of my remisier. Also I get used to the online platform which I think the interface is user friendly, also the database is powerful whereby I can get all the financial data for the past 5 years easily come with comparison table. This is the most important for me! You will know why later on when we going to talk on how to pick stock.

Many people wondering which broker companies at Malaysia offer the cheapest rate for trading, and they tend to go for it. However, for me the brokerage fee is the least that I really care, difference by 0.1-0.2% per transaction doesn’t mean much to me, or for long term investor. As long as I get a good service and database from the broker company. That will for sure compensate the ~0.1-0.2% differences if I pick the correct stock for investment.

Whether to trade either online/offline?

Personally I trade offline for the first few weeks after my trading account being approved. All the times my remisier will be there for me, maybe not immediately but will respond within 5 minutes. However after I get used to the online platform, I never call her again. The online platform has everything you need, and is real time, with a lower brokerage fee. So I would recommend everyone to trade online, unless your internet is down or unavailable.

After you go through this post, I believe you already taken the first step to stock market investment; you can start trading soon after you deposit money into your trading account.

What is stock market?

When you first introduced to stock market, you might be wondering what is stock. It is extremely important for one to understand what is stock really means before they get started.

Imagine that you want to start an internet cafe business with few of your friends, and you need to raise USD100000 to start your new company. You split the company into 100 pieces, shares of stock. You will then sell it to your friends, with one share cost USD1000 (USD100000/100). The percentage of each share holders will be calculated based on the number of shares they hold.

If the internet cafe started to make profit after tax for the first year let’s say USD20000, you could call a meeting with Board of Directors. Deciding whether to use the money to pay dividends, stock repurchase, expanding or reinvesting in the business.

With the growing of the business which you see a bright future, you might consider to further raise capital for expansion. And if your company is large enough, you can do this in stock exchange, instead of selling to your friends or family only. For most cases, reason of a company is listed in stock exchange is to raise more capital, but there are also some specific cases whereby the main purpose is to build up reputation, as companies listed in the stock exchange will have to obligate with the stock exchange rules, to notify share holders on important announcements (share buyback, share disposal/acquisition by big shareholders & etc), and the most important, to submit the audited financial report. This will make the investors make decision whether to buy or sell the company shares.

KLSE and US Stock Market (Nasdaq//NYSE) are holdings the same concept. They are platforms for companies buying/selling or I should call them auction firms, whereby you can also ask/bid for company shares.

The Coca-Cola Company which is listed in NASDAQ since 1978 is making net income of USD 11.8 billion on year 2010, and is giving away USD1.76 dividends to the shareholders, which is USD4.03 billion (USD1.76 x number of shares (2.29B) ) ~34% of the net income. The price of The Coca-Cola Company is USD65.21 now, with the same dividends as 2010, you will only earn 2.8% (before tax). This is obviously not a good return in term of dividends (not even able to overcome the personal inflation rate), so probably you will not purchase it. You might instead try to sell the shares on hand by asking it on the stock market.

However if you study the company in details, you might think that the company is going to continuously grow with the net income is continuously grow ~15%, you might be buying it, expecting that the company will be continuously growing and your dividends will keep growing by the rate ~15%. Also the price of the stock will keep rising if other investors seeing the 15% growth rate, they will probably think that is a good investment and bid for a higher price to buy the shares.

Well, this is just a simple example, and in real case, you still need to further study what is the factor for the company to grow, and will it still keep growing in the coming future.

I think you get the concept of the stock market now. Shares of a company are what you can buy/sell by bid/ask. When the demand is high, the price of the stock will be rising. And the price of the stock will be going down if the demand is low.

And the most important thing to remember is that when you buying the shares of a company, you immediately become the shareholder, you invest in the company. So in the other way round, you need to think as an entrepreneur or businessman, to only pick the company that you think is going to grow and making profit.

Why I choose to invest in stock market?

When you tell your friends or your family that you are investing in stock market, here are some possible negative messages you might received:

• Is too risky, don't ever touch it! Which most likely coming from your parent or aunt/uncle, especially for those who suffered from economic crisis during 1997. My mum was one of the victims.
• Why don't you invest in Penang/KL property? You can earn a lot from there. Or maybe gold? The price is keeping increasing. I think investing in stock market is just too risky.
• Why don’t you let the professional do this for you, just invest in Public mutual or TA investment fund. Some of the funds giving me quite good return last year.
• I just lose hundred thousand this year, I would never invest in stock market again! So do you!
• Stock market like KLSE or Dow Jones is for those rich folks, 'small fish' like us would be swallowed by them.

 
For most of them who loss bunch of money in the stock market (this happen for 90% investors), most likely they would have been shadowed for the whole life and would never invest in stock market again.

 
While for those who never invest in stock market, in their mindset stock market is just too dangerous, and thinking that stock market is for those rich folks to make money.

For some who think stock investment is very high risk, I totally agree with them! However for me, stock investment is a high return investment with very minimum risk. Why I said so? Imagine if you know that there’s a treasure island, bunch of people will definitely rush for it. However, is a deserted island, which there is no route/path for you to drive/walk, resource of food are minimum and the weather is unpredictable. There are bunch of inexperienced person and experienced explorers with good surviving skill. So at the end, who do you think will be able to find the treasure? No doubt, the answer is the experienced explorer! For the experienced, the risk is very minimum and most likely they are going to enjoy the good return with the treasure discovered. However for those inexperienced, most likely they are going to lose their way in the jungle and might even lose their lives. So now you see, why I considered stock investment is safe and giving high return! With adequate knowledge and experience, you will be able to become the ultimate investor that going to have high return with minimum risk!

Why don’t I invest in other sectors such as property or commodity or even Public Mutual? They are giving good returns. 
Well, I do agree that investing in property is good and probably more stable than stock in most situations, but it would need more capital to start with. It would be good if you have cash on hand that is at least 50% of the buying price to prepare for economy downturn or surge of interest rate, just in case you have to hold the property on hand.

 
How about gold? Gold is a good investment though, which it had rose a lot since 2001, however if you look into long term, the price of gold across 36 years had appreciate up to 2104%! Wow, you might be thinking that is a great return! However, if you calculated the compound interest, it is only 9% each year. Which might be good enough for average investor, but it is definitely not good enough for you and me that aim to become an ultimate investor!

For mutual fund, people might think instead of investing in stock market by themselves. Why don’t they let the professional do this for them? Well, by hiring the professional to invest for you, you need to pay sales charge of 5%-6% with annual fees of 1.5%-2%. This mean that you will merely making any profit for the first year. Also from US mutual fund performance, only 3% of the mutual fund is outperform the S&P 500 over five years. Therefore to really gain in mutual fund, you need detail, while there are total ~700 mutual funds at Malaysia.

So why not you just analyze the stock market, either at KLSE or US stock market (Nasdaq/Dow Jones/S&P 500)? By choosing the winning stock, you will be double or triple your investment in just few years time. With just a little capital, you can invest in stock market. Indeed, Warren Buffet started his stock investment at the age of 11, and he had been continuing doing this until now for 69 years. He is the 3^rd billionaire in the world ranking for 2010 and chairman & CEO for Berkshire Hathaway.

Why you need to invest?

Ever imagine what are you going to do at the age of 55? Well, according to a study carried out by AXA Retirement Scope 2010, most of Malaysian hopes to retire by age of 55, and probably is time for them to travel around and enjoy themselves with their beloved. However 80% of them never plan for retirement fund!

Awareness level of retirement income

Malaysians' perception of their retirement income

Do you think you able to enjoy your life after 60 years old without any proper planning? Well, you might be, if what you need is just a very simple life, providing that you are healthy enough, not needing to spend on the medical expense that keep going up every year.In fact, only 35% of the Malaysian think that the retirement income is sufficient.

Most of us might think that, we can still get money from our children if we really face some financial problems during the old age. However what happen if your children are not earning much and they have their own family to support? Adding pressure to your children is unlikely what you intended.

So why don’t you just do something now? Why don’t you live with dignity when you are old?

People always complaining with their jobs, I was one of those anyway. Complaining about the routine and tedious jobs, low increment and etc. I’d been hearing this all the while though I’m working in MNC that is considered to be very generous in this industry.

So why don’t you try something else to improve your financial status, or plan for an early retirement, and work whatever/whenever you like to.

Some say putting your money in fixed deposit is good and secure, however with the low interest rate of 2.7% now, there is no way to cater the inflation rate. The inflation rate I refer is not the one that reported by government, which might go lower down to <2% which might make you feel secure. 

The inflation rate I refer to is the personal inflation rate; it depends on how much and where you spend. For me, the expenses every month tend to increase by ~5%, all the hawker and restaurant foods are raising their price ~10-25%, and it impact me a lot. I wish I was a hawker sometimes. So if you just save all your money in bank or FD account, your money are not going to grow. Instead the buying power will be dropping year by year!

Malaysia Inflation Rate 2000-2009

Well, for me, investing is the best way for me to escape from the tedious working life and to ensure my financial status is keep growing. You will be able to do this with little capital and utilize your own free time for investment. And remember, you need to get your money working for you, not you working for money!

Investment == Commitment

What is investment? Well, from Wikipedia, investment is putting money into something with the expectation of profit. More specifically, investment is the commitment of money or capital to the purchase of financial instruments or other assets so as to gain profitable returns in the form of interest, income (dividends), or appreciation (capital gains) of the value of the instrument. 

So did you see the main point? Commitment is the main point, here's what commitment refer to which is relevant in investment: 

1. Agreeing to use money, time or people in order to achieve something.
2. A promise to do something or to behave in a particular way; a promise to support somebody/something; the fact of committing yourself.
3. The willingness to work hard and give your energy and time to a job or an activity.

Anyone who think that handing your own saving to the financial planner and let him/her decide everything for you is not really an investment!

If you want to invest, you need to be committed, meaning that you have to work hard for it, and promise to yourself that you will consistently spending time/energy to achieve the financial goal which you had set for yourself!