Unit Trust Funds - The type of Investment for you

Source here

MANY have looked far and wide for Ms Right (Investment), the one with the sexy, super model looks and outgoing personality (attractive, high double-digit growth and guaranteed returns).

The good news is that Ms Right might actually have been with us all this time, amongst close friends (unit trust funds). Ms Right, however, might not necessarily have the glitzy characteristics; instead we have the humble, charming and loving personality (well diversified, proven track record and consistent returns).

Interested to know how to find Ms Right? Or are we avoiding a relationship with Ms Right because we won’t risk broken hearts (suffering losses)? For the relationship to work, there are some basic ground rules:

1) Know the purpose of your investment. Are you investing because everyone is making good returns and you feel left out? In this case, you might be investing on the wrong basis.

2) Then, establish a timeframe for your investments. Do you need the money in the short to medium term? If yes, then investing might not be for you.

Investment returns can be volatile over shorter periods. However, for the longer term, say four to six years, the returns from investments might very pleasantly surprise you.

3) Next, a proven strategy is essential. For example, dollar cost averaging, putting in regular investments, setting profit and loss target levels. At which point perhaps do we need to realign our portfolio? What about creating a suitable portfolio that caters for the amount of risk you can handle and looking out for opportunities during crisis periods?

4) Lastly, are your investments reviewed periodically? That does not mean daily, weekly or even monthly reviews. A six-monthly review can ensure our investments stay the course and are aligned to our goals.

A successful relationship with Ms Right needs nurturing, commitment, and constant input and feedback.

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10 Things To Consider Before You Hit Retirement

Point 6,7 and 9 are reasons why you need to start investing in mutual funds for long term investment.

Source here

You have been working your whole life, saving for your retirement. Most of us have millions of ideas about what it’ll be like when it finally comes to the moment where we break away from the 9-to-5 rut. However, with a few more years to go before the day finally arrives, it’s time to take serious action, and get things in order for your golden years ahead.

Most of us would want to achieve financial freedom by then and having not to worry about money any further. To ensure everything is in order when your last conventional pay cheque comes your way, here are 10 things you need to do:

1. Decide on your goal

Many a times when we plan for our retirement, we don’t have a clear picture of how we really want to retire. Do we want to retire at a small and quiet village, outside of town, or perhaps stay in a small(ish) condominium in town, where everything is within walking distance?

By this time, with just a few years to your retirement, you should really have a clear idea whether you want to upsize or downsize your lifestyle post-employment.

The first question you ought to ask yourself is what you want after you retire. Travel around the world and eventually, retire at one of the Caribbean islands? Whatever your goal is, you need to align your retirement plan towards achieving it.

2. List down your obligations

Before embarking on your adventure after retirement, you should consider any financial obligations you may have that can adversely affect your finances after employment.

Do you still have dependents (parents or children) you have to support even after you retire? Will your child(ren) still be in college, with hefty tuition fees coming your way every few months?

How about your lifestyle? If you have planned for your retirement optimally, you should not have to downsize your lifestyle too much. The key word here is sustainability. You should have a clear idea of how much you need every month during your retirement, and how long your retirement fund will last.

3. Clear your debt

Ideally, you should have cleared all your debts before you hit retirement. By clearing your debts, you improve your net worth and credit rating which might be helpful should you need to take another loan in the future.

Credit card debts are usually the first priority to be cleared off due to its high interest rates, followed by personal loans and car loans. There has been an ongoing debate on whether home loans should be cleared off sooner than needed for the peace of mind of being debt-free. If you think paying off home loan last is a better idea, perhaps you should look into the option of refinancing your mortgage.

Currently, Malaysia’s base lending rate is at 6.85%. Comparing with the historical rates, it might seem to be a little high too high to refinance your mortgage. But consider this: after retirement, you’ll lose your primary source of income (for some, only source of income) and your ability to take up a new loan diminishes.

If you have to refinance your mortgage by then, banks might quote you a higher rate, require a guarantor, or simply reject your application. Perhaps it might be a good idea to lock in a fixed mortgage rate to avoid being exposed to interest rate volatility in times of economic uncertainty.

4. Preserve your assets

When we are still earning an income, we mostly focus on accumulating assets. However, when retirement hits you, more focus should be put on preserving your existing assets.

A person may own multiple properties and be worth millions of Ringgit, but he or she may not be able to even afford lunch! In finance, two terms arise: solvency is the ability to meet its long-term ( more than two  years) financial obligations, and liquidity is the ability to meet short-term (less than two years) obligations by converting assets quickly into cash.

In other words, how we preserve our assets depends on our ability to sustain our short-term needs (daily expenses and outflow) without needing to liquidate (force sale) our assets. Consolidating your assets by consulting wealth management and financial planning advisories may be a good idea to have clearer view of your current financial health and have more control in monitoring and preserving your assets.

5. Create or update your will

To prevent your family from exploding into those family feuds infamously depicted in Hong Kong soap operas, updating your will (or create one if you don’t have one yet) is essential. Jokes aside, it is important to have estate planning so that you can be assured that your family is being taken care off  in the manner of your preference.

Having a will doesn’t just ensure your hard-earned assets are distributed properly and rightfully, according to your wishes, it also helps your family go through the process quicker and with greater ease. Remember, avoid hassles by having different wills for assets in different countries and jurisdictions.

6. Review your investment portfolio

As you retire, you would require a substantial steady stream of income to replace your previous conventional income that takes care of your daily expenses and other obligations.

As result, your capacity or holding power of your investment is limited. Perhaps toning down your investment appetite from aggressive high capital growth equities to a more conservative and passive, dividend paying funds such as bonds or government securities might be a good idea. Reviewing your risk tolerance is essential to sustain good cash flow and preserve your assets.

Here are some financial mistakes you should avoid before you hit retirement.

 7. Establish passive income

If the retirement you envisioned for yourself is one where you stop working completely, it becomes even more crucial for you to establish at least one source of passive income, which will be your new primary source of income.

As an alternative to your investments, you can also create another stream of income by working part-time or taking up freelance jobs. For those who have years of professional work experience, they can opt for consulting or an advisory role to other firms or institutions – this may not exactly be ‘passive’ but if it’s something you enjoy doing, it wont feel like a job for sure!

Setting up a mamak or a sundry shop as a small business might also be a good idea (seriously, mamaks rarely fail and typically have healthy profit margins).

8. Healthcare

The unfortunate thing with healthcare is that it becomes more expensive the older we get. Most people give up one their medical card due to the exorbitant price they have to pay — especially in view of the diminishing income after retirement.

Therefore, it is important for one to have a clear idea of their health and fitness level before they hit their golden years. Prevention is certainly better than cure.

Find out if you have any medical conditions that may require substantial amount of money to finance, especially when healthcare cost is escalating to the tune of 12% per annum. Maintain your medical card, review the policy to ensure it is adequate, then set up a budget for rainy days, that could include medical emergencies.

9. Withdraw your EPF

Should you withdraw everything or should you withdraw a set amount regularly? Prematurely withdrawing and depleting your EPF, even if you can, may bring adverse effect to your retirement savings. Unless you have a strong reason or solid financial plan to invest elsewhere that could potentially provide better returns, EPF should be remained untouched and used as a last resort as this will be retirement fund  for the next 10 to 20 years.

If you don’t think your EPF savings enough is adequate to outlive your retirement years, you can consider withdrawing some of the money for selected investments.

10. Continue working

Retirement is really just a phase that everyone goes through. According to the Life After Work survey conducted by HSBC, 22% of Malaysians plan to semi-retire because they need to bridge an income shortfall.

Review your retirement savings before your retirement to have an understanding of whether you stand financially post-employment. Will you be able to live comfortably on that savings, or do you need to continue working to generate income for your golden years?

For some, the idea of not doing anything for next one to two decades may not be conceivable at all! However, the point is to plan for your retirement so semi-retirement is an option and not a means to survive.

We need to start retirement planning as early as possible in order to have a comfortable retirement in years to come. However, planning your retirement is not just about saving money religiously, but also about making the right decisions at the right time to boost your savings.

These 10 steps should be done just a few years before you retire. This will still give you some room to make up for any shortfalls.

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Why You Should Never Accept A Counter Offer When You Resign

Thought of sharing this piece below. Source here

It was a moment in my career that I will never forget. I had accepted a new job at a different company and when I went into my boss’s office to quit, with resignation letter in hand, he offered me a higher salary if I would remain in my current job.

Even if you think this would never happen to you, it is best to prepare in advance so you’ll feel comfortable with your response, which should always be: “No, thank you.” Surprised that I’m telling you to decline your manager’s counter offer? Here’s why…

If you followed the process I explained in a previous blog (Job Seekers: Consider This – Before You Change Jobs) – to analyze the reasons WHY you want to change jobs – then you’d already have identified the issues that were within your manager’s or your ability to control. And you’d already have worked through ways of fixing those issues.

If you felt you were underpaid, you’d have asked your boss for a raise.

If you were bored in your job and wanted more challenging work, you would have discussed this with your manager and asked him or her to assign you to projects or tasks that will broaden and deepen your work experience.

If a lengthy commute was lowering the quality of your life, you’d have negotiated to work from home a few days a week.

Whatever the reasons were for wanting to change jobs, you would have analyzed them and made every attempt to fix the issues that were possible to fix. So what does that leave you? Issues that weren’t fixable – the deal-breakers. They were the reasons you went out and found a new job that better fits your career requirements or goals. So why would you suddenly want to stay in your job just because your boss offered you more money?

If you previously couldn’t get a raise from your boss when you provided proof that you are underpaid, ask yourself: “Why is my manager offering me a raise now that I’m resigning?” If you weren’t valuable enough to be given a raise before, why would your boss be willing to give you more money now? Most likely, it is not because you’ve suddenly become a more valuable employee. It’s because your manager doesn’t want to deal with the work disruption your departure could create.

Let me state that one more time to be sure you understand… it is not because you’ve suddenly become a more valuable employee. It is because your manager doesn’t want to deal with the work disruption your departure could create.

Don’t waiver on your decision to change jobs. You took the time to identify your reasons for leaving. You worked to fix all the issues that were within your control. There were issues that weren’t fixable and these were your deal-breakers. Because you couldn’t change the deal-breakers, you found a new job that was a better match to your career goals and aspirations. Don’t let your ego or feeling flattered that you’re being offered more money cloud your judgment or cause you to make a bad decision. You already did your homework, so feel secure about the process you went through to seek a different job.

If you begin to second-guess your acceptance of the new job and consider accepting your manager’s counter offer, think about what else would change if you stayed (besides receiving more money). Review each of your reasons for wanting to switch jobs and take an honest look at your deal-breaker issues. Will they somehow magically disappear if you accepted the counter offer? Nope. So look your boss in the eyes, smile nicely, and say “No, thank you” to that counter offer.

~ Lisa Quast, author of award-winning book, YOUR CAREER, YOUR WAY!.  

IPO setback for 1MDB? Chief exec replaced

Source : The Star Online

PETALING JAYA: 1Malaysia Development Bhd (1MDB) will be welcoming its third chief executive in a space of just over five years since it was established, as the government-sponsored investment fund struggles to complete the submission of the listing of its energy unit.

Malaysian-born, Dubai-based banker, Arul Kanda Kandasamy (pic), will replace 1MDB chief executive Mohd Hazem Abdul Rahman, who was appointed to the post in August 2012.

1MDB chairman Tan Sri Lodin Wok Kamaruddin announced the appointment of Arul Kanda as president and group executive director of 1MDB with immediate effect and described the change as “part of a transition plan”.

“The board also announces that 1MDB will be undertaking a strategic review to explore and determine a course of action that will allow the company to maximize returns for all of its stakeholders,” it said.

1MDB, which was supposed to complete the submission of its energy unit in December last year, did not eloborate on what it meant by the investment fund undertaking a “strategic review”.

“1MDB will update the market on the outcome of its strategic review in due course,” according to the 1MDB statement.

Bankers said 1MDB’s initial public offering (IPO) of its energy unit had been submitted to the Securities Commission (SC) last month, but was incomplete.

“The submission is incomplete, and hence, the authorities cannot proceed to process the application,” said a source.

1MDB’s listing of its power-generation unit, which has been touted to raise US$3bil (RM10.5bil), is crucial for the fund to pare down debts it accumulated to acquire power plants since 2012.

“Topping the list is a debt of RM2bil that the fund still owes Usaha Tegas Sdn Bhd for its purchase of the Tanjong power assets for RM8.5bil. The debt is supposed to be extinguished during the IPO, but the IPO has been delayed,” said a banker.

During the IPO, Usaha Tegas has the option of converting its debt to an equity stake in the listed company a few years down the road.

Investment bankers do not rule out “issues” with regard to the amount owed to Usaha Tegas as holding back the completion of the IPO.

“It should be Arul Kanda’s top priority,” said an investment banker.

Arul Kanda said he was pleased to be joining 1MDB at this important juncture.

“As the company’s new president, my first priority will be to undertake a comprehensive strategic review of its operations, while ensuring we derive value from the high-quality energy and property assets in the company’s portfolio. I look forward to working with the rest of the 1MDB team as we begin this journey, and am confident that we will achieve the right outcome for the company and its stakeholders.”

Rumours of Hazem’s resignation have persisted over the last two months, where 1MDB had previously refuted queries posed by StarBiz. The reason for Hazem’s departure was not provided by 1MDB.

Critics have often taken potshots at 1MDB for putting its money, including US-dollar debt papers, and parking it with little-known funds outside Malaysia when nearly all its projects and operations are in the country.

Lodin had in the past responded to the criticism, stating that it was normal for funds to undertake such practices.

Arul Kanda, 38, hit the Malaysian corporate scene in 2009 when he was appointed non-independent, non-executive director of RHB Capital Bhd representating Abu Dhabi Commercial Bank (ADCB) that had a stake in the bank. He held the position until the bank sold its stake to a sister company also owned by the Abu Dhabi Government – Aabar Investments PJSC – in 2011.

A graduate from the London School of Economics with a distinction in corporate and commercial law, Arul Kanda has held several positions in the investment banking division of ADCB since July 2008. Before that, he was head of Islamic Financing Solutions at Barclays in London and director of capital markets at Calyon in London and Bahrain.

Aabar still holds a 21.2% stake in RHB Cap.

Arul Kanda’s appointment comes as the market awaits development in the listing of 1MDB Energy that was slated for the first quarter of this year.

1MDB had struck up deals with the Usaha Tegas group and International Petroleum Investment Company PJSC (IPIC) for the RM4.29bil purchase of the Tanjong and Genting power plants, which eventually led to it getting three other power plant projects from the Government.

In 1MDB’s latest annual report, it was stated that 1MDB had incurred a goodwill of RM2.6bil for the acquisition of the power plants.

IPIC is the parent company of Aabar and also a major shareholder of ADCB.

During the purchase, 1MDB also issued US$3.5bil debt papers in two tranches of US$1.75bil each. The papers were issued by 1MDB Energy Ltd and 1MDB Energy (Langat) Ltd. The US-dollar debt papers were secured by guarantees from IPIC.

IPIC came into the picture as it is believed that Usaha Tegas and the Genting group were not comfortable with guarantees from 1MDB, as it would have been perceived to be receiving favours from the Government. This is because 1MDB is wholly owned by the Government.

In return for the corporate guarantee from IPIC, 1MDB had given a 10-year option to Aabar to acquire up to a 49% equity interest in the Tanjong and Genting power plants when the energy division goes for listing.

1MDB’s annual report for the period ended March 31, 2014, said the fund had taken a bridging loan facility worth US$250mil (RM836mil) in May last year and that the proceeds were used to extinguish the options granted to IPIC. Some of the US$1.22bil (RM4.03bil) repatriated back to Malaysia from Cayman Islands has also been used for the settlement of the put option with Aabar.

Challenging times in Penang

Most of you who might have missed out this article. Here it is below or alternatively the link

THE Penang property sector is expected to see some challenges going forward. Real Estate and Housing Developers’ Association (Rehda, Penang) chairman Datuk Jerry Chan expects another 30% decline in property transactions in 2015 from the 30% drop recorded in 2014.

Chan says: “We expect to see little or no appreciation for high-end condominiums going forward. The mid-range high-rise properties with price tags of RM400,000 to RM500,000 are likely to see appreciation. We also expect to see lower demand for landed residential properties priced between RM3.5mil and RM5mil.”

Another indicator of the bumpy road ahead is the high rejection rate for housing loans, which according to Rehda Penang deputy chief Datuk Toh Chin Leong is 50% for some projects. “You don’t see this three years ago, but it has been happening for the last 18 months,” Toh says.

Notwithstanding the challenges predicted by the association, there are at least 10 residential addresses in Penang where prices have appreciated substantially since 2009, unaffected by the economic uncertainties.

Raine & Horne director Michael Geh says these addresses are not in the premier category, but are sought after because of their pricing, location and facilities.

“They have benefited from the new infrastructure, malls and other amenities that have mushroomed around them. Owners are not speculators and would not give them up unless the offer is good. This is another reason why these properties have appreciated rapidly,” Geh says.

On the island, the five addresses are Springfield Condominium in Sungai Ara, Krystal Suria in Bukit Jambul, Leisure Bay in Tanjung Tokong, Marina Tower in Relau.

In the south-west district, where the Penang International Airport is located, prices of Springfield Condominium, Krystal Suria, and Marina Tower have appreciated between 164% and 233% (see table)

In the north-east district, prices of Leisure Bayand Midlands Condo have appreciated by about 200%.

The second bridge project, announced in 2006, the construction of the Subterranean Penang International Convention and Exhibition Centre in Bayan Baru and the Penang Waterfront Convention Centre next to the Penang Bridge, have helped to boost prices. Both convention centres will be ready this year and 2017 respectively.

On the mainland in central Seberang Prai, the popular addresses are Taman Pauh in Permatang Pauh, Taman Sejahtera in Alma, Putra Bertam in Bertam, and Juru Indah in Juru. In North Seberang Prai, it is Taman Dahlia in Jalan Raja Uda.

Landed terraces in Taman Pauh, Taman Sejahtera, Putra Bertam and Juru Indah have risen between 43% and 60% since 2009.

The second bridge project linking Batu Kawan in South Seberang Prai and Batu Maung in the southern part of the island has driven up property prices located at both ends of the bridge.

Using 2006 as a benchmark, Geh says the price of vacant land has increased to between RM250 per sq ft (psf) and RM300 psf in Batu Maung from RM50 to RM60 psf. “Pricing depends on whether the land has been zoned for agriculture, commercial or residential use,” he says.

Prices for new two to three-storey terraces south of the island start from RM1.2mil, compared with about RM450,000 prior to 2006.

“New condominiums in similar locations are now priced at between RM700,000 and RM800,000, compared with between RM250,000 and RM300,000 prior to 2006, when the bridge was first announced,” he says.

Properties located in the prime locations of central Seberang Prai and south Seberang Prai have also increased significantly.

Henry Butcher Seberang Prai’s associate director Fook Tone Huat says vacant land in the area, especially those in south Seberang Prai where the second bridge is located, are between RM42 and RM60 psf, a huge jump from 2006’s RM8-RM9 psf.

Land prices in central and north Seberang Prai were then between RM20 and RM40 psf, compared with today’s range of between RM50 and RM120 psf. The increase in land prices has translated into higher property prices.

“New landed properties such as double-storey terraced units in south Seberang Prai are now priced between RM360,000 and RM450,000 compared with between RM150,000 and RM200,000 prior to 2006,” Fook says.

Double-storey terraces in prime locations in central and northern Seberang Prai have doubled, from RM200,000-RM270,000 to RM400,000-RM630,000.

“We are also seeing a number of life-style condominium projects being planned in Bukit Mertajam this year with prices between RM300 and RM350 psf,” Fook says.

As for the secondary or sub-sales market, double-storey terraces, depending on location, are priced between RM300,000 and RM600,000.

Aspen Group Holdings Sdn Bhd and PE Land Sdn Bhd’s plans to develop an Ikea store and the RM1bil Penang Designer Village, which also includes a RM200mil premium outlet respectively, will drive up prices further in Seberang Prai, especially those located near the second bridge.

Moving forward, Geh says south-west district properties will benefit from the state government’s plans to transform the Bayan Baru township into an international business process outsourcing (BPO) area. Two multi-storey blocks will replace the current Penang Development Corp headquarters. The 29 and 25-storey blocks will house retail and recreational facilities.

“In the north-east district, the opening of the Gurney Plaza and Gurney Paragon shopping malls respectively in 2001 and 2013 and the increase in food and beverage outlets in the Pulau Tikus and Tanjung Tokong neighbourhoods have boosted prices.

Eastern & Oriental Bhd’s plan to undertake RM25bil worth of residential and commercial projects for the second phase of Seri Tanjung Pinang over the next 20 years is another boon for the island. This involves reclaiming 307ha in Tanjung Tokong.

The first stage of land reclamation is expected to take about 30 months and the development of residential and commercial projects another 10 years. The gross development value is about RM8bil.

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Asian economies downshift, from China to Singapore

PUBLISHED: Jan 2, 2015 

China’s growth engine looks to have ended last year on a flat note as its massive factory sector sputtered in December, though ebbing price pressures also offered scope for more policy stimulus from Beijing and across much of Asia.

The tale was similar from Singapore to South Korea to Indonesia as manufacturers struggled with weak demand, both at home and abroad.

China’s official Purchasing Managers’ Index (PMI) slipped to 50.1 in December from November’s 50.3, its lowest level of the year and just above the 50-point level that is supposed to separate growth from contraction.

There was better news from China’s services sector, which accounts for close to half of the economy, where the PMI edged up to 54.1 in December from November’s 53.9.

Yet many analysts suspect economic growth for all of 2014 will undershoot the government’s 7.5% target, marking the weakest expansion in 24 years.

With factories able to make more than consumers wanted to buy, the pressure was intense to cut prices.

“The price measures show very strong disinflationary forces,” said analysts at Nomura.

“With no inflation pressure, we expect more policy easing in the first quarter, including a 50 basis-point cut in the bank reserve requirement ratio, to shore up domestic demand.”

Disinflation was a feature across much of the region.

India’s PMI showed input prices slumped to a near six-year low, even as overall manufacturing activity picked up to its fastest in two years.

The HSBC PMI, compiled by Markit, rose to 54.5 in December from 53.3, the 14th straight month above the 50-mark that separates growth from contraction.

Yet India’s annual inflation rate has slowed to only 4.38%, the lowest since the government started releasing the data in 2012 and potentially a green light for easing by the Reserve Bank of India (RBI).

“With the disinflationary trend gaining ground, the RBI is expected to find space for some rate cuts in 2015,” said Pranjul Bhandari, chief India economist at HSBC.

In South Korea, consumer prices grew at the slowest clip in more than 15 years in December, opening the door for further rate cuts there.

Its version of the PMI contracted slightly but did show some improvement in December to stand at 49.9, from 49.0 in November.

Indonesia was not even that fortunate as its PMI slipped to 47.6 in December, the lowest since the survey began in April 2011 and a third consecutive month of contraction.

Singapore also disappointed as economic growth slowed more than expected in the fourth quarter and the manufacturing sector contracted in the face of erratic global demand, which could continue to weigh on Asia’s trade-reliant economies well into the new year.

The city-state’s gross domestic product expanded by an annualised 1.6%, well short of the 3% analysts expected and mainly due to a reversal in manufacturing.

“The external demand story remains very lacklustre at this juncture,” said Selena Ling, an economist at Oversea-Chinese Banking Corp, adding that Japan, China and Europe were all slowing down.

“Unlike 2014, when we started on a strong note for the first half and after that the momentum tapered off, we could be starting 2015 on a relatively soft note, especially as people are looking forward to the Fed to normalise policy.”

Asian exporters will get some relief as the US economy shifts into higher gear, though they did not benefit as much from the American recovery in 2014 as they had in the past.

The US Federal Reserve has indicated it will start raising rates from zero later this year as long as the economy continues to improve and unemployment falls further.

The US Institute for Supply Management’s measure of manufacturing is due later on Friday and is expected to show a still strong reading around 57.6 for December.

In contrast, the December PMIs from the eurozone are seen staying subdued, which will only add to pressure for more aggressive action from the European Central Bank (ECB).

In an interview with German financial daily Handelsblatt published today, ECB president Mario Draghi acknowledged the risk that inflation would stay too low for too long.

“We are in technical preparations to adjust the size, speed and compositions of our measures early 2015, should it become necessary to react to a too long period of low inflation,” he said.

“There is unanimity within the Governing Council on this.”

The ECB council meets on Jan 22 and markets are wagering heavily it will finally decide to start buying sovereign debt, a major reason the euro hit 29-month lows today.

Read more here