Answers to some Investing and Compouding Questions. How to Maximize Your Investment Profit. How to Open a Brokerage Account in Malaysia. Etc.
Oct 13th, 2007 by AhYap
scwong: The math that we studies before, 90% of it is not useful in everyday life. I speak for those who are not engineers or accountants or architects, etc.
True! We try to figure out things like Train A start from Ipoh at 8.00am at the speed of 80km/h and Train B start from Johor Bahru at 9.00a.m. at the speed of 100km/h, at what time and where will both the train meet each other? Zzzzzzzzzz.
ahbi: ah yap a….y no add me in msn le…i gave u my email last time mer
My ex-coursemate Donald (The #1 cibai according to Google) has answered it for me nicely. “You guys don’t need to check him on messenger coz i can’t even get him on email!” Yes, CibaiYap really don’t play messenger and reply to emails. He also off his handphone most of the time. Even when it is on, he can let the phone ring and ring and ring without picking it up, making the caller on the other side jump like a monkey. That’s AhYap, or better be called CibaiYap because of this.
taikor: I only knew how to save RM100k in 5 years even before I graduate. For those working in Singapore, that’s a lot easier. Just bring back around S$950 every month and you’ll be able to save Rm100k in 5 years.
Those making SGD should aim for SGD $100,000 to become a SGD millionaire! But if you are making Rupiah, don’t save only 100,000 Rupiah lar. 100,000 Rupiah is only RM39.10!!!
april: i also bought ICAP. but damn miserable .. bought at 1.74 and only 200 units coz super and extremely poor. :’( Plan to sell at 2.15 and wait for it to drop and the buy alot alot in the future. Currently bought under my auntie’s account so have to sell asap or else next year all the minimum rate will increase to RM40. But sibeh good ah the share!!!!
I am very happy, so you are now the #4 people who listen to me. Did you buy 200 or 2,000? If one buy 200 units of ICAP at 1.74, his total cost would be RM361.14 including commissions and fees, making the averaged bought price 1.8057. In order to just break even, one need to sell it at 1.88! It needs to increase at least 8% before you can make any money.
The amount of units you bought affect your break-even point (the price where you sell and you don’t make or lose any money). If you buy ICAP at RM1.74 here are the break even points for different amount of units you buy.
100 – RM2.01
200 – RM1.88
300 – RM1.83
400 – RM1.81
500 – RM1.80
600 – RM1.79
700 – RM1.79
800 – RM1.78
900 – RM1.79
1,000 and above – RM1.77 (total investment around RM1,800)
When we buy or sell a stock, we need to pay the brokerage fee, stamp duty & clearing Fee. It’s the stamp duty and clearing fee that affect our break-even point because when you buy too little, stamp duty and clearing fee will account for a large percentage of your total invested amount.
Lesson 1: Every time you buy or sell, make sure the transacted amount is at least RM1,800 to maximize your return.
Online brokerage like HLeBroking and Maybank2u charge only 0.42% brokerage fee. If you are buying through a reminsier, you will need to pay 0.7%! If you know you can negotiate (most people don’t know), they will give you 0.6%. But that’s still more expensive than the 0.42%.
Lesson 2: Use an online brokerage house to save on brokerage fee.
yangsquare: I’m very prospective about this- but how do you manage to get 20% compound interest?? even 12% would be difficult to find, wont it?
It is very easy, if you know how. It is very hard, if you don’t know how. If you know how to swim, swimming is very easy. If you don’t know how to swim, swimming is very hard (and you can even get drown!). So is swimming easy or hard? Of course, I will share more and blog more later about how to get the 20%. Akan Datang.
yangsquare: Also remember there is also a negative force behind all positive forces; that is what we call INFLATION. inflation rate is currently around 2% for the whole country and 6% in big cities like KL. That means your money will diminish if you keep it in time.. meaning your 20% compound would only be like 18% after subtracting the inflation rate.
Brilliant. The answer is in the statement itself. Because inflation is unavoidable, that’s exactly the reason why we need to aim for a higher compound interest rate (and not the Amanah Saham’s 8%!). If you have live long enough, you should have witnessed the destruction-power of inflation. How much does 2 pop-piah cost 20 years ago? 80 cents. How much today? 2 Ringgit and 80 cents.
yangsquare: btw, how do i start a trading account? any minimum age for that?
18 is the minimum age. Open it online at HLeBroking.com. But you still need to print out the final application form and go to any Hong Leong bank to have your signature witnessed and IC certified. Then you can ask them to mail it for you to Hong Leong securities. To trade, you can bank in money to your brokerage account via Maybank or Hong Leong bank.
Huiying: I agree with the compounding theory too.. it really requires a lot of discipline to reject all kinds of temptations to make that type of saving. Meaning, if you are earning around 3k, while you are still young, no outings, no trips and no fun. Really tough. And so, I think balance is really important. A balance of lifestyle and having saving at the same time.
This is a very open topic like politics and religion. Always can’t get a right or wrong from it. If you are honest with yourself and look at all the people around you, do you think there is more rich people or poor people? Is there more healthy people or unhealthy people? Is there more successful people or fucked-up people? If you do what most people do, you will get what most people get – poor, unhealthy and fucked-up. But this arrangement is good and nothing need to be changed. If not, who is going to sweep the street? Who is going to tar the road? Who is going to be police (haha)?
But what different now is that most people don’t know they have a choice. You know you have a choice now. So you want to be like most people or you want to join the less-people club? But as I said earlier, it is okay to be like most people. If everyone has money, who is going to work at the bank’s counter? Who is going to be our accountant? Who is going to be a brilliant engineer to design better stuffs for our livings? Who’s going to repair our car when it is broken?
Huiying: Just wondering, when you purchased ICAP, you are using the rule#1 method?
No, I don’t. You don’t evaluate ICAP using Rule #1 method because ICAP is a fund and not an ordinary business. ICAP is currently holding 15 stocks. You can happily evaluate it’s holdings using rule #1. ICAP strategy is value investing, and rule #1 is one kind of value investing which is more ‘aggressive’. There are many ways to implement value investing and ICAP is using a more conservative value investing approach than rule #1, making you sleep easier at night. I will discuss what I mean by aggressive and conservative in some other posts.