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.