059 Which market has performed YTD?

Almost all markets were hit during the 2014 year end oil price slump. As we move into 2015, we were bugged by Greece issues until recently where ECB finally agreed to extend their financial help.

So for the last few months, investors were reluctant to invest because of uncertainty.

If we make a comparison of market performance, we notice Japan has been on the up trend. China has face some correction but has bounced back. I think another market we can look into is India. India market has been going up since bottoming in Jun.

I am into India funds.

058 A case of putting too much into insurance savings plan

Recently met a young lady. During the talk, she admitted she has a few insurance policies. She is unsure the content of the policies. She bought them just to support her friends.

I was intending to introduce her to do regular savings. She has to schedule her payments because she has just paid one and another is coming soon.

So, I asked for her policies to study. Well, she has 3 policies. It appears one of them is participating life insurance plan. This seems fair to me. The other two are actually five-year-paying and eight-year-paying savings plan. The commitment for these 3 policies is more than 10%of her annual salary. No wonder she feels the pain of paying.

Apparently, she doesn't have coverage for medical expenses, critical illnesses and accidents. All these coverages seems basic to me. Unless a client really insists on NOT having one, then everybody should have a decent coverage amount.

Upon rough analysis, the savings plan only generates her a rate of return of about 3% p.a. over a period of 15~20 years. If she has channel the money into investment, she can expect a fairly higher return.

A study of regular savings plan into performing funds over a ten year period showed an investor's money would have roughly doubled. If an investor put off a lump sum ten years ago, his money would have grown 1.5x~4x.

Time is indeed investor's friend.

Coming back to this lady. It is now her choice to continue her policies and be left without other basic coverage; or she could opt for some general insurance coverage temporarily until she made a decision.

I feel sad to see such situation. Client's policies has no cash value and she feels pain to simply let go. But to carry on means she has to carry the "burden" and at the same time wasted her opportunity. I think all insurance agents should go for need based selling where we sell the plan needed by clients.

057 Looking for new CFP Students

We are going to start a new CFP class, in Johor Bahru, soon. Now we still need a few more students to complete the number. It will be held at selected Saturday and Sunday. The actual dates has yet to be fixed.

There will be experienced lecturers to conduct the class. Most of them are planners or agents in their field that may be able to provide practical guidance and sharing.

Prerequisite for students must be a degree holders.

We hope to look for candidates that may be interested to venture into Financial Planning industry. Students need not necessarily become our planner, although we sincerely hope so though.

To be a financial planner, one must possess a CFP or RFP. CFP is recognized worldwide while RPF is recognized in Malaysia only.

To know more about CFP, please go to www.fpam.org.my, as for RFP, please visit www.mfpc.org.my.

Please email to sateo7689@yahoo.com if you want to enquire more.

056 Do you TRADE or INVEST: A reminder from a fund manager

I attended PhillipCapital 6th Annual Conference last weekend. This is my third time there. Normally we would do day travel but this time around, we went a day earlier and spent a night there.

It was a great event. Roughly 2000 people were there.

We listened to market views and outlooks from various fund houses. It pays to do so because, then only, we know how each fund house views the market. To be a good investor must first be an informed investor. Ultimately, we are responsible to our investment results.

Mr Ang, CIO of PhillipCapital, gave his talk on TRADE or INVEST. I think he pointed out some common errors of retail investors. He jokes many people wanted to TRADE for quick gains but as the stock price falls, they keep the stock for long term investment instead.

His explanation was true. One can trade or invest. But the qualities to be able to do so are different. Traders must not be emotional but only carry out their trades like programmed robot. Investors should study their stocks well.

(Debate between Trade or Invest never end. Likewise, debate between Technical Analysis and Fundamental Analysis is on going.)

He is also honest in his talk. He admitted he is not God who knows everything. He makes mistakes, and sometimes silly mistakes. He said he can only be right 70% of the time. When he is right, he wants to maximize the gains. Frankly, I have not seen any fund manager admitted their mistakes. Perhaps because I met too few of them.

I can feel it's very tough to be a fund manager. Managing other people's money should be more pressure than managing owns.

It's tough to see investment goes into red. But in the long term, stock market is on rising trend. All investors know Buy Low Sell High, but most of the time we want Buy At Lowest Sell At Highest. Thus, when market goes lower we don't want to buy. But when market goes higher, we all jump in. Mistakes, mistakes.

Do you want to join the Conference next year? Or you may be interested to listen to monthly fund house briefing, in JB? Drop email to sateo7689@yahoo.com. 

055 Maintain your insurance coverage with cash flow management!

The rise of medical costs in Malaysia plus the implementation of GST let us see the upward adjustment of premium. This makes the insured public to feel the sudden increase of insurance premium.

People who bought medical card issued by general insurance companies feel the burden of new insurance premium. People who bought medical card packaged within investment-linked policies do not feel it, although the cost of insurance is adjusted as well.

Well, this happen to my client recently. His medical card, under general insurance company, is due for renewal soon. His new premium plus GST comes to RM1053 as compared to RM800+ the previous year.

His reaction is, obviously, sad to see the increment of RM200 in his premium. For this, I have to explain his amount is actual premium plus GST. The rise in premium part is actually RM100+ or so. All insurance companies has adjusted their premium to factor in medical costs and GST.

Then he complaint his wife's investment-linked policy doesn't have to say more. For this, again, I have told him before and have to explain again the reason behind the no hike.

So he feels his premium is too burdensome for him. He wants to downgrade his coverage. He is the sole breadwinner. He has to feed a family of 8 persons. He should have the biggest coverage.

I do not agree he should reduce his coverage. I suggested hecan rearrange his payment method to monthly payment so that he can keep his coverage, and reduce his burden of forking out a big sum of money.

However, he totally doesn't want to consider monthly payment option. He feels his current monthly commitments is high enough. He only to pay in lump sum but the new amount is too high. He would rather reduce his coverage.

For me I would rather break the RM1053 into about RM90 monthly so that I can maintain the same coverage. In desperate time, paying RM90 monthly is less burdensome than paying RM1053 one off. The trade off is a little bit of interest charge. But what is more important is the coverage.

I believe many other people may actually surrender their coverage totally. So worrying. The medical costs is rising too fast. And this coincide with the newly implementation of GST has make public to feel the pressure of rising price. People is cutting down spending.

The only comforting thing is we still have Government Hospital to turn too at very affordable prices.

Folks, let's plan our insurance coverage properly.