The new URL for LCF on Personal Finance is at howtofinancemoney.com
08 January 2012
10 December 2011
LCF on Personal Finance featured comments in Personal Money magazine, twice!
Here's the November 2011 issue of Personal Money Letters to the Editor
And here's the December 2011 issue.
05 December 2011
The 4th & Perhaps the Most Important Question to Ask an UTC before you Invest in Unit Trust
I previously suggested 3 basic, must-ask questions for a unit trust consultant whom engages you for investment products sale.
Before continuing to read further, you need to realize that any investment carries its own unique risk. If you are not at this stage yet, then you will always look for a guarantee before putting your money into any investment vehicle. It is true that FD returns are guaranteed*, but no one ever got successful in wealth accumulation by putting money in FD alone. Prudent investment decision is about minimizing the risk of monetary losses, not by avoiding the risk.
We always blame financial agents for their promises made on the investment returns which cannot be fulfilled. I am starting to think that agents are unintentionally and indirectly "coerced" into giving the misleading info in their sales pitch due to the the fact that people always want a guarantee in any investment. In other words, it could be our own's doing! Of course, given the fact that the agent whom you are dealing with is a competent UTC, not purely a sales guy focusing solely on meeting his sales quota.
Before continuing to read further, you need to realize that any investment carries its own unique risk. If you are not at this stage yet, then you will always look for a guarantee before putting your money into any investment vehicle. It is true that FD returns are guaranteed*, but no one ever got successful in wealth accumulation by putting money in FD alone. Prudent investment decision is about minimizing the risk of monetary losses, not by avoiding the risk.
We always blame financial agents for their promises made on the investment returns which cannot be fulfilled. I am starting to think that agents are unintentionally and indirectly "coerced" into giving the misleading info in their sales pitch due to the the fact that people always want a guarantee in any investment. In other words, it could be our own's doing! Of course, given the fact that the agent whom you are dealing with is a competent UTC, not purely a sales guy focusing solely on meeting his sales quota.
29 November 2011
What You Are Actually Investing in a Fixed Income Fund.
Fixed income fund is touted as the safest asset class in unit trust investment. However, is it as safe as fixed deposit?
NO.
Fixed income funds invest in government and corporate bonds. I previously wrote about bond and how bond prices affect you bond fund NAV as it fluctuates according to business cycle. This is systematic risk, which is inherent to the entire market. You cannot control this but the good thing is, it is somewhat predictable to certain extent. You just know that a recession is looming in the horizon by looking at the various economic indicators.27 November 2011
LCF Answers Readers' Question
Question 1
In my previous post on calculating total insurance needs, a reader remarked that by liquidating all Mr Lim's assets, it essentially means there is neither a house nor liquid cash for his family to stay and use after his death.
This is correct. Therefore, if Mr Lim does not want the house to be sold and wants his wife to still have liquid cash in the bank upon his demise, he should omit both his house market value and cash from total assets computation.
Therefore, total assets available to settle his current liabilities is now equivalent to $ (890k - 500k - 10k) = $ 380k.
His insurance needs to cover for the shortfall is now equivalent to $ (1210k - 380k) = $ 830k.
In my previous post on calculating total insurance needs, a reader remarked that by liquidating all Mr Lim's assets, it essentially means there is neither a house nor liquid cash for his family to stay and use after his death.
This is correct. Therefore, if Mr Lim does not want the house to be sold and wants his wife to still have liquid cash in the bank upon his demise, he should omit both his house market value and cash from total assets computation.Therefore, total assets available to settle his current liabilities is now equivalent to $ (890k - 500k - 10k) = $ 380k.
His insurance needs to cover for the shortfall is now equivalent to $ (1210k - 380k) = $ 830k.
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