Sunday, September 26, 2010

How to earn Passive Income from Real Estate Investment Trust?

Most of people not aware of advantages of REIT investment which cover all types of industries, high dividend yield of about 7% to 8% annually, low entry cost, support by higher corporate governance. The best is you as an investor, no need to predict or ask if tomorrow market ups or down, just think long term. 
If you have FD in bank or bond as one of investment, it's advisable to move portion of fund into REIT to earn higher return.

What Is Real Estate Investment Trust?
A pool of money from investors is invested in properties, i.e. office building, shopping malls, warehouse ... and managed by REIT managers. (For detail of M-REIT, click here)

What REIT can offer?
- advantage to invest in property market and enjoy diversify in many types of industries instead of invest in a single physical property.
- maintained and managed by experience property managers, maximize the operating income of properties
- ownership of high quality real estate

Why invest in REIT?
- liquidity - REIT can be bought and sold easily today or tomorrow
- high dividend distribution, 90% to 100% of rental given back to investor and tax efficiency, where investors are tax only once.
- affordability - investor can buy a small portion with low entry cost

How to make money with REIT?
- passive income - sustainable distribution of dividend which pay quarterly or half yearly.
- take advantage of inflation - rental generally increase in tandem with inflation rate, this long term growth of distribution will not happen for FD or bond
- potential capital appreciation - though this is not guarantee, but usually properties will increase in value every year.
- the beauty of stock market - at time when fear control the market, everyone keep on selling their stock, hence it's great opportunity for us to buy these cheap "properties", like supermarket doing cheap sales!
Every market down trend is a great opportunity for us to make money in REIT.

Can I apply loan to buy REIT?
Yes, but not all bank provide such facilities. Bank normally provide housing loan (physical property).

Friday, September 24, 2010

Rotten is worst than...

Is market down scary?
No at all, it's more scary if the company become rotten. The "rotten" company is the one making loses year after year with sign of going bankrupt soon. In my earlier year of investment, I like to buy this kind of company, because of it's low price, thought can buy more with less money. Later I noticed what's the point to buy this kind of "rotten" company as the share price keep on lower and lower and is unable to recover when market up again. Usually the rotten is very hard to cue. From past experience, 10 out of 9 times, all these "rotten" company will turn bankrupt, so why invest in these type of company since there are so many others out there doing better? (Recently, another S company turn rotten and the share price drop from 70 cent to 18 cent now)

Market crash is not a problem provided you invest in quality stock. We know in long run, the economy will grow and big company with good management will always grow in value. This should be the first criteria of investment plan, never look at the "rotten", seek for top excellence company, not only leading in country's industries, but also well known internationally.

Saturday, September 18, 2010

Invest for long term

It's time to receive annual report again... I like the last page of report from Public Bank:
If a share holder of Public Bank had bought 1000 shares in Public Bank when it was listed in 1967, and assuming the share holder had subcribed to all right issues to date and had not sold any of the Public Bank's share, he would had in the end of 2009, 135,398 shares worth RM1,529,997 based on the share price of RM11.30 at the end of 2009. In addition, he would had received a total gross dividend of RM632,643 whilst only spent capital outlay of RM48,760 for rights issues.

As of 17 Sep 2010, Public Bank share price worth RM12.70, let do some calculation here:
135,398 shares: RM1,719,554
Dividend: RM 726,643
Minus Right Issues RM48,760

So, total return is RM2,397,437 for 43 years, or RM55,754 per year. The conclusion, one need to invest in good company (shareholder friendly with growing business) and invest for long term will able to see the power of compound growing in capital!

Friday, September 17, 2010


实力机构想赚钱,普通个人投资者(俗称“散户”)也想赚钱 只是,我们发现,大多数的散户股民却常在赚钱的美梦里,重复着更多凄凉的赔钱故事。即便是赚到钱的散户们,也容易陷入“辛辛苦苦三五年,一朝回到解放前”的“轮回漩涡。

Wednesday, September 8, 2010

Invest for future

Many think that they don't have any money, there's no point to investing. The truth, investing is the process of building wealth, you can start with any amount, $100, $200 or $500, the earlier the better.

Do you know that what ever amount you invest per month for 7 years at 10% is the same amount you can withdraw per month for-ever without touching the principal?

If you set aside $500 per month for 7 years, you can take $500 per month - forever. (as long as you able to get 10% annual return) 
This is the way how to build stable monthly income!

Tuesday, September 7, 2010

Common Myths about Mutual Fund

Recently noticed a lost making investment product from my father, guess what -- Mutual Fund. Invested 12 years ago with principal of $4000, today the market value is worth $1512. (OMG, a loss of 62%) Why invest in Mutual Fund and there are still many invest in Mutual Fund, they might not aware of common myths:

1. Fund management said for people who know nothing about investment, mutual fund is best for them. This is not true, as for the case of my father, he bought and kept it for more than 12 years but end up in lost position. One still need to learn what's fund management and how to invest in the fund than simply listen to sales agent.

2. Buy the fund and keep it for long term will profit in the end. Sales agent always tell investor to invest for long term, but the Fund never guarantee with profit not to mentioned about benefit from compound interest. (also read the disclaimer clause, past performance never guarantee the future...)

3. The best time to buy fund is any time. Buy at any time? Fund management claimed that the fund is managed by professional that take care of market timing, investor just need to buy at any time. This is not true, as the fund is subject to market movement, sometime the fund will sell at very low price. Seem one need to buy low and sell high? If want to buy low and sell high, why trade the fund which cost you 5%, whereas if you trade directly in stock market, only 0.5%.

4. Fund management take care of risk as the fund manage by professional to have diversified set of holdings. This is not true as the risk involved is similar to invest directly into stock market. Also, is it through asset allocation can really reduce the risk? If yes, why so many fund still selling below the initiate issue price? Why investor need to pay 4 or 5% of management fee each year for this kind of result? Investor need to pay management fee even the fund show negative performance?

5.    Buy with cost averaging method, then will have positive return in long term? If you do this, will end up dig a big hole for you! If the fund was not performed in good years, don't expect it will profit in future.