Financial Planning

I came across an article and I would like to share part of it.  This article is written at a time the stock markets are falling.  As investment is one of the greatest inventions to increase the wealth of many millionaires I believe if we want to get more in life we should think and act like a millionaires with whatever resources we have.  As they say if you aim for the moon, you may end up amongst the Stars.  I like to highlight the following statements in the article:

According to Nassim Nicholas Taleb in his book entitled The Black Swan, we should stop trying to predict anything and instead take advantage of uncertainty.

A lot of investors or analysts may spend a lot of time trying to predict the market bottom. We should not try to predict when the market will reach its bottom as we will never know until it happens.

The key thing is to focus on is whether we have already identified which good quality stocks to invest in when the market is getting nearer to the bottom. Instead of trying to catch the stock at the lowest point, we hold the principle that we would be happy if we are able to catch those stocks 20% from the low.

Looking back at history in the Asian financial crisis which is still fresh in our mind, the market took 18months to fall to the bottom.  It took 18 months for it to peak again.  Do you see it as a crisis or an opportunity?  How many investor made money from this crisis?  Only the ones that see the opportunity.  The rest was frozen with fear and wait until too late, the market has recovered.  The top guns, 20% of investors are now salivating.  Among them is Mr. Warren Buffet.  The balance 80% has fear all written over their face.  Are you the 20% taking this as an opportunity or 80% stricken by fear?

Is this the best time to start investing?  I don’t know but what I do know is this is the right time.  Using dollar cost averaging, I have started the ball rolling.  Investing into Unit Trust funds and selected blue chips.  Do not be someone that “only sees things happen or worst still do not know what happened”.  We know this story by hard now.

Semi-retirement is no life of leisure
Sacrifices part of the price to quit working

Jonathan Chevreau, Financial Post
Published: Saturday, September 06, 2008

Having spent the month of August on book leave, a self-published book sitting on my desk on my return got my attention. Are You Ready for Semi-Retirement? is by Ian Taylor, who semi-retired in 1988 at the age of 38, when he got a handsome double-severance package from the federal government and vowed never to return to fulltime employment. He had been the chief media spokesperson for Pearson International Airport in Toronto.

Taylor concedes such generous packages are rare today, but nonetheless believes Baby Boomers can embrace semiretirement with financial assets of as little as $500,000, provided they have mortgage-free homes.

Born in 1950, Taylor is at the vanguard of semi-retiring Baby Boomers. Indeed, Boomer trends and semi-retirement are the main topics for his public speaking career that complements his self-publishing ventures. The book, his fourth, bears the subtitle A Boomer’s Guide to Success, Freedom and Adventure. Practicing what he preaches, Taylor says he “accepts engagements when he’s not vacationing at a villa, undergoing an adventure or writing a new book.”

Currently, Taylor runs a media training business from his home in Hamilton, Ont. Revealing a knack for marketing, he inscribed my personal review copy with the words “Get ready. Be frugal. Have fun.”

I’m working on it! But like most North American Boomers, semi-retirement is going to require some serious advance planning. Citing a pivotal 2005 study by Merrill Lynch, Taylor says 69% of Canadian Baby Boomers and 75% of American Baby Boomers intend to keep working and earning in retirement, either because they can’t afford to stop altogether or don’t want to.

“The vast majority will move into some form of semiretirement,” Taylor said in an interview this week. “They will invent semi-retirement.”

The key word is “semi,” which means semi-retirement is one-half of a lifestyle that also includes “semi-work,” or what Taylor dubs the “semi-career.” Typically, this is a part-time business run out of one’s home with all the tax advantages that go with self-employment. Taylor identifies seven “hot” semi-careers including: consulting, creative communications, full-time investing, real estate management, home-care services, online niche businesses and a concept he terms the “gift-driven dream job.” He also describes some not-so-hot jobs such, as McJobs, franchising and various get-rich-quick schemes that are better avoided.

Merrill Lynch found Boomers reject either a life of fulltime leisure or one of full-time work. Taylor says: “It’s not all about money; it’s about happiness and freedom and independence, which money can’t buy.”

After talking to many middle managers about retirement at his seminars and training courses, Taylor says semi-retirement “is the realization of your success, the achievement of freedom and the opportunity for adventure.” He cites his older brother Don, who retired from teaching at 58, as now one of the “busiest and most successful semi-retired people I know,” with income generated from eight different sources.

But people like that are still rare. Taylor devotes an entire chapter to the fact that few are ready even to semi-retire, let alone fully retire. If you’re not prepared to rebalance your time, talents and treasures, “you’re not ready for semi-retirement,” Taylor writes. He estimates only 10% to 15% of Boomers are financially successful enough that they could easily semi-retire before age 65. The rest will have to be prepared to make big changes if they wish to change gears.

One of the qualities successful semi-retirees will have to cultivate is frugality. Boomers will have to realize that the short luxury vacations they took when they grabbed a week or two from full-time employment are out, while long-stay vacations with light housekeeping are in. They’ll have to avoid travelling at peak seasons like March Break, choosing the more affordable off-season. Shared cars are in and commuting is out. In the realm of personal finances, being in debt is out and being an investor is in.

Two years ago, Taylor and his same-sex partner sold their Toronto home to rent a penthouse apartment in Hamilton, Ont. They also maintain a summer house in Turkey Point, Ont., and are considering buying a condo in Hamilton and/or a home in Florida.

The book is a quick read, with a few leading questions to stimulate readers to start reinventing their own semiretirement.

There are some good news among all the bad. If you are a long term investor this is good news but if you are a short term speculator, you will still need to try to catch the short term up and down fluctuations in the share market. This piece of news is from Reuters.

Wednesday August 20, 2:38 am ET
By Kevin Plumberg HONG KONG (Reuters) - Most Asian stock markets edged higher on Wednesday, rebounding from a two-year low as Chinese shares surged on hopes for policies from Beijing to jumpstart growth, though many analysts said it was a long shot.

The dollar struggled as crude oil crept above $115 a barrel and gold prices edged higher, taking some of the steam out of the U.S. currency’s recent surge to a seven-month high.

World stock markets slid to the lowest since September 2006 on Tuesday, with investors increasingly skeptical about earnings expectations for 2009 given the mixed results so far in 2008 and constant reminders about instability in the financial sector.

However, most Asian indexes turned higher as cheap valuations proved irresistible, especially with markets rife with chatter about fiscal stimulus in China.

“Bargain hunters have returned to the market on talks that a rescue package is on the way,” said Francis Lun, general manager from Fulbright Securities in Hong Kong. “We are all waiting for a miracle,” Lun added.

Hong Kong’s Hang Seng index (HKSE:^HSI - News) rose 1.9 percent, after closing at a one-year low on Tuesday, with shares of China Mobile (HKSE:0941.HK - News) providing the biggest boost.

Shares of Asia’s largest wireless carrier, up 2 percent, hit a one-year low before the rally swept through the region.

The Shanghai composite index (^SSEC - News) surged 6 percent after touching a 20-month low. The index is watched by many global investors as a gauge of risk taking and a leading indicator for the world’s fastest growing economy.

Monday August 11, 2008 MYT 3:36:25 PM

KUALA LUMPUR: Public Mutual will launch two new Islamic funds, Public Islamic Select Enterprises Fund (PISEF) and Public Islamic Income Fund (PI Income), on Thursday.

The mutual fund said on Monday PISEF was targeting investors seeking long-term growth potential of Syariah-compliant bellweather companies in the domestic market.

It said PI Income was for investors seeking a steady stream of annual income. Both funds are open for EPF members investment scheme.

Public Mutual chairman Tan Sri Dr Teh Hong Piow said PISEF was an aggressive Islamic equity fund that seeks to achieve capital growth through investment in the largest 50 companies.

These 50 companies would be measured in terms of market capitalisation - at the point of purchase - which complied with Syariah requirements.

“These bellweather companies are usually considered relatively resilient as they have established track records, resilient growth prospects due to their size and entrenched market shares, and financial resources to withstand challenging economic conditions,” he added.

As for PI Income, the Islamic fixed income fund seeks to provide annual income over the medium to long term by investing in sukuk and Islamic money market instruments.

“PI Income allows access to the growing sukuk market which is generally only accessible to insititutional investors. Sukuk and Islamic money market instruments offer a steady stream of income to investors with profit distributed annually,” Teh said.

Public Mutual said the initial offer price of PISEF and PI Income would be 25 sen per unit and RM1 respectively during the 21-day initial offer period from this Thursday to Sept 3.

The minimum initial investment for both funds is RM1,000 and the minimum additional investment is RM100.

Below are comments by some economist and business writers. One is just non-committal whereas the other says that likely there will be a sharp fall. What ever it is I just wish that the world would be greener, people will be less dependent on oil and use more green energy, even leg power. However the most important is that economies of the world would recover so that people all around the world will not suffer from the effects of a recession. The world would be a better place to live.

“On a happier note, there is hope that the decline in oil prices has just begun. While Schork says it’s anyone’s guess where crude will trade - “By the end of the third quarter, there’s a good chance oil could be below $100 a barrel, and a good chance it could be above $150,” he says - others see a chance that the commodity, having enjoyed a head-spinning runup, could also drop more than anyone expects. Economist Jim Griffin notes at the ING Investment Weekly that crude’s rally earlier this year became “nearly parabolic” - a sign that the decline could be steep.”