a GOOD plan for BETTER tomorrow :-)

People of Today - What Do They Want?

In today's fast growing economy, people are not only working towards financial growth and stability they are also looking towards a better lifestyle for themselves and their family. While chasing dreams of early retirement, sending their children for overseas tertiary education, owning a few units of properties and a diversified portfolio of investment instruments, many questions are left unanswered.

Often people have not taken sufficient steps to ensure that their assets are protected from risk as well as ensure that their dependants are adequately taken care of financially in the event they are no longer around or in active employment. While steps have been taken to ensure that there are some forms of assets distribution arrangements, the funds required during the interim period may not be adequately set aside or worse, these funds are not taken into consideration when making the arrangements.

Also, many of the people while investing their monies and receiving investment return had not been able to analyze the actual rate of return after inflation. In fact, their investment strategies may not be in-line with their Financial Goals and Objectives without them realizing it.


Realizing Financial Goals - What Do They Need?

How then can people fulfill their Financial Goals while maintaining their current lifestyle and make their savings work harder for them? What do people require in order to ensure that all aspects of achieving their Financial Goals are taken care of? When their life circumstance changes, how do they know what impact all these issues have on their existing strategies. What should they do?

The most talked about process today is Financial Planning. Although Financial Planning is relatively new to many people in Malaysia, it has been practiced in USA for more than 40 years. In Malaysia today, Financial Planning as a profession is regulated by the Securities Commission. Its importance and development stems from the recommendations in both the Capital Market Masterplan 2001 and Financial Sector Masterplan 2001.


Financial Planning - What is it all about?

Simply, Financial Planning is about helping an individual achieve his or her Financial Goals from where he or she is today. To many people, Financial Planning is a complicated process and that only the rich need to worry about it. Is this true? The answer is "No".

In fact, all of us need some form of Financial Planning. When we first purchase a house, we need to ascertain how much we can afford, how much loan to take, which financial institutions is giving the better rate and which loan is best suited to me for better cash flow management. When we invest our hard earned savings, we need to find out about our risk appetite, the time period of investment, the anticipated rate of return and asset portfolio.

If we need to categorize the different stages of the wealth management process and its solutions, it can be best described as follows:

1. Wealth Protection
- Insurance

2. Wealth Growth
- Unit Trust Funds
- Equities
- Properties
- Savings accounts etc

3. Wealth Creation
- Insurance

4. Wealth Distribution
- Wills
- Trust


Doing Financial Planning - What are the Benefits to Me?

1. Investment Growth Strategies for better Return on Investment.
2. Financial Protection in case of Disability and Critical Illness (when removed from Employment
Permanently or Temporary).
3. Health and Medical Coverage for Hospitalization and Surgical Costs.
4. Safeguard Family Income to ensure Continuity of Lifestyle.
5. Children's Tertiary Education especially for Overseas Education.
6. Retirement Funds for Independent Post-Retirement Lifestyle.
7. Emergency Funds for Contingency and Replacement Costs.
8. Estate Distribution to ensure Proper Administration of Estate and Protection of Family's Assets.


Financial Planning Process - What Do I Need to Know?

The Financial Planning Process involves a Six Step Process.

1. Establishing and Defining your Relationship with your Planner.
2. Gathering of your Personal and Financial Data including Goals.
3. Analyzing and Evaluating your Financial Status.
4. Developing and Presenting Financial Planning Recommendations and/or alternatives.
5. Implementing the Recommendations.
6. Monitoring the Recommendations.


a GOOD plan for BETTER tomorrow :-)

Time Deposit with 1% interest

Index to track unit trust equity funds

iFAST Capital Sdn Bhd believes its Fundsupermart.com All-Equity Fund Index (FEFI) will help unit trust equity fund investors better monitor their investment.

FEFI is the first index that monitors and tracks the returns of unit trust equity funds in Malaysia.

The index is accessible on Fundsupermart.com, Singapore’s biggest online unit trust distributor. The portal is operated by iFast, a joint venture between OSK Investment Bank Bhd and Singapore’s iFast Corp Pte Ltd.

Fundsupermart.com Malaysia and Singapore general manager Wong Sui Jau said the introduction of the index was timely, given the current economic conditions.

“Up to now, investors commonly look at other indices to monitor the status of the stock market. Although these indices mirror the overall situation of the market, they are not designed to provide up-to-date information on unit trusts in Malaysia.

“The launch of FEFI is well-timed. With the current financial situation, the index will serve as a benchmark for investors to monitor their investments and guide them to invest,” he said at the launch.

The index currently tracks 44 domestic equity funds. It is calculated on a daily basis, with the level and corresponding date displayed on the website.

Wong said there were plans to add more funds to the index, depending on the industry growth.

“We update the index every six months and will add new funds accordingly,” he said.

Wong said a fund must be open-ended and have daily price fluctuations to be considered for the index, adding that iFast also planned to launch a bond fund index in the future.

History of Unit Trusts

Malaysia introduced the unit trust concept relatively early compared to its Asian neighbours, when, in 1959, a unit trust was first established by a company called Malayan Unit Trust Ltd.
The unit trust industry in Malaysia has therefore a history of more than four (4) decades. The development of this industry can be presented in chronological order as follows:

The Development of Unit Trusts

• The Formative Years: 1959 -1979
  The first two decades in the history of the unit trust industry were characterised by slow growth in the sales of units and a lack of public interest in the new investment product. Only five unit trust management companies were established, with a total of 18 funds introduced over that period. The industry was regulated by several parties including the Registrar of Companies, The Public Trustee of Malaysia, Bank Negara Malaysia and the Ministry of Domestic Trade and Consumer Affairs.
  The 1970s also witnessed the emergence of state government sponsored unit trusts, in response to the Federal Government's call to mobilise domestic household savings.

• The Period from 1980 to 1990
  This period marks the entry of government participation in the Unit Trust Industry and the formation of a Committee to regulate the unit trust industry, called the Informal Committee for Unit Trust Funds, comprising representatives from the Registrar of Companies (ROC), the Public Trustee of Malaysia, Bank Negara Malaysia (BNM) and the Capital Issues Committee (CIC).
  The 1980s marked a significant development in the history of the industry when the Skim Amanah Saham Nasional (ASN) was launched by Permodalan Nasional Berhad (PNB) in 1981. Despite only 11 funds being launched during this period, the total units subscribed by the public swelled to an unprecedented level because of the overwhelming response to ASN.
  The 1980s also witnessed the emergence of more unit trust management companies, which were subsidiaries of financial institutions. Their participation facilitated the marketing and distribution of unit trusts through bank's branch network which widened investor reach.
  The Period from 1991 to 1999
  This period witnessed the fastest growth of the unit trust industry in terms of the number of new management companies established, and funds under management. The centralisation of industry regulation, with the establishment of the Securities Commission on 1 March 1993, coupled with the implementation of the Securities Commission (Unit Trust Scheme) Regulations in 1996 and extensive marketing strategies adopted by the ASN and ASB (Amanah Saham Bumiputera), played key roles in making unit trusts household products in Malaysia. Consequently, the total asset value of funds under management grew more than threefold from RM15.72 billion at the end of 1992 to RM59.95 billion at the end of 1996. The period also saw greater product innovation and deregulation of the industry.
  Although the pace of growth of local unit trust funds has moderated since the financial crisis of 1997-1998, it has nevertheless maintained its upward trend.

• The Period from 2000 to current
  In 2005 the unit trust industry experienced another year of strong growth which saw the net asset value of managed funds capitalising 14.2% of Bursa Malaysia’s market at RM98.5 billion at the end of 2005. Further, the liberalisation of overseas investment rules (such as the increase in overseas investment limit from 10% to 30%) by Bank Negara Malaysia has seen unit trust management companies launching numerous offshore funds or realigning investment strategies of domestic funds to invest offshore up to the permitted limit which resulted in the launch of 10 offshore funds with an intended overseas investment exposure of more than 50%. As at the third quarter of 2006 the number of offshore funds with an intended overseas investment exposure of more than 50% is 38 which is clear evidence of the continued interest by the investing public for a better slice of the overseas market.
  

Balanced Funds: A Safer Approach To Investing In Volatile Markets

In times of volatile market movements, it is a challenge for some investors to keep their emotions in check. When markets are in a strong rally, our herd instinct compels us to join the crowd and ride with the upside. But when markets correct, we are prone to sell out in panic. Yet, the wisest thing for investors to do at such times may be to remain calm and maintain a focused approach for their investments. Keeping an investment portfolio that is invested across different asset classes is a sound and effective strategy to ride through periods of adverse market movements.
Stock markets are volatile by nature and as illustrated in recent weeks, extended periods of rising share prices can often be interrupted by sudden bouts of consolidation. In such times, investors with moderate risk profiles should consider holding a balanced fund which is invested in both equities and bonds in near equal proportions. Balanced funds aim to provide income and capital growth over the medium to long term period by adopting a balanced asset allocation approach - 40% to 60% of the fund's Net Asset Value (NAV) is invested in equities while the balance is invested in debt securities and liquid assets. In comparison, equity funds generally have asset allocations of 85% or more in equities and the balance in fixed income securities and liquid assets.
The main benefits of investing in balanced funds are:
1. More Stable Returns: The overall portfolio risk of a balanced fund is reduced because the returns of equity and bond investments are generally not positively correlated. The potentially higher but more volatile returns from equity investments are moderated by the fund's investment in bonds. As a result, the returns of a balanced fund should be less volatile than a conventional equity fund.
2. Rebalancing: Another benefit of balanced funds is that in times of rising markets these funds "automatically" rebalance the portfolio by taking profits on equity investments which have appreciated and rebalancing the portfolio to its original equity: bond asset allocation of 60:40. Thanks to this rebalancing process, the unit trust investor need not worry about when to take profits on their investment.
3. Capital growth: A balanced fund will allow the investor to participate in the long term capital growth of equity markets because a sizable portion of up to 60% of the fund is invested in equities.
In conclusion, balanced funds are suitable for medium to long term investors with conservative to moderate risk reward temperament with a preference for receiving income and a respectable measure of capital growth. Investing in a balanced fund helps unit trust investors stay focused on achieving their long term investment goals without requiring them to evaluate the prevailing market cycle. Once they have selected a well-managed balanced fund in line with their risk profiles and investment objectives, they can be assured that the managers of the fund will take the necessary steps to rebalance the fund on a regular basis.

When There's a WILL...

We all know we should do it but more than 80% of Malaysians over the age of 18 have not written a will. What is more shocking is that more than 80% of parents with children below the age of 18 do not have a will. This means that should anything happen to one or both parents, thier children are not provided for financially. And there is no legal guardian for the children.

COMMON EXCUSES GIVEN FOR NOT WRITING A WILL:

• I'm still young, I'll write it when I'm older.


• My spouse will know what to do.


• I don't have anything of value to leave to my family or I'm not rich so I don't need a will.


• I don't know what to do or who to ask.


• If I write my will, then I'll die faster.


• I don't have time to do one now, maybe later.


• Wills are only for the erderly, the sick or the dying.

WHY DO YOU NEED TO WRITE A WILL?

• To control your property and family after you die.


• Allows you to designate the guardian of your child(ren) after your death.


• Appoint the appropriate person to administer your estate to your beneficiaries.


• If you without a will, it takes long time to sort out your estate and this delay may cause financial hardship on your family members.


• Avoid legal tussles on who has claim on your property and your children.


• Do not assume that if you die without a will, your assets will automatically go to your spouse and children. Your parents and siblings may have a claim too.

WHEN YOU DECIDE TO WRITE A WILL, YOU WILL NEED TO:

• Make a list of all the people you would like to name as beneficiaries.


• Make a list of all your assets - property, bank account, business assets, shares in public listed companies, foreign assets, insurance policies, etc.


• If you have made an earlier will, then you will have to revoke any previous wills.


• Provide directions on your wishes for your funeral - it is not incommon for family members to argue over which religious ceremony should be followed where the members are of different religious denominations.


• Decide whoshould be your executors (If this is an individual, there should be more than one, in the event that he or she dies before you), trustees and witnesses.


• Decide on who you and your spouse would like to appoint as your children's legal guardian and ask them to agree to this appoinment. It is an idea to have alternatives, in the event that the first choice is no longer available to carry out the appoinment.

DID YOU KNOW?

• Marriage revokes a will that was excuted prior marriage.


• Conversion to ISLAM revokes a will, the estate is then governed by Syariah Law.


• If you die with no relatives and no will, your estate goes to the Malaysian Government.

Benefits of Investing in UNIT TRUST

Unit trust funds provide you with a simple, convenient and less time-consuming method of investing in securities compared to investing directly in the stock market or any other eligible market. As an investor you are able to benefit from the expertise of full-time professional fund managers without the need to worry about what kind of securities to buy and when to get in and out of the market. By investing in unit trust funds, you have the opportunity to spread your money over a diversified portfolio of assets which otherwise may not be possible on your own.
In brief, the benefits you will get to enjoy with unit trust investment are:

Professional investment services
Diversification opportunities and minimised risks
Affordability
Convenience
Liquidity

Note: Any investment carries with it an element of risks. Therefore, prior to making an investment, prospective investors should consider the risk factors.

Wealth Accumulation Insurance

Not all of us are born with a silver spoon. Many believe that low and moderate income families cannot afford to save and build wealth. Yet, everyone has the ability to accumulate wealth over time. Through contributions to a retirement program, education investments, and other savings during their working years, most can accumulate six-figure assets. Accumulating wealth is not a mystery. It simply takes time, patience and the following7 steps:

• Think long term and have realistic goals.
• Know your risk appetite.
• Start immediately.
• Invest systematically/regularly.
• Diversify your investments.
• Take advantage of tax reduction strategies.
• Stay on the course.

Mode of Investment

EPF

This allows you to invest part of your EPF Savings into our full range of unit trust funds. By investing some of your EPF Savings in a unit trust fund, you have the opportunity to achieve potentially higher returns on your savings over the long-term.


(a) How does it work?

• You must be below 55 years of age.
• You are only allowed to withdraw and invest 20% (at any one time) of the amount in excess of RM50,000 from your EPF Account 1, subject to a minimum investment of RM1,000. This means you must have at least RM55,000 saved in your EPF Account 1.
• Investments to a unit trust fund from your EPF Account 1 can only be made once every 3 months.
• Any income distributions paid by the unit trust fund will be considered as EPF savings and must be reinvested into additional units of the fund.
• You are redeeming your units in the unit trust fund, your redemption proceeds will be returned to your EPF Account 1.
  
  Example:
  
  Total Savings in Account 1
  RM130,000
  Required Balance in Account 1
  RM50,000
  Excess Amount
  RM80,000
  
  Investable Amount (20% x RM80,000)
  RM16,000
  

Subsequent withdrawals can be made after 3 months from the last approved withdrawal.



(b) What do I do next?

Forward the following:

• completed application form;
• photocopy of your identity card or passport duly thumb-printed; and
• completed KWSP 9F (AHL) (obtained from the EPF or from any of our offices) duly thumb-printed.
  

SAVINGS PLAN

Our Savings Plan allows you to invest smaller amounts on a regular basis. Though it may seem small at first, each month's contribution can develop into something quite substantial over time.
Our Savings Plan helps you to invest a fixed sum of money every month. This saves you the hassle of timing your investment. With a constant investment amount, you will buy more units when prices are low and fewer units when prices are high. This can work out to your advantage and is known as the Dollar Cost Averaging concept.

LUMP SUM

Under this option, you may invest at any time by cash in a lump sum, subject to the respective Funds' minimum initial investment and additional investment. You may invest a small lump sum, leave it to accumulate and assign amounts whenever you are able to invest.

Do's and Don'ts of Choosing a Unit Trust Fund

Do

• Decide which type of unit trust fund meets your saving needs.
• Shop around for a reliable unit trust company.
• Check whether investment limits, frequency of income payments, etc, are suitable.
• Check past performance records.

Don't

• Don't choose any unit trust fund just because its performance has been good, make sure it is the right fund for you.
• Don't pay too much attention to short term performance, good consistent performance over all periods is the best lead.
• Don't decide on a unit trust fund just because it has low charges, good performance is far more important.
• Don't borrow to invest in unit trust unless you are absolutely aware of the risk involved.

Introduction to UNIT TRUST

The Basics (Introduction to unit trust)
A unit trust fund is a collective investment scheme, which pools the savings of investors with similar investment objectives in a special "trust" fund managed by professional fund managers. The fund will then be invested in a diversified portfolio of equities, fixed income securities and other assets in accordance with the fund's investment objectives and as permitted under the SC's Guidelines on Unit Trust Funds. The organisation of a unit trust fund is a tripartite relationship between the manager, the trustee and the unitholders. The obligations and rights of each of the three parties are specified in the Deed, a legal document drawn up by the manager and registered with the SC. The Deed is designed to govern the operations of the trust fund and protect the unitholders' interests. The manager is responsible for the management and operations of the trust fund whilst the trustee holds all the assets of the fund.

Mode of Operation (Governed By The Deed)

Knowing what you are saving / investing for

All journeys have one thing in common, a destination...and here are some events in your life you may wish to save for:
- Putting your child through private education.
- The wedding of your dreams.
- A new home.
- Your retirement.
Of course, you may not want to invest for any other reason than to make the most of your money. Unit trusts in general has a proven record over the long term to help you do just that.

Understanding risks and returns
Why investors should understand the meaning of risks? There is a direct relationship between risk and reward. A fundamental principle of investment is the risk reward trade-off associated with every investment decision made. The higher the risk, the greater the reward, but the reverse is also true! There are generally, three basic types of investment risk :
*General market risk that relates to a broad range of investments and is largely dependent on economic conditions and internal markets.
*Market sector risk that relates to a particular sector of a market, for example, financial stocks will perform better than plantation stocks at a particular period of time. This form of risk can be managed by carefully monitoring the economic scene with a view to identifying the winners and losers.
*Specific risks that relates to the performance of a particular security or property in an investment portfolio. For example, the performance of a specific company's share. The specific risk that one investment will not perform, over another can be minimised by carefully investigating and researching before buying and performing regular ongoing checks.
Since unit trusts invest in marketable securities, they are exposed to market environments. Fund managers seek to mitigate risks by building a broadly based portfolio.
Different types of funds involve different degrees of risk. Bond funds have historically proven to have less risk to capital than equity funds, since they are affected less by the fluctuations of the stock market. While equity investment can be more risky, it is more likely than a bond fund to provide long-term capital growth.

Benefits of Unit Trusts
*Access to markets and overseas opportunities. Unit trusts give you the opportunity to invest in specialised and/or overseas markets. Again, it would be difficult or impossible for an individual to access such markets directly due to limited capital resources as well as time required to be spent on careful research to gain in-depth knowledge of these markets.
*Low minimum investment. With as little as RM1,000, you can invest into a wide range of securities that you might otherwise not have access to. There are also regular savings plans which start from as low as RM100 so that you can continuously build on your investments.
*Professional management. Few of us are investment experts. The great thing about investing in unit trusts is that you leave your money in the hands of experienced professionals who devote their time to ongoing research and managing the funds.
*Spreading the risks. As a unit trust buys into a range of securities, the investment risk is reduced. This is because if any particular security proves to be a bad investment, the impact on such a diversified portfolio is not as significant as having put all eggs in one basket.
*Investments to cater to different objectives. There are many types of funds to meet a variety of financial objectives and an investor can use a portfolio of funds to achieve his or her objectives.
Investors would have different objectives when they invest. If you are planning to invest for your retirement 30 years later, you might consider using growth-oriented equity funds that have traditionally delivered healthy returns over a longer period. Other funds such as bond funds are suitable for those who prefer steady returns with lower risks.

Choosing the right fund for you
*What are your goals? Before you invest, determine your objectives and time horizon, and then balance them against the risks you are prepared to take. For example, if your goal is to accumulate wealth over a long period of time, your portfolio may comprise more equity funds than bond funds to focus on capital growth.
*What is your risk tolerance? It is not enough to want the highest returns on your investments as risks and returns go hand in hand. A high risk-taker would be prepared to weather a few knocks in exchange for the possibility of higher rewards. A more conservative investor would opt for steady but relatively lower returns and greater stability.
*Think medium to long-term. Most unit trusts offer potentially good returns over the long run. However, be prepared to hold onto your investments as unit trusts are regarded as medium to long-term investments
Just like many other investments, the value of unit trusts can rise and fall on a daily basis. But don't panic. If an investment temporarily falls, this can sometimes provide an excellent opportunity to invest more money, averaging your price when the market offers good value.

ABOUT FINANCIAL PLANNING

People of Today - What Do They Want?

In today's fast growing economy, people are not only working towards financial growth and stability they are also looking towards a better lifestyle for themselves and their family. While chasing dreams of early retirement, sending their children for overseas tertiary education, owning a few units of properties and a diversified portfolio of investment instruments, many questions are left unanswered.

Often people have not taken sufficient steps to ensure that their assets are protected from risk as well as ensure that their dependants are adequately taken care of financially in the event they are no longer around or in active employment. While steps have been taken to ensure that there are some forms of assets distribution arrangements, the funds required during the interim period may not be adequately set aside or worse, these funds are not taken into consideration when making the arrangements.

Also, many of the people while investing their monies and receiving investment return had not been able to analyze the actual rate of return after inflation. In fact, their investment strategies may not be in-line with their Financial Goals and Objectives without them realizing it.


Realizing Financial Goals - What Do They Need?

How then can people fulfill their Financial Goals while maintaining their current lifestyle and make their savings work harder for them? What do people require in order to ensure that all aspects of achieving their Financial Goals are taken care of? When their life circumstance changes, how do they know what impact all these issues have on their existing strategies. What should they do?

The most talked about process today is Financial Planning. Although Financial Planning is relatively new to many people in Malaysia, it has been practiced in USA for more than 40 years. In Malaysia today, Financial Planning as a profession is regulated by the Securities Commission. Its importance and development stems from the recommendations in both the Capital Market Masterplan 2001 and Financial Sector Masterplan 2001.


Financial Planning - What is it all about?

Simply, Financial Planning is about helping an individual achieve his or her Financial Goals from where he or she is today. To many people, Financial Planning is a complicated process and that only the rich need to worry about it. Is this true? The answer is "No".

In fact, all of us need some form of Financial Planning. When we first purchase a house, we need to ascertain how much we can afford, how much loan to take, which financial institutions is giving the better rate and which loan is best suited to me for better cash flow management. When we invest our hard earned savings, we need to find out about our risk appetite, the time period of investment, the anticipated rate of return and asset portfolio.

If we need to categorize the different stages of the wealth management process and its solutions, it can be best described as follows:

1. Wealth Protection
- Insurance

2. Wealth Growth
- Unit Trust Funds
- Equities
- Properties
- Savings accounts etc

3. Wealth Creation
- Insurance

4. Wealth Distribution
- Wills
- Trust


Doing Financial Planning - What are the Benefits to Me?

1. Investment Growth Strategies for better Return on Investment.
2. Financial Protection in case of Disability and Critical Illness (when removed from Employment
Permanently or Temporary)
3. Health and Medical Coverage for Hospitalization and Surgical Costs
4. Safeguard Family Income to ensure Continuity of Lifestyle
5. Children's Tertiary Education especially for Overseas Education
6. Retirement Funds for Independent Post-Retirement Lifestyle
7. Emergency Funds for Contingency and Replacement Costs
8. Estate Distribution to ensure Proper Administration of Estate and Protection of Family's Assets


Financial Planning Process - What Do I Need to Know?

The Financial Planning Process involves a Six Step Process.

1. Establishing and Defining your Relationship with your Planner
2. Gathering of your Personal and Financial Data including Goals
3. Analyzing and Evaluating your Financial Status
4. Developing and Presenting Financial Planning Recommendations and/or alternatives
5. Implementing the Recommendations
6. Monitoring the Recommendations