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INVESTMENT TOWARDS FINANCIAL FREEDOM DEFINATION OF INVESTMENT: ACTIVITY OF INCREASING RETURN AND WEALTH BASED ON INITIAL A...
CHARACTERISTICS OF GOOD INVESTMENT. <ul><li>SHOULD BE LONG TERM (5 – 10 YEARS) </li></ul><ul><li>MUST HAVE OBJECTIVES (e.g...
TYPES OF INVESTMENT <ul><li>Fixed deposits  – low risk, low return, may not cover inflationary pressure. </li></ul><ul><li...
DIRECT INVESTMENT IN SHARE MARKET (KLCI) <ul><li>HIGHLY UNPREDICTABLE IN PRICE MOVEMENTS. </li></ul><ul><li>DIFFICULT TO U...
UNIT TRUST INVESTMENT <ul><li>Medium to long term investment (at least 3 years) </li></ul><ul><li>Managed by professional ...
<ul><li>UNIT TRUST IS A WEALTH ACCUMULATION TOOL. WEALTH ACCUMULATION NEEDS PATIENCE, PERSEVERANCE AND TIME. </li></ul><ul...
<ul><li>INVESTORS MUST HAVE A PURPOSE AND THE INVESTMENT IN UNIT TRUST MUST SUIT THAT PURPOSE. </li></ul><ul><li>MAKE A PL...
<ul><li>IT IS EXPENSIVE FOR INDIVIDUAL INVESTORS TO GAIN EXPOSURE FOR A PARTICULAR CLASS   ASSETS . </li></ul><ul><li>FOR ...
<ul><li>UNIT TRUST FUNDS INVESTED IN COMPANIES LISTED IN BURSA MALAYSIA (KLCI), AT SUCH THERE IS UNAVOIDABLE RELATIONSHIP ...
<ul><li>MALAYSIAN ECONOMIC INDICATORS DEPEND ON EXPORT GROWTH, GDP, FDI, GLCs PERFORMANCE etc. </li></ul><ul><li>THE SHARE...
WHAT IS UNIT TRUST <ul><li>DEFINATION  –  U.T IS A FORM OF INVESTMENT BY POOLING OF FUNDS FROM INDIVIDUAL OR CORPORATE INV...
UNIT TRUST INDUSTRY IN MALAYSIA <ul><li>A SUNRISE INDUSTRY. </li></ul><ul><li>CONSIDERED  A RELATIVELY NEW AND A POTENTIAL...
CATEGORIES OF  U.T. FUNDS <ul><li>INCOME FUNDS  – invest in bonds or other monetary derivatives. Unaffected by performance...
PROFITS FROM UNIT TRUSTS <ul><li>CAPITAL GAIN  – profits realized based on the different between buying and selling price....
PURPOSE OF DIVERSIFICATION <ul><li>To have a wide diversity of shares over a large no. shares. </li></ul><ul><li>To avoid ...
WHAT IS BONDS <ul><li>BY DEFINATION a bond is debt instruments between an issuer ( or borrower) and a lender (or investors...
THANK YOU FOR YOUR TIME
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FINANCIAL PLANNING

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Transcript of "FINANCIAL PLANNING "

  1. 1. INVESTMENT TOWARDS FINANCIAL FREEDOM DEFINATION OF INVESTMENT: ACTIVITY OF INCREASING RETURN AND WEALTH BASED ON INITIAL AMOUNT INVESTED
  2. 2. CHARACTERISTICS OF GOOD INVESTMENT. <ul><li>SHOULD BE LONG TERM (5 – 10 YEARS) </li></ul><ul><li>MUST HAVE OBJECTIVES (e.g. child education, housing, retirement, etc.) </li></ul><ul><li>RETURN OUTPERFORM INFLATIONARY RATES/PRESSURE. </li></ul><ul><li>MUST HAVE AN ANTICIPATED AMOUNT (e.g. RM 20,000, RM 50,000.) </li></ul><ul><li>SHOULD BE LIQUID. </li></ul><ul><li>SHOULD HAVE MARKET VALUE. </li></ul>
  3. 3. TYPES OF INVESTMENT <ul><li>Fixed deposits – low risk, low return, may not cover inflationary pressure. </li></ul><ul><li>Saving account – very low risk, very liquid, interest may not cover inflationary pressure. </li></ul><ul><li>Share market – high return in relatively short period, high risk, require up to-date market knowledge & information, high capital start up. </li></ul><ul><li>Insurance – forced saving, lack of flexibility. </li></ul><ul><li>UNIT TRUST – affordable, liquid, flexible. </li></ul>
  4. 4. DIRECT INVESTMENT IN SHARE MARKET (KLCI) <ul><li>HIGHLY UNPREDICTABLE IN PRICE MOVEMENTS. </li></ul><ul><li>DIFFICULT TO UNDERSTAND THE COMPLEXCITY OF THE SHARE MARKET. </li></ul><ul><li>REQUIRE THE NECESSARY INFORMATION, KNOWLEDGE ABOUT PLACING THE RIGHT INVESTMENT. </li></ul>
  5. 5. UNIT TRUST INVESTMENT <ul><li>Medium to long term investment (at least 3 years) </li></ul><ul><li>Managed by professional fund managers. </li></ul><ul><li>Diversified thus reduces risk through spreading of investment. </li></ul><ul><li>Affordable and allow for regular top-up to increase investment size. </li></ul><ul><li>Transparent i.e prices are listed on major newspapers. </li></ul><ul><li>It is liquid </li></ul>
  6. 6. <ul><li>UNIT TRUST IS A WEALTH ACCUMULATION TOOL. WEALTH ACCUMULATION NEEDS PATIENCE, PERSEVERANCE AND TIME. </li></ul><ul><li>WEALTH ACCUMULATION IS A MARATHON, NOT A 100 m DASH. INVESTING IN A UNIT TRUST IS A CONTINUOUS PROCESS. </li></ul>
  7. 7. <ul><li>INVESTORS MUST HAVE A PURPOSE AND THE INVESTMENT IN UNIT TRUST MUST SUIT THAT PURPOSE. </li></ul><ul><li>MAKE A PLAN FIRST AND THEN FIT THE UNIT TRUST PRODUCT INTO THAT PLAN. </li></ul>
  8. 8. <ul><li>IT IS EXPENSIVE FOR INDIVIDUAL INVESTORS TO GAIN EXPOSURE FOR A PARTICULAR CLASS ASSETS . </li></ul><ul><li>FOR EXAMPLE INVESTOR WITH RM 5,000., IT WOULD BE IMPOSSIBLE TO SIMULTENEOUSLY HOLD A DIRECT INVESTMENT IN EQUITY AND BOND MARKET. HOWEVER WITH UNIT TRUST INVESTMENT IT IS POSSIBLE TO SPREAD THE MONEY AROUND TO ALL THESE CLASS ASSETS AT THE SAME TIME. </li></ul>
  9. 9. <ul><li>UNIT TRUST FUNDS INVESTED IN COMPANIES LISTED IN BURSA MALAYSIA (KLCI), AT SUCH THERE IS UNAVOIDABLE RELATIONSHIP BETWEEN MALAYSIAN ECONOMY, BURSA PERFORMANCE AND FUND VALUE. </li></ul><ul><li>THE PERFORMANCE OF U.T. FUNDS ESPECIALLY EQUITY/GROWTH FUNDS USUALLY HAS A CLOSE “ POSITIVE CORRELATION” TO MARKET CHANGES. </li></ul>
  10. 10. <ul><li>MALAYSIAN ECONOMIC INDICATORS DEPEND ON EXPORT GROWTH, GDP, FDI, GLCs PERFORMANCE etc. </li></ul><ul><li>THE SHARE MARKET INDICATORS (KLCI) BASED ON THE PERFORMANCE OF THE 100 INDEX- RELATED STOCKS. </li></ul><ul><li>KLCI PERFORMANCE IS AN EVENT-DRIVEN MARKET DOMINATED. </li></ul><ul><li>DEMAND FOR THE COMPANY SHARES AND SOMETIME THE COMPANY’S INTERIM PROFITS RESULT WILL AFFECT ITS SHARE PRICE THUS THE KLCI PERFORMANCE. </li></ul>
  11. 11. WHAT IS UNIT TRUST <ul><li>DEFINATION – U.T IS A FORM OF INVESTMENT BY POOLING OF FUNDS FROM INDIVIDUAL OR CORPORATE INVESTORS . </li></ul><ul><li>THE FUNDS ARE POOLED AS A LARGE SCALE INVESTMENT AND THEN DIVERSIFIED INTO BALANCED PORTFOLIO OF EQUITY STOCKS, OR BONDS. </li></ul><ul><li>IN SIMPLER TERM U.T WILL ENABLE SMALL TIME INVESTORS TO OWN A WIDE POOL OF SHARES AT AFFORDABLE PRICES. </li></ul>
  12. 12. UNIT TRUST INDUSTRY IN MALAYSIA <ul><li>A SUNRISE INDUSTRY. </li></ul><ul><li>CONSIDERED A RELATIVELY NEW AND A POTENTIAL MARKET. </li></ul><ul><li>COVER RM 121 BILLION OF KLCI MARKET CAPITALIZATION (15%). LARGEST IN THE ASEAN REGION. </li></ul><ul><li>PRESENTLY 28 PRIVATE U.T. COMPANIES WITH ABOUT 516 TOTAL NO.OF FUNDS (2008). </li></ul>
  13. 13. CATEGORIES OF U.T. FUNDS <ul><li>INCOME FUNDS – invest in bonds or other monetary derivatives. Unaffected by performance of KLCI. </li></ul><ul><li>GROWTH FUNDS – or EQUITY funds. Invest up to 90% in equity stocks listed in KLCI. Funds volatile & sensitive to the performance of KLCI. Funds objective to achieve capital appreciation. </li></ul><ul><li>BALANCE FUNDS – generally about 60 % invest in KLCI, the rest in bonds and other monetary derivatives. Volatile albeit a lesser degree. </li></ul>
  14. 14. PROFITS FROM UNIT TRUSTS <ul><li>CAPITAL GAIN – profits realized based on the different between buying and selling price. </li></ul><ul><li>DIVIDEND – awarded based on the total no. of units held. </li></ul><ul><li>UNIT SPLIT – declared in the form of additional units. e.g. 1:5 i.e 1 unit free for every 5 units held. </li></ul>
  15. 15. PURPOSE OF DIVERSIFICATION <ul><li>To have a wide diversity of shares over a large no. shares. </li></ul><ul><li>To avoid exposing to much investment in a limited no. of shares. </li></ul><ul><li>To counter the shares that may rise against the shares that may fall. </li></ul><ul><li>To spread risks over a wide no. of shares. </li></ul><ul><li>Not having to depend on a limited no, of shares to realize profits. </li></ul><ul><li>(“not putting one’s eggs in one basket” is a perfect metaphor for diversification). </li></ul>
  16. 16. WHAT IS BONDS <ul><li>BY DEFINATION a bond is debt instruments between an issuer ( or borrower) and a lender (or investors). </li></ul><ul><li>THE ISSUER (government or corporate body) promise to pay the investors a specified rate of interest on a regular basis until a stated maturity date; whence the issuer repays the bond holder i.e the investors the borrowed amount. </li></ul><ul><li>SHOULD the issuer goes bankrupt, the bondholders have a higher claim on assets. </li></ul>
  17. 17. THANK YOU FOR YOUR TIME
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