Tuesday, October 19, 2010

How to build retirement income for life?

New economy impact - we know salary going to increase, services and goods price going to increase faster than previous year. Policy can not be changed but we can plan and take advantage of this to invest for future, especially build up retirement income. One of the way is invest in REIT.
Several reasons why buy REITs:
1. Low interest rate - with current interest rate for FD around 3%, the return from REIT is better. For instant, with $10,000 invest in REIT, one can earn passive income of about $800 per year, as compare to deposit in bank to get around $300 per year.

2. Property is an appreciating asset
Before you buying any REIT, ask yourself if you have holding power when market deteriorate like what we have gone through in 2008. If you have holding power and do not sell during the downturn, you will almost inevitably lose money on it. After 2008, property price did rise and stabilize. In fact, any market downturn is a good opportunity, we expect few years later similar to 2008 will happen again.

3. Assets beat playing the market
The asset always be there, even the market downturn or financial crisis in 2008, if you do not sell it, you will not lose money. REIT is an asset like property which provide more liquidity, hence the price will move up and down, it's the nature for stock market, don't fear when market down.

4. Market conditions don’t matter
Investor with long term objective should be less concerned about the market's movement up or down. Anyway, property will always appreciate in value, compare to deposit in FD, you will not enjoy benefit of capital appreciation and advantage of inflation. Of course, if you want to speculate, REIT is not the right investment tools.

5. Property keeps on giving
Of course, these asset can be given to someone you love or your family. Parent who want to save money for their children's future may start to invest some money on monthly or quarterly basis. This is very best way for buying an asset and inheritance to their children.


Read more:  Malaysia REIT

Tuesday, October 12, 2010

Insider Asia Model portfolio 398 - Buy REITs

Noticed one article from Insider Asia Model, they are buying some REITs:

Quote
As such, we have decided to move some funds into real estate investment trusts (REITS), which offer fairly good yields on relatively low risks. We acquired 20,000 units each in AmFIRST REIT, Al-Aqar KPJ REIT and Quill Capita Trust for a total consideration of RM66,600. 
To read more...
Unquote


This is not a good news for us, as usually those stock recommended will going up due to many people chase to buy. Below are the price for the 3 counters as of today's closing price:
AmFirst REIT: RM1.18
Al Aqar REIT: RM1.15
Quill REIT:  RM1.00
Let's keep this record and see if these REITs counter going up.

Monday, October 11, 2010

Investment rule one - never lose money

Today I randomly choose one book from my library, it's related to Warren Buffer.
Chapter one - the writer say,
Rule No.1: Never lose money. Rule No.2: Never forget rule No.1. This is the second time I read this book, felt so important and need to write down some points for future reference.

Yes, never lose money in stock market, if you fail to do this, better do not invest. The question is how not to lose money? I think first step is find a company that always pay out stable dividend. Invest and plan to hold it for at least one year. If you can find a company say pay out dividend of about 8% p.a., then holding for one year at least better that FD.

But why need to hold for one year, someone think they should sell high and buy low? I am not as clever as those who can find the high and sell it, so I choose second option, buy and hold good company. Since we only target those company paying consistent dividend of 7% or 8%, these company can grow 20 or 30% is not a problem. Hence, holding for one year should see the result. One year later, we can review the result, is 8% good enough? Usually notice the share price already go up 10 or 20% due to good performance of financial result. In case if the share price still remain the same or lower, then we may need to review the company's overall result again before further decision make.

This is the meaning of Never Lose Money!