Syariah Compliant Funds

Syariah Compliant Funds has been in the radar of most investors since there have been much emphasis on Islamic Finance products. The reason for their popularity is it practice socially responsible investing and the accumulation of wealth of the Middle East, because of the rising oil prices.

Because of its nature, it is found that the risk of investing in them are much lower compared to other normal unit trusts investing in general equities but also due to its nature, it does not have much diversification.

Investors who strongly believe in socially responsible investing and looking to diversify their investment portfolio can consider these syariah compliant funds.

For more information on such funds, please click here.

Related Books

Taking Housing Loans

Taking Housing Loans is a must especially when we would like to own our dream home. But owning a home can be a nightmare if you do not do proper homework and become burden with housing loans.

Before you go out and look for your new home, you should first look at the available financial resources that you have. You can take the following steps:

1) Assess your financial resources and decide how much you can come up with to service your housing loans per month, assuming you have to service the loan for a period of more than 10-20 years.

2) From that amount that you have come up with, use only 60-90% as a gauge of how much you can really come up with to service your housing loans. For instance, at the end of first step, you calculated that you can service the housing loan with $1000 per month, and assuming you are very risk averse, that means you can only use $600 to service a loan per month.

3) Next go out and have a look at the housing loan packages available that allows you to service it with $600 (from the example) per month. From the housing loan package that you have selected, you can now see how much you can borrow.

4) From how much you can borrow and how much you have set aside for the 20% you need to pay upfront, you can now go out and look for the dream home that would fit that budget.

For more information on housing loans, please click here.

Investing in Penny Stocks

Investing in Penny Stocks (define as less than $1 for each share) is a viable investment tools for those people who are just starting out to work, and wants to invest in stocks .

New investors have to realise that when investing in penny stocks, the risk is larger compared to investing in blue chips. And the risk is higher if you want to make a fast buck from it.

Young investors when investing in penny stocks should take a long term view of it and the objective in investing in penny stocks is to discover the next Starbucks or Google thus getting a "10-" or even "100-" baggers as defined by Peter Lynch at a very low price.

Because of such an objective, one has to learn the following before deciding which business to invest in and purchase its stocks.

1) Accounting
2) Business Model, mainly how it does its business
3) Management Experience

All these are important if you want to find out the next BIG THING. As Warren Buffet mentioned before, when you purchase a stock, you are interested in owning the business, and you do want to own a profitable business, I presume.

For more information on stocks investing, please click here.

Hospitalisation Insurance

It is very unfortunate to be in the hospitalization, especially when you need surgery. Things can be worse when you look at the exorbitant hospitalization bill. It can range from a few thousands to tens of thousand of dollars. Such exorbitant hospitalization fees can be avoided in total if you study and plan your insurance covers.

Health insurance companies have a whole range of hospitalisation insurance which can cover critical illness, accident, surgery and hospitalization. Individuals need to assess their family medical history, their finances and decide how much premium they can afford. And from the premium they can afford to give, shop around to give them the widest coverage and also the highest amount insured.

Nowadays, there are plans that covers deductible as well, if you can afford the premium. So do take some time to look around. If you hired a financial planner, ask for their advice and do take note of how they are 'rewarded' for the advice they give you.

For more information about insurance, please click here.

Share Investment Strategy: Buy Low Sell High

This morning in the Sunday Times, there is an interesting article on the most talk about share investment strategy and that is "Buy Low Sell High". But in stock market, when is the market bottom? When is the bottom of your stock? Grasping the market timing would seem to be the best option but timing market is extremely difficult due to volatility of the market.

So in the news article, they have experts to tell us how to "buy low, sell high" using 6 buying strategy.

1) Target and hold blue chips

Blue chips are suitable for people who do not have time to monitor the market and they are usually the first to benefit in any uptrend

2) Promising Business models

This is somewhat similar to Warren Buffet's investment style where the business model have great influence on his stock decision.

3) Look for promising 'turnaround' companies

These companies are usually ignored by investors and their stock prices are at the bottom. Studying the development of such companies might let you know when they are making a turnaround.

4) Look for bad news

Bad news that have temporary effect on companies usually will drive stock prices down, that is when buying opportunity comes in.

5) Spot undervalued stocks using PE ratio

Company stocks that have low PE ratios and having robust earnings growth might be a good stock to buy. Low or high has to be measured against those other companies from the same industry.

6) Identify bargain buys using PB ratio

Stocks that trade at a discount to its book value are worth looking into. This strategy usually applies to property developers and fiance companies which depend greatly on their assets for income generation.

To learn more about stock investments, please click here.

Beating Inflation

The top headlines in most newspapers these days are high inflation rates. Most countries are experiencing historically high inflation rates. Causes of inflation rates are because of commodities prices like rice, flour and most importantly oil.

Usually if inflation is caused by commodities, the poor and middle level income would be greatly affected. In Singapore, inflation rates are predicted to be between 5-6%. Such rates would greatly erode the purchasing power of your deposits, even if it is left in a fixed deposit which is earning between 1-2%.

Commodities like all other investment tools are subject to business cycles, thus it is important to take that in your consideration when planning your personal finances. To beat inflation and ensure that your retirement nest egg, it is important that you keep your money invested in the relevant investment tools. Which tool is relevant depends on your investment horizon.

For the immediate reality, it is very important to plan your budget carefully. Have records of your household expenditure for the month. Such records would inform you which are experience the highest inflation.

At the end of the month, when planning your budget, have a look at which area of expenditure would have increased greatly, in this case, would be your food expenditure. Have a closer look at this area and see what changes you can make to bring the expenditure down.

In the long run, try to build another source of income, preferably passive source or increase your financial literacy level and start investing.

For more information on Planning your Budget, please click here.
For more information on Investment tool, please click here.

Being bankrupt

In Singapore, recently there are many articles on people especially young ones are not able to pay down their debts. In Singapore, you could be made a bankrupt as long as your aggregate debt is more than SGD$10,000.

A bankrupt is duty bound to account for any money or property he receives after bankruptcy. He is allowed to keep a reasonable part of his income for himself and family, and then handover the excess to Official Assignee (OA) for distribution to creditors.

Depending on your occupation, you might be required to terminate your services or redeployed to another job. So note that you might lose your dream job, jeopardizing your career. You might be required to inform your employer of your bankruptcy status, and also do note that your bankruptcy status would be announced in the newspaper.

You still can take a holiday overseas but you must seek for approval from OA. The OA might require you to declare who is paying your traveling expenses.

Having been a bankrupt, your credit record is held in the Credit Bureau, keeping your bankruptcy record for up to six years. Such records might be passed to banks when you apply for loans after your discharge, making it likely that the bank would reject your applications.

For more information on Bankruptcy in Singapore, please click here.
For more information on Planning your Budget, please click here.

Bankruptcy and Discplined Spending

In Sunday Times (22nd June 2008 edition), it was mentioned that those that are under 30s are now forming a larger percentage of those filing for bankruptcy.

Main reasons given was the materialism and desire for high life. Having desire is good because it spurs you to seek out more avenues to satisfy your desire, but if inappropriately handled can be disastrous.

Thus it is strongly recommended that you do some budget planning. Have a budget on how much to spend per month. If you desire a luxury item that will take several months to save up, try to resist the urge to sign the purchase with your credit card. Instead, put the money away in another savings account that is not very accessible to you, immediately when you receive your salary. Give yourself small rewards when you have successfully put aside some money, this will keep you going. Once you have save up enough money, please go and sign the purchase with your credit card to earn some rewards and also the luxury item you have been waiting for months!

Preparing a budget and sticking to it might not make you a millionaire but it is essential to help you be free from financial problems. Preparing a budget would also allow you to see where your money is spent and are you spending it wisely, building both for the long term and short term plans of your life.

For more information on cash budget planning or other financial planning, please click here.

Credit Cards For Personal Financial Management

Just ran through an article in Straits Times (13 June 2008 Edition). Inside it mentioned that credit card users that goes delinquent tend to be the following group of people.

1) Young Working Adults (between the age of 21-29)
2) Divorcee
3) Male

Credit cards are actually great tools for personal finance management. But credit card applications should be considered carefully. Holding too many credit cards might not be a good idea, given that you have to manage many accounts.

When considering to apply for any credit cards, be it Citibank or UOB, Visa or Masters, my recommendation is to look at credit cards privileges for instance discounts, credit card promotions with specific retailers, credit cards points for redemption and many more. Apply for a credit card that will give you the greatest benefit based on your household and personal expenditure. Thus this will reduce the credit card account that you need to manage.

Have a monthly budget on the amount you spend on credit cards. Using the consolidated credit card statement, to keep yourself informed if you have exceeded your budget. If you do, look at your income statement when you prepare next month's cash budget and see what expenditure you can reduce further, until you have a disciplined approach to using your credit cards.

Celebrate if you can have successfully maintained a disciplined approach, by having a good meal once in a while (because you deserved it), but remember, use your dining credit cards at your favourite restaurant and budget for it.

For more information, on using credit cards, please click here.

OCBC Preferred Stock

Recently OCBC offered Preference shares to both institutional and retail investors.

"The dividend is paid twice a year in June and December.

The minimum subscription is 200 preference shares or S$20,000, and thereafter in multiples of 100 preference shares or S$10,000.

OCBC says the preference shares are perpetual securities with no fixed redemption date.

This is a very new investment tools thus most retails investors here are not familiar with preferred stocks investing.'' - Taken from ChannelNewsAsia on 02 June 2008

Basically preferred shares work like normal stocks, just that there is a fixed dividend yield on par value and other conditions on it for instance, is it a cumulative preferred stocks, when is it redeemable and so on.

OCBC preferred stock is providing a dividend yield of 5.1% par value which is significantly higher than the return of 0.8% for bank deposit or the return of 3.3% on a ten-year Singapore Government Bond.

" The preferences shares have been rated Aa3 by ratings agency Moody's. Fitch has given an A+plus rating, while Standard and Poor's has assigned an A-minus. " - Taken from ChannelNewsAsia on 02 June 2008

The preference shares in this case have received high credit ratings. Thus it is very unlikely that the bank will go bankrupt.

But since the dividend are not guaranteed and cumulative, investors have to note that there might be chances that the bank will not pay dividends. Investors have to realise also since it is issued by a bank, whether it can issue dividends will also be subjected to MAS rules. In instances, where the bank has insufficient reserves if it issues dividend or the bank is in danger of becoming insolvent, it is very unlikely that the bank will issue dividends.

But OCBC claimed that since the end of World War II, it has never stop paying dividends on its common stocks (shares that are a class lower than preference shares.)

Investors are advised to read up on what is offered by OCBC Preference shares before committing investment capital into it.

You can read more about preferred stocks and its risks here.