Financial literacy for the new economy- what everyone should know.

bloodsucker(10Nov2012) wrote:

Re thread: noob need helpAgree with your views about how it doesn't cover inflation even if it breaks even. The effect of deduction is simply too high for most regular premium ILPs.

Luffy, I'm glad you made the right choice not to buy a ILP. If you really want to invest and you've got the spare cash lying around, why not leave some of it in a bond ETF/unit trust just to test water? It may or may not work out, but at least you still have more control over your investments. In fact, if you have a brokerage account, go with ETF's and not unit trusts. The thing about starting on investments is to start small and gain confidence and knowledge while taking a bit of losses here and there. Cap your losses, maximise your gains. Very simple advice for a starter. Don't expect to never lose money. Because that is the mentality of a silly investor. Think long term cash flow. You can of course use a small bit of cash to go speculate in stocks and see how it goes. But if you don't know what you are doing, sometimes it's just better to play poker cos some people have better luck in poker than stock betting hahaha

Guess amongst choices, one good way to snoop around would be to enquire about the overhead charges.
Me understands that usual fee for trading shares/ ETF/ bonds on SGX is about (ball pak)0.35% (min. $35)- so to buy n sell the same item, one pays ~0.7%, approx $9k each trade or the broker costs would be higher (than 0.35%).

Bonds are supposed to be safest then preference shares (PS), then normal equity shares (NS) in that order (also that order to get back $$$ fr a bankrupt/ liquidating company).

Think banks might be raising $$$ (Basel III) to shore up capital so those w some spare cash can wait for the to offer preference shares and then bid for them through local bank ATMs, e.g. DBS Bk 4.7% NCPS 100 (MU7.SI) today's price is $106/piece, min trade= 10 pieces- but when bought at IPO stage would be the face (par) value= $100/piece (so U don't have to pay the +$6/piece COV that mkt now demands)- of course, if another Lehman moment occurs, then too bad, COV might become 'negative' if mkt thinks that DBS has risk of bankruptcy etc. The 4.7% refers to the dividend payable annually although this isn't guaranteed though rules state that if PS dividend isn't paid. then NS CANNOT be paid any dividend that year... DBS has paid NS dividend every yr AFAIK.

Unit trust is for those who want 'experts' to do heavy lifting for them, pay ~5% sales charge upfront and then management fee of ~1-2% annually- although my experience w these so called experts have been dismal (Lehman time, they pay themselves as usual, but unit trust can lose 50% never to return- was a Barclay's bank unit trust).

Gold ETF on SGX, transaction fee same as other SGX listed stocks n shares but got to pay the gold storage company 0.4% annual to keep the physical gold in their vault (they kapok 0.4% of your gold/ETF over 1 yr duration)- U do the maths, n read their disclaimer(s) twice over too.

My take about investing one's own hard earned $$$ today is to read books by ppl like Robert Kiyosaki [wiki] to understand how the world of finance works and why bad to sever inflation exists and why there exists the debt crisis today (Greece now has problem +++, austerity+++) sorry to you if U own Greek govt bonds (haircut) Greek stocks (austerity mood)- how long it remains in doldrums, I dun think even the ECB knows what's best to do....

So for goodness sake, understand the concept of inflation.

Read books by Stern Business School Professor Nouriel Roubini who predicted the 2008 housing cum financial crisis in the USA.

Get inspiration from Andrew Hallam (he is being interviewed on money mind (CNA 12Nov2012 and the week before)). If U are young, your efforts at financial literacy will bear fruit, just dun forget about the poor and needy in Singapore and elsewhere in the world.

Me for now am reading Rich Dad's Conspiracy of the Rich: The 8 New Rules of Money (Robert T. Kiyosaki) going happy for now even if I'm paying govt inflation tax for the 60k under my pillow @5%p.a.= {0.05*60,000/365}= $8.22/day- and blaming the PAP government [pict] every day for not teaching me any kind of financial literacy fr primary school up to uni, so that's all for now, don't forget the poor if U do make some $$$, the best things in life are free.
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I am no financial adviser, this is just personal opinion, usual disclaimers apply.
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10Nov2012: noob need help