217) Benefits of Investing in Unit Trusts

Have you wondered what are the benefits of investing in Unit Trusts? 

Here are 20 Benefits for your consideration.

1) Easy and low investment amount to start. 
You can start to invest with a small amount. Most funds can start with a minimum of $1000 or even lower.

2) Can grow slowly and consistently, even with small amounts.
You can grow your investments with small amounts or larger amounts. Remember to grow it consistently to achieve bigger amount in the long term.

3) Just Invest and wait for the assets to grow
As the funds are managed by professionals, you can just invest and wait until your financial goals are achieved.

4) Investment Goals
These are a list of common goals you can plan for:
a) Dream home
b) Children Education fund
c) Comfortable Retirement
In fact, all other financial Goals

5) Easy documentation and fast process
The investment process is easy and fast. No complicated legal documentations from banks and lawyers.

6) Can instruct your Bank to do Direct Debit Instruction (DDI).
You can sign up for DDI for monthly investment deductions. Be systematic and no need to remember to top up on monthly basis.

7) Not compulsory to invest regularly. It is your choice to add more if wish to.
Increase your investments when you have more money. There are no commitments, late payment charges or penalties for non payments.

8) More easy and relaxed. No need constant monitoring.
As your investment are for longer term, no need for regular and constant monitoring of the investment performance.

9) No worry investment type:
No Flood and Fire damage.
No Maintenance fees & Repair costs.
No Robbery and Theft problems.
No Regular monitoring required.
No Regular monitoring required.

10) Can Diversify into many Countries and Regions
You can diversify your investments into different countries or regions. Diversification reduces your investments risks.

11) Diversify into different asset classes - Equity, Bond and Money Market.
You can easily diversify into other asset classes to reduce risks further. Equity are into stock market. Bonds are fixed income investments. Money market are placements into Financial institutions to earn interest.

12) Easy Switching between different Funds
You can easily switch into different funds according to your risk tolerance and market conditions.

13) Investments have a more balanced Risk and Return 
As the funds are diversified, you have a more balanced risk and returns.

14) Regulated by Securities Commission with CMSA 2007
Unit trusts investments are regulated by Securities Commission and must comply to the Capital Market and Services Act 2007.


15) Fund Managers monitor and manage the daily investment operations
The unit trust funds are managed by professional fund managers. The fund operations are managed by the UTMC.

16) Easy & Convenient to check updates via online.
You can check your investment status via online. You can also do certain transactions online.

17) Relatively easy and fast to withdraw funds. Flexible. Anytime, anywhere.
It is also easy get back your money. As it can be done online, you can do withdrawals anytime from anywhere with internet connection.


18) Can do partial withdrawal for Emergency.
If there is an emergency and you need some money, you can do partial withdrawal of the amount you need. No need to sell everything.

19) Easy to Divide and Distribute Unit Trust assets
It is easy to divide and distribute your Unit Trusts investments. It is much easier if compared to a real property.

20) Capital Gain and Distribution Income are Tax Free
All capital gain you made from investments are non taxable. Any distribution received is also tax free.

There are more BENEFITS not listed above.
Contact your Unit Trust Consultants to know more.

Know more of how UTC help investors from this video

More related articles:

• 73) Unit Trust vs Gold Investment Account
• 71) Unit Trust vs Share Investment
• 62) Unit Trust vs Gold pieces as Investments
• 61) Unit Trust Bond Fund Vs Fixed Deposit
• 60) Unit Trust vs Property Investment

216) Savings vs Investment

216) Differences between Savings and Investments

What is Savings?
We save or store money so that can be used in the future. The amount is "preserved" and little or no chance of losing its nominal value. The money is normally saved in a bank.

More suitable for shorter term.
Returns are lower.
Risks are lower.

Returns: Interest.
Liquidity: Higher.
Purpose: Living expenses, buy small items, short holiday.
Main factor: liquidity & flexibility.

Examples: Savings Account, Fixed Deposits Account.

What is Investment?
We invest into an asset and hope that the value will increase and/or generate income. They value can increase or decrease, depending on demand and supply. We expect some risks in investments. Money is converted into another asset to generate higher value or some income.

More suitable for longer term.
Returns are higher
Risks are higher

Returns: Capital Gain and Income.
Liquidity: Lower or very low.
Purpose: Retirement, children education, other financial goals, buy large items.
Main Factor: time and discipline.

Examples: Shares, property, unit trusts, business.

Always remember the saying,

High returns comes from high risk.

Read more about 4S of Investments from this link
http://highlevelrules.blogspot.com/2017/06/what-investors-want-in-their.html

215) KLCI Changes for Nov & Dec

215) KLCI Changes for Nov & Dec since 2000.

Have you wondered what happened to the KLCI points for the last 2 months of year?
Is there such thing as Year End Rally since 2000?

Here's the data and graph for your reference.

Out of the 18 years studied, there were 7 years going negative, which means 38.9% were lower years.

In other words, 11 years or 61.1% that KLCI went higher from 1 Nov to 31 Dec.

Notice the next year's performance after there was a down year. For example, on the down years 2000, 2003,2005, 2014 and 2016. The year after was a positive year for the Nov to Dec.

Will the same pattern repeat for Nov to Dec 2019? 

Let us see what will happen to KLCI from 1 Nov to 31 Dec 2019.

For report on KLCI for Dec months, please click link below;

http://highlevelrules.blogspot.com/2017/12/santa-rally-in-fbm-klci.html

Please be reminded that Past Performance are NEVER an indication of Future Performance.

214) Categorize Your Activities into Different Levels.

How do you decide which activities are useful and how useful it is?

One idea is to categorize them according to the ability to achieve your goals.

Give more POSITIVE score to those activities that are more useful and help you to achieve your goals. Give NEGATIVE score to those activities that prevents you or drag you from achieving your goals.

Below is an example.
Let's assume your goal is to get appointment for sales presentation for financial planning services industry.

Level 0 for not related to business (Eg. Watch TV, wash car, send kids to school, driving)

Level +1 for low priority tasks. (Eg. Fill up forms, organize brochure, facebook)

Level +2 for medium priority (Eg. Make appointments, FTF, telephone calls for appointments, attend trainings)

Level +3 for important tasks. (Eg. Presentations to clients, Review clients portfolio)

Categorize and do the high value activities and outsource the lower value activities.

Don’t waste your time on the negative activities as below.

Level -1 for negative activities. Spending time to CBEG- Complain, Blame, Excuses, Gossip.

Level -2 for negative group activities. Eg. Go around finding others to do more CBEG.

Activity Results
Positive activities add value to your life and increase your success while the Negative activities reduce the values in your life and take away your success.
 

Do the ABC (Awareness Before Change).

More explanation from this link:

https://highlevelrules.blogspot.com/2017/07/your-success-depends-on-how-well-you.html

213) How to know if you are in your Comfort Zone?

You have heard from motivational seminars or your friends telling you that you are stuck in your comfort zone.

Have you ever wonder how to know if you are in your comfort zone?

Here's an easy way to find out the answer.

You can take it literally.
If you feel comfortable, you are in your comfort zone.

How to know if you are in your comfort zone?
If you feel relaxed and calm in what you are doing, then you are in your comfort zone.
If you feel confident that you can achieve a task easily, then you are in your comfort zone.
If you can do a task without thinking much, then you are in your comfort zone.

People like to do the same things again and again. It is a way our brain works to keep us out of danger. Doing the same things give us safety. We know what to expect. It is self preservation.

However, doing the same things will give you the same result.
Albert Einstein quoted, "Insanity is doing the same thing over and over again and expecting different results."



Then how do you know you are out of your comfort zone?

You can take it literally too.
If you don't feel comfortable, you are out of your comfort zone.

How to know if you are out of your comfort zone?
If you feel pressure, stress, panic, worried, lost, doubtful, etc, then you are out of your comfort zone.
If you have no confidence that you can achieve a task, then you are out of your comfort zone.
If you have to plan and think a lot, then you are out of your comfort zone.
If you have to ask or look for help, then you are out of your comfort zone.


If you want to change, you need to change on how you do things.

Doing something differently can be in many ways. It can be a small change or a major change.
Small change will bring small differences.
BIG change will bring BIG differences.

Even doing something with different mindset will produce different results.

A simple example to illustrate. You may be angry of driving in the traffic jam. However, by making a small change in your thinking, you will change the way you look at the traffic jam. If you think that you are lucky to be able to drive, it will make you feel grateful to be in the traffic jam. There are many others who cannot drive and cannot even afford a car.

How do you make changes to get different results?

Let's say you have to make phone calls to get sales appointment. You can confidently and easily make 10 calls per day. You have no problem at all. Out of the 10 calls, you can get 3 appointments. As you can be confident to get 3 appointments, then this is your comfort zone.

Try to increase your calls to 20 calls per day. Increasing your number of calls is something outside of your comfort zone.

At first, you will get a lot of questions and doubt your ability.
Your will ask yourself if this is possible?
Where to get the names to call?
What time to call so many people?
Will that many people want to pick up my calls?

If you don't feel comfortable, then you are out of your comfort zone.


Similarly, getting 3 appointment per 10 calls is 30% success rate. Try to increase to get 50% success rate. 30% is in your comfort zone, 50% is outside your comfort zone.

Many people stop trying to do new things because of the big changes they try to do. 
Your mind will resist the major changes to keep you safely inside your Comfort Zone. But, having small changes will be more comfortable to you. You are slowly and steadily expanding your Comfort Zone. Make your Comfort Zone circle bigger and bigger until you reach your goal.

If you have done 10 calls per day, then make it 11 calls for tomorrow. Slowly and steadily increase the number of calls until you reach your target of 20 calls per day. When you achieved a small goal, celebrate your success with a small celebration.

You will be motivated to keep doing more and EXPAND your Comfort Zone. Your mind will associate celebration and happiness with your effort to try new things and do more. Expanding your comfort zone is going to be an exciting experience.

Once you have the expanding momentum, you will be able to make bigger changes.

212) Seeds to grow in your mind garden...

One ______ seed will grow into one _______ tree, which will give you many _______ fruits.

Choose your seeds wisely:

Happy, rich, angry, motivated, easy, abundance, hate, lazy, love, care, difficult, amazing, great, powerful, grateful, integrity, idea, sad, friendly, big, blessed, High Level, etc. 

You are free to decide and grow other seeds of your own choice.

Happy Planting.

#highlevelrules
#highlevelmotivation

211) Sow Seeds on an Empty Land.

Your mind is like a piece of empty land.
Your thoughts are like seeds of trees.

You will have lots of different seeds (Thoughts).
You choose to sow one seed (initial Action).
You continue to take care of the young tree (continuous Actions).
It will grow into a big tree (Result).
Then the tree will bear fruits (Reward).

If you sow a Good seed, then you will get Good fruits.
If you sow a Bad seed, then you will get Bad fruits.
So, be careful and aware of the seeds that you have.

Also, you will notice that good seeds are harder to grow as compared to bad seeds. For example, a durian tree is harder to grow as compared to grass. 

If you leave the land empty, grass will quickly grow without your notice.

So, in the same manner, be aware of your thoughts and be more determined to take care of the good thoughts. 

Else, you will get bad thoughts taking over your life.

#highlevelrules
#highlevelmotivation

210) Do You spend more or less during retirement?

An interesting topic for a long Debate.

A post in Facebook on the same question attracted many comments. Most people commented that the expenses will go higher.

  

So, what do you think?

The answer is not as simple as just higher or lower. Your expenses are different depending on your situation. 

The comments on higher expenses can be summarized into few main reasons:

1) More Time to Spend

More time to travel, eat, holiday. By staying more at home, the utilities are also used more. The water and electricity bills go higher. You will switch on the electrical items for longer period. Air-cond, TV, lights and internet are used more. When you are working in an office, the water and electricity are paid by the company you work for.The appliances at home are switched off.

As the saying goes, during retirement "Everyday is a Holiday". We tend to spend more during holidays.

2) Higher Inflation

Prices will go higher as time progress due to inflation. During your retirement, your expenses are higher even you buy the same things. Inflation rates are also different for different products and services.

3) Pay for More Things

While working for a company, you can claim certain expenses like travel and handphone bills. Companies also provide benefits like insurance, dental, medical and hospitalization. Company even give drinks, snacks, birthday celebration, sports facilities, uniform, t-shirts, paid holiday and annual company trips. 

When your retire, all expenses are to be paid by you. You cannot claim back any expenses.

4) Housing Loans
As the housing costs is getting more expensive, the banks had been extending the loan tenure until age 65 or even 70. This is to allow a lower monthly installment repayment by the house buyer so that he or she can be eligible for higher loan amount. House prices are increasing faster than income increments.

Even after retirement age, many people still have to pay for their housing loan. Any increase of interest rates will incur more expenses servicing the loan.

Housing loans repayments is a major expenses for most people. It is good if the house are fully paid up before your retirement.


5) Car Loans
As cars are also getting more expensive, the car loan tenure had been extended to 9 years. Higher installments are also due do higher car prices.

Car loans repayments is another major expenses for most people. It is good if the car is fully paid up before your retirement. Furthermore, having the convenience of a car also incur other costs like maintenance, road tax, car insurance, parking, etc. Consider taking public transport for your traveling.

6) Children Education
As more people are getting married at older age, they are also having children at a later age.

Education fees for the younger children are still required even after a person retired. As more students are getting higher education, having a tertiary education is longer a luxury, but a necessity.

More from this link:
https://highlevelrules.blogspot.com/2018/07/must-i-send-my-child-to-tertiary.html

Children's tertiary education are major expenses for most people. It is good if the children completed their studies before your retirement.

7) Children Expenses

Many people are still paying for the living expenses of their non-working children. As the cost of living is getting higher and increase faster than income, the younger generation is finding difficulty to survive on their own. Many young people still depend on their parents for the basic expenses. Only after many years working, can the younger generation to afford their own property.

8) Other Dependents
Aged parents or older relatives may still depend on the younger retiree. Many people are caught in the "sandwich generation" where they have to support their parents and young children. Refer to point above on children expenses.

Listed below are quick points of expenses and savings during working life and retirement life.

9) Lifestyle
Your lifestyle will be one major impact to your expenses. Are you willing to change your lifestyle to reduce the expenses? Are you still willing and able to work after the official retirement age?

10) Other Considerations
The are also other factors that is beyond our control. Among few considerations are the  impact of government policies, benefits to citizens, taxation, advancement of science, technology, healthcare and cost of medication.


Expenses During Working Life

- Transport to work
- Working clothes
- Outside food during lunch
- Children school, tuition fees
- Housing loan

Savings During Working Life
- Medical claim
- Insurance provided
- Travel claims
- Allowances
- Company Trip
- Notebooks provided
- Mobile & line subsidy

Expenses During Retirement Life
- Travel holidays
- Higher Medical insurance
- Higher Medical expenses
- More time to spend
- Expenses by staying at home

Savings During Retirement Life
- less on clothes
- less on makeup
- less on food
- less on expensive items

Do get a better understanding on your circumstances and prepare better for your retirement.

Here is an Excel file where you can compare the Cash Flow (income and expenses) during working and during retirement. 

Assume you retire today. What was your cash flow last month vs your cash flow for next month.

Another tab in the Excel file is for you to do your Yearly Income and Expenses for next few years.

Link to Cash Flow excel file:

https://drive.google.com/open?id=1c9m6z1g_WxOmxHDhaM7wQLsjqSuuy21P

Do take note that the expenses are based on current values. The inflation effect is not taken into consideration.

Prepare your expenses covering many areas.
Do compare before vs during retirement.
Do the annual cash flow for several years to understand your cash flows.

209) Expanded Formula for Invesment

209) Expanded Formula for Investment, 

FV= PV(1+i)^n

If you are in the Unit Trust industry, you would most probably have seen the formula below.

FV= PV(1+i)^n

FV = Future Value or End Value
PV = Present Value or Begin Value
i = interest rate or rate of return
n = number of years or periods

Yes, it is the same formula you learned during your preparation for the Unit Trust Exam, CUTE.

Let us see the formula from different perspectives. Most probably it is your first time ever.

As you know about Unit Trust and PRS investments, your invested money is converted into units.
The amount you invested is divided by the unit price to get number of units.

Eg,

If you invested $1000 into a fund with the unit price of $0.25, you will get 4000 units. Assume service charges are paid separately.

PV = UP x NU
where,
UP = Unit Price
NU = Number of Units

$1000 = $0.25 x 4000

Let us expand the formula to separate the n.
We assume it is for 3 years to simplify the calculation. In actual practice, the n can be any number of years.


FV= PV(1+i)^n

FV= PV(1+i1)(1+i2)(1+i3)
where,
i1 = rate of return for year 1
i2 = rate of return for year 2
i3 = rate of return for year 3

Let us expand the FV and PV, indicating:
PV1 as the Begin Value in Year 1
FV3 as the End Value in Year 3

So, the expanded formula is:
FV3= PV1(1+i1)(1+i2)(1+i3)

Now, expand PV1 and FV3 in terms of Unit Price (UP) and Number of Units (NU)
PV1 = UP1 x NU1
FV3 = UP3 x NU3

The expanded formula is:
FV3= PV1(1+i1)(1+i2)(1+i3)
(UP3 x NU3) = (UP1x NU1)(1+i1)(1+i2)(1+i3)

This formula above can only be used if the Number of Units Remains Constant.

What if the number of units increased?

Let us combine another formula from Second perspective.
Total Return is the calculated by the compounded return over the different years.

So the Total Return for 3 years can be shown as formula below:

(1+TR3) = (1+i1)(1+i2)(1+i3)

The formula, 
FV3= PV1(1+i1)(1+i2)(1+i3) becomes
FV3= PV1(1+TR3)   


Let us combine another formula from Third perspective.

(1 + Total Return) = (1 + Number of Units Growth) x (1 + Unit Price Growth)

(1+TR3) = (1+NUG3)(1+UPG3)

TR3 = Total Return for 3 years
NUG3 = Number of Units Growth for 3 years
UPG3 = Unit Price Growth for 3 years

The formula, 
FV= PV(1+i)^n

FV= PV(1+i1)(1+i2)(1+i3)

FV3= PV1(1+i1)(1+i2)(1+i3)
FV3= PV1(1+TR3)  

FV3= PV1(1+NUG3)(1+UPG3)
(UP3 x NU3) = (UP1x NU1)(1+NUG3)(1+UPG3) 

In General Terms, for n years, the formula is
(UPn x NUn) = (UP1x NU1)(1+NUGn)(1+UPGn)

This is the new derived formula to calculate the end investment value from the growth of unit prices and growth of number of units.

Try this formula out and check the answer.

Using the above formula, the original investment PV of $1000 with 4000 units at $0.25 each has grown into end value FV.

Let's say the unit price had increased to $0.30 and number of units became 5000. The investment value has now become $1500.

So,
Number of Units Growth = (5000 - 4000)/4000 = 0.25
Units Price Growth =  ($0.30 - $0.25)/$0.25 = 0.20

FV3 = (UP1x NU1)(1+NUG3)(1+UPG3) 
FV3 = ($0.25 x 4000)(1+0.25)(1+0.20)
FV3 = ($1000)(1.25)(1.20)
FV3 = $1500

FV3 = UP3 x NU3
FV3 = $0.30 x 5000
FV3 = $1500


More details from these links:

251) How Total, Annual & Annualized Returns are Related

https://highlevelrules.blogspot.com/2020/05/251-how-total-annual-annualized-returns.html

179) Unit Price and Number of Units Growth Rates Effect on Investment Values.
https://highlevelrules.blogspot.com/2018/06/unit-price-and-number-of-units-effect.html

208) Weak Blame Strong Praise

208) The Weak Blames, The Strong Praises

What do you normally do? Blame more or Praise more?

Why is that people like to blame more?
They blame others because they want to show that others are wrong, and they are right.

It is human nature wanting to be correct or right all the time. Our society demands us to always to do the right things or being right.

The successful are being celebrated, looked up to, praised and honoured.
The failures are being looked down, neglected and even scolded.

It is the Maslow's hierarchy of needs, esteem needs is one of the psychological needs.

Images courtesy from
https://www.simplypsychology.org/maslow.html

One of the easiest way is for the psychologically weak person to blame others and feel being right to fulfill his/her own self-esteem. Being right while others are wrong.

The Psychologically Strong person has already enough Self-esteem. They have no need to blame others. When another person make a mistake, the strong normally will still praise that person for trying out. Maybe even give some encouragement and tips to do better.

The Strong always see the positive while the Weak always see the negatives.
They are Strong because they see the positives.
They are Weak because they see the negatives.

So, set your mind on what you want. To be Strong or Weak?
See the positives in yourself and others. Praise others for the effort they put in,

Everyone starts from different starting point levels. To start doing something is always better than watching for something to happen.

207) Perceived Value Creation

207) Perceived Value Creation

It's Not How Hard You Work. It's How Much Perceived Value You Created For Others.

You will be rewarded or paid by the Value you created for others.
How much perceived value you provided to others? It is not only any value, but perceived value by others.

Something can be valuable to you, but if nobody see any value in it, then nobody wants it.
One good example is your health. If you value your health, you are willing to pay any amount to make yourself better. But, to other strangers, your health is not of their concern. They don't see any value from you getting better. Only your real friends and family will be concerned about your health.

Many people are being told to WORK HARD.
Some people are being told to WORK SMART.

In fact, you should do both. Work Hard & Work Smart.

However, even if you work hard & smart, it is NEVER on the amount of effort your put in.
It is very important that your work add value to other people's life.

If people are having a heart sickness, a heart surgeon is very valuable. The surgeon can operate on that person and extend that person's life. A surgeon will be paid very well for his effort

Comparing to a normal clinic doctor, he can treat patients with flu. However, curing the flu is not perceived as valuable as curing a heart sickness.
 
Let's use an example of a Financial Consultant.

Many consultants can help others to choose an investment fund.
Let's compare the knowledge to select a fund versus the knowledge to construct an investment portfolio for high net worth clients.

Definitely, knowledge on portfolio construction is perceived to have higher value. Not many consultants are able to construct a good investment portfolio. Even fewer consultants have the knowledge to construct a good investment portfolio for high net worth people. A Financial Consultant that has the knowledge and experience on investments for high net worth clients will be paid much higher.

Be good in whatever career you do. In fact, be VERY GOOD in whatever you do.
More importantly to be VERY GOOD in doing things that add value to others.

HIGHER VALUE, HIGHER REWARD.

Similar articles:
http://highlevelrules.blogspot.com/2017/07/get-rewarded-for-value-added.html

206) Price Top & Bottom Cycle

206) Price Top & Bottom Cycle

What is the rationale for the investment price top and bottom?

Here's one simple explanation for you to ponder.

When investors are pessimistic about the investment, they start to sell. Not many wants to keep the investment anymore. Now Supply is higher than Demand. 

When they sell, the investment price drops. More and more investors start to sell. There will be a time when all those who wanted to sell, had already sold. When all the sellers had sold, there are no more sellers. Those left behind are holders who are willing to keep the investments for a long term.

This is when the price is at the bottom. The price could no longer go lower. Good and experienced investors will note that the price is cheap and it is value for money. They will become buyers and start to buy. As there are no more sellers, the price will start to go higher to entice some holders to sell.

Now Demand is higher than Supply.

When the price starts to go higher, more early buyers start buy, the price will start to go even higher. More and more buyers start to buy, pushing the price even higher. The earlier buyers became sellers and start to sell and take profit. There will be a time when all the buyers had already bought and no more new buyers. 

When the late buyers could not sell anymore, the price stops going higher. This is when the price is at the top. Some buyers will start to sell to get back their money. As there are no more buyers, the price starts to go lower. More and more investors start to sell and became sellers.

Now Supply is higher than Demand again and the cycle repeats.

However, note that for a good investment, the price will tend to trend upwards. The next top high will get higher. The next bottom low will also get higher. In other words,


Higher High, Higher Low.

It is very important that you invest into a good investment and keep invested for a long term
Be an Investor who invests for a long time. 
A Trader do trading and holds the investment only for a short time.

205) Add More After Loss

205) Why You Need to Add More Investment After Losses?

This is an interesting question that affect most investors in their investment journey.

Let us assume you had invested earlier and your investment had made 20% loss.
What should you do? Do you invest more or cut loss by selling whatever is left?

First of all, understand what you are investing in. Is it still a good investment or no more hope?
If the fundamentals are still good, then it is still worthwhile to continue with the investment.
If the fundamentals have turned bad and no longer worthwhile to continue, then it is better to cut loss.

Now, let us assume that the fundamentals are still good. It is just that the price had dropped due to certain market conditions.

Let us do the calculations to make a better decision.

Example:  
Ali is 40 years old and plans to retire at 60 years old.

Initial Investment = $1,000.
Initial Unit Price = $0.50
Units Available = 2000.units

1 year later, the investment drops 20%.
Investment loss = 20%

New Unit Price = $0.50 x (1-20%) = $0.40


Scenario 1: Additional Investment
Additional investment = $1000
Unit Price = $0.40
New Additional units = 2500 units
Total units = 2000 + 2500 = 4500 units

Total investment = $1000 + $1000 = $2000.
Once the market recovers, the unit price will go up again.
If unit price become $0.45, the total Value = 4500 units x $0.45 = $2025. Profit = $25.
If unit price become $0.50, the total Value = 4500 units x $0.50 = $2250. Profit = $250.

Ali had made some profits as the unit price goes higher.

Scenario 2: Do nothing
Ali did not do additional investment. His total investment is still $1000 with 2000 units.
If unit price become $0.45, the total Value = 2000 units x $0.45 = $900. Loss = $100.
If unit price become $0.50, the total Value = 2000 units x $0.50 = $2000. Profit = $0.

Let us assume the unit price returns back to $0.50 after another 1 year.
Ali get back his original investment after 2 years.
There is no Profit nor Loss, his total investment still remains at $1000 after 2 years.

Ali had planned to accumulate wealth for his comfortable retirement. Since he had been fearful about the investment volatility, he did not add more investment. He still had the same $1000 after 2 years.

Ali is now 42 years old, 18 years to retirement at 60.
His time to retirement had reduced by 2 years. 
He had to save or invest more now to reach his retirement goal.

Do continuously invest into good investments and always look at the long term. Do not be distracted and be fearful of the short term investment volatility.

Consult your financial consultant on how to plan for your future financial goals.

204) Returns to Cover Lossses

204) How Much Future Returns Required to Recover Past Losses?

You may be wondering how much positive future returns to breakeven your past losses.

Basically, the more loss you had, the bigger returns you have to get.

Using the formula for Total Return, you can calculate the numbers.
Let's say you invested into Funds and made a lost in 2016. How much you need to get positive returns in 2017 for a breakeven?

For breakeven, the total return is ZERO %.

Fund A:
Total Return = 0%
Annual Return 2016: -5%
Annual Return 2017: X?

(1+Total Return A) = (1+AR 2016) x (1+AR 2017)
(1+ 0%) = (1-5%) (1+X)
(    1 ) = (0.95) (1+X)
(1+X) = 1/0.95
(1+X) = 1.0526
X        = 0.0526 = 5.26%

Not Much Difference, right? 

Now, let us calculate if the lost is -20%.

Fund B:
Total Return = 0%
Annual Return 2016: -20%
Annual Return 2017: X?

(1+Total Return B) = (1+AR 2016) x (1+AR 2017)
(1+ 0%) = (1-20%) (1+X)
(    1 ) = (0.80) (1+X)
(1+X) = 1/0.80
(1+X) = 1.2500
X        = 0.2500 = 25.00%

Wow, you need 25% return just to recover the 20% loss.

Now, let us calculate if the lost is -50%.

Fund C:
Total Return = 0%
Annual Return 2016: -50%
Annual Return 2017: X?

(1+Total Return C) = (1+AR 2016) x (1+AR 2017)
(1+ 0%) = (1-50%) (1+X)
(    1 ) = (0.50) (1+X)
(1+X) = 1/0.50
(1+X) = 2.00
X        = 1.00 = 100.0%

Wow, you need 100% return just to recover the 50% loss. 
That is DOUBLE your investment amount for next year.

Now, let us calculate if the lost is -80%.

Fund D:
Total Return = 0%
Annual Return 2016: -80%
Annual Return 2017: X?

(1+Total Return D) = (1+AR 2016) x (1+AR 2017)
(1+ 0%) = (1-80%) (1+X)
(    1 ) = (0.20) (1+X)
(1+X) = 1/0.20
(1+X) = 5.00
X        = 4.00 = 400.0%

Wow, Wow, WOW! You need 400% return just to recover the 80% loss. 
That is 4 times of your remaining capital just to get back your original capital.

Now, let us calculate if the lost is -95%.

Fund E:
Total Return = 0%
Annual Return 2016: -95%
Annual Return 2017: X?

(1+Total Return E) = (1+AR 2016) x (1+AR 2017)
(1+ 0%) = (1-95%) (1+X)
(    1 ) = (0.05) (1+X)
(1+X) = 1/0.05
(1+X) = 20.00
X        = 19.00 = 1900.0%

Wow, Wow, WOW! You need 1900% return just to recover the 95% loss. 
That is 19 times of your remaining capital to get back your original capital.

How long you think you need to invest just to get 19 times of your remaining capital?
Definitely it is going to be a very long time.

By then, most people will never want to invest anymore if they had lost 95% of their money.

Here's the summary for your reference.
Loss 5%, need 5.26% to breakeven.
Loss 20%, need 25% to breakeven.
Loss 50%, need 100% to breakeven.
Loss 80%, need 400% to breakeven.
Loss 95%, need 1900% to breakeven.

Be aware of your investment RISKS and how much you can afford to lose.
Do Diversification and practice Dollar Cost Averaging method on your investments.

Consult your financial consultant on how to diversify your investments.

203) Volatile Funds Effect on Return

203) Why Volatile Funds Has More Effect On Total Return

Assume below are the Annual Returns (AR) by calendar year for 3 funds.

Fund A:
2015: +10%
2016: -15%
2017: +5%

Fund B:
2015: +5%
2016: -10%
2017: +5%

Fund C:
2015: +10%
2016: -25%
2017: +15%


Which fund will give you the BEST returns after 3 years?

What is the Total Return for Fund A?

(1+Total Return A) = (1+AR 2015) x (1+AR 2016) x (1+AR 2017)
(1+Total Return A) = (1+10%) (1-15%) (1+5%)
(1+Total Return A) =  (1.10) (0.85) (1.05)
(1+Total Return A) =  0.9818
Total Return A = 0.98175 - 1
Total Return A  = -0.01825 = -1.825%

What is the Total Return for Fund B?

(1+Total Return B) = (1+AR 2015) x (1+AR 2016) x (1+AR 2017)
(1+Total Return B) = (1+5%) (1-10%) (1+5%)
(1+Total Return B) =  (1.05) (0.90) (1.05)
(1+Total Return B) =  0.99225
Total Return B = 0.99225 - 1
Total Return B  = -0.00775 = -0.775%

What is the Total Return for Fund C?

(1+Total Return C) = (1+AR 2015) x (1+AR 2016) x (1+AR 2017)
(1+Total Return C) = (1+10%) (1-25%) (1+15%)
(1+Total Return C) =  (1.10) (0.75) (1.15)
(1+Total Return C) =  0.94875
Total Return C = 0.94875 - 1
Total Return C  = -0.05125 = -5.125%

Looks like all the 3 funds made losses after 3 years.
So, the BEST of the worse fund is Fund B which had the least loss.


In terms of volatility, Fund C is most volatile. Fund B is least Volatile. However, the 3 funds are volatile if compared to Bond or Money Market funds. 

What is the moral of the Story? 
Beware of the Volatile funds that gives Big negative returns.
One big negative returns can wipe out all your past profits. You will need a longer time to break even and make some profits.

One idea to reduce the risk of volatile returns is to diversify your investment portfolio. 
Do invest into different asset classes and into different regions. 

Do consult your financial consultant on how to diversify your investments.

 

202) Calculate Total Return From Annual Returns

202) How to Calculate Total Return From Annual Returns?

Most investors want to know how to calculate the total returns of their investments. There are many types of returns and the terms are confusing those who are not familiar.

Annual Returns for the fund based on calendar year. Basically, it means the return from 1 Jan to 31 Dec of the year.

The Total Return basically means the returns from the first day to the last day of investment.

Let's take a look at an example for a better understanding.

Assume below are the Annual Returns (AR) by calendar year for a fund.

2015: +10%
2016: -5%
2017: +8%

What is the total return from 2015 to 2017?

(1+Total Return) = (1+AR 2015) x (1+AR 2016) x (1+AR 2017)
(1+Total Return) = (1+10%) (1-5%) (1+8%)
(1+Total Return) =  (1.10) (0.95) (1.08)
(1+Total Return) =  1.1286
Total Return  = 1.1286 - 1
Total Return  = 0.1286 = 12.86%

Total Return for 2015 to 2017 = 12.86%


Let's use money amount to show the calculation.

Let's assume you invested $1000 on 1 Jan 2015. 
What is your investment value at 31 Dec 2017? Assume no charges and no payouts.

Use the FV=PV(1+i)^n formula.

On 31 Dec 2015, the value was:
FV = $1000 (1+10%)^1
FV = $1000 (1.10)
FV = $1100

On 31 Dec 2016, the value was:
FV = $1100 (1-5%)^1
FV = $1100 (0.95)
FV = $1045

On 31 Dec 2017, the value was:
FV = $1045 (1+8%)^1
FV = $1045 (1.08)
FV = $1128.60

Total Return = (End Value - Begin Value)/Begin Value
Total Return = ($1128.60 - $1000)/$1000
Total Return = 12.86%

Now, what is the Annualized Return?

Use the FV=PV(1+i)^n formula.
$1128.60 = $1000 (1+i)^3
1.1286 = (1+i)^3
(1+i)^3 = 1.1286
(1+i) = Root 3 of (1.1286)
(1+i) = 1.04115
i = 0.04115
i = 4.115%

The Annualized Return is 4.115%. 
Annualized Return is based on compounded year after year.


Annualized Return is DIFFERENT from Average Total Return. 

Average Total Return = Total Return / No. of Years

In this example, the Average Total Return = 12.86% / 3 = 4.287%.

Hope this example helps to explain the differences between:
a) Annual Return
b) Total Return
c) Annualized Return
d) Average Total Return

201) Start Your Retirement Fund Early

201) Why You Should Start Your Retirement Fund Early?

Many people know about the need to start planning for retirement. However, not may have the discipline and means to start as soon as possible.

There are so many things to buy to make our lives more comfortable. Buy a car, apartment, holidays, nice clothes, handphones, etc. Then get married and have children. Once the children starts to grow older, we need to send them for kindergarden, primary school, secondary school, tertiary education.

The job and income also start to grow from a young executive, assistant manager, manager, senior manager, Regional Manager, General Manager, etc.

As the time goes by, our income goes higher. However, so does our expenses. Normally, we will match our expenses to the income we received. More income means can have more expenses.

So, how early should you start to create your retirement fund?

Let's look into this case study to see the effect of starting your retirement fund early. Mr Ali and Mr Baba are 2 good friends. After talking to a Financial Consultant, they agreed to start their retirement funds immediately.

Mr Ali is 30 years old, while Mr Baba is 40 years old.
Both starts to invest at the same time. Both agreed to invest $10,000 per year for the next 20 years.
Let's assume both investors got 8% return per year.

After 20 years, Mr Ali is 50 years old and is still working.
However, Mr Baba is already 60 years old and just retired.

Using the Time Value of Money (TVM) calculator, both will have $494,229.21 after 20 years.

As Mr Ali is only 50 years old, he still has another 10 years to let his investment ($494,229.21) grow without adding any more money. When he reached his retirement at 60 years old, his investment fund will have grown to be $1,067,003.80.

 

Wow, that is more than Double his money. 


Therefore, it is very important for you to start savings and investing early.
For $10,000 per year, it is only $833.33 per month.

You do not need to have a large amount to start investing.  Just a few hundred dollars as a start.
It is more important to be disciplined and start to invest early.

Do remember to invest for the long term and not to worry about the volatile market in the short term.

Time in the market, and not Timing the Market.

Do practice the recommended method where you SAVE first, SPEND the rest.

It is very important for you to Start as early as you can.


Do consult your Financial Consultant and discuss about your Retirement funds.

200) Invest Your Retirement Fund

200) Why Retirees Should Still Invest their Retirement Fund?

Retirees want to preserve their hard earned money for their retirement use.

Most retirees know that their savings may not be enough to last them through their golden years.
Many prefer to keep their money into their banks savings account or their official retirement funds, for example, in their 3PF accounts.
The money is considered in a very safe place.

So, why should a retiree invests outside the safety of their official retirement savings funds?

Small Percentage
The official retirements savings plan are designed for retirement accumulation. You may had taken out to diversify to other investments earlier. However, the amount invested out are a small percentage only. Most of your retirement money are placed into safe investments .You may want to take out a small percentage to diversify.

Risk vs Return
Savings account are safe as it normally preserves your money. Investments are designed to give higher return than savings. Putting all your money into a savings account or savings fund, reduces the money returns potential. You may want to consider to take some risks to get higher returns. As the common saying,
Low Risk, Low Return; High Risk, High Return.

Long Term
Most investments need longer time to get the benefits. To get high returns within short term, you may need to do trading and speculation. Long term good investment normally give good positive returns. Know the difference between Investor and Trader.

Click the link below for more info:
http://highlevelrules.blogspot.com/2018/07/trader-vs-investor.html

Emergency Withdrawal
Understand where you put your money. Is it convenient to get back the money during emergency need? Some funds are not convenient to withdraw as you have to be personally present at their office. What if you cannot go the to the office personally? What if you are bed ridden or too sick to travel? Do you have people to help you to withdraw the money?

Diversify
As the old saying, Not to put all your eggs into one basket.
Do diversify your savings and investment. Different market conditions will affect different investments at different times. It is important to diversify into different asset classes, different regions, different currencies and different investment horizons.  

Savings and Investments.  
Plan your retirement budget. How much you need to use for the coming years. For short term requirement, you can place into short term savings. For mid term requirement, you can placed into low to medium risk investments. For longer term use, you can place into higher risk investments to get higher returns.

Click the link below for more info:
http://highlevelrules.blogspot.com/2017/09/need-based-portfolio-model.html

Do get more information and some advise on your investments. Even if you know something, it will still benefit you to have other people to share their knowledge. Even more important for you to get help, if you do not have much knowledge and experience in retirement planning.

Do contact and discuss with your Financial Consultant on the options available for you.

199) Why People Join or Leave

People join because of good company,
People leave because of bad leader.

Application of the High Level Rule #1 and Rule #2.

As a leader, do ensure your downlines get involved in your team’s activities. Not only get involved, but have fun at the same time.

They join you because they see something good, promising and fun in your team. However, when they are in the team, they have to get involved and have fun. 

To keep people get involved, they must have fun. Without fun, people only get involved once or twice, but then will not get involved again. 

When people don’t get involved, they will feel that they are no longer needed and your team can do without them. Slowly, but surely they will “disappear” from your team.

As a leader, be aware on the 2 rules to keep your team growing and grow stronger.

198) Handling Objections During Presentation

Listed below are very common objections and concerns that people normally give. Most of  the time, theses objections are a simple learned reaction to anybody trying to sell something.

I want to discuss with my spouse.

Mr Prospect, it is good that you want to discuss with your spouse. In our discussion, do you find the ideas and knowledge useful? If you find it useful, then the same ideas will be useful to your spouse as well. You can start the plan first. We can meet your spouse later and discuss with her.

More details in the link below:

http://highlevelrules.blogspot.my/2017/10/utc-sales-ideas-2-prospect-want-to.html

You are very new.

Mr Prospect, I am a Unit Trust Consultant. My colleagues and I share ideas on how you can make your money work harder for you by investing. The Company has a team of investment professionals to manage your invested money. They study and select good companies to buy at a good price. 

I may be new, but the Company has many years of experience. The Company had won many awards on their funds they managed. They are well recognized in the industry.

How Can Unit Trust make money?

Money invested in unit trust funds are pooled together from similar investors like you. The equity fund managers invest into stocks of good companies. Buying stocks means buying a small part of a big company.When the companies have good business, they make profits. Profits returned to investors by giving dividends. 

Meanwhile a good company's share will increase in price. Buying low and selling higher will also give Capital Gain.

Accumulation of capital gain and dividends will make the equity funds increased in value.

Can you give discounts?

The initial service charge is charged by the Company. I will discuss with you about your future plans. I help you to plan for your financial goals and recommend suitable funds for investment. As a UTC, I am doing the service for FREE.

The Service Charge is high

The Company only charge one time during the initial investment. This is to cover the marketing and processing fees. There are no charges after that. The invested funds will pay for the yearly Management fees, trustee fees, and other operational fees.

Please refer to this article for more details

http://highlevelrules.blogspot.my/2017/09/is-unit-trust-initial-service-charge.html

Common Objections:

a) Not Interested

b) No Money

c) No Need

d) Not Ready

Use the 5 Questions method to handle the objections:

1) What's Up?
2) Why Not?

3) How To?

4) What Else?

5) Which One?

Please refer to this article for more details on the 5PSQ.
http://highlevelrules.blogspot.com/2017/07/4-high-level-coaching-questions.html

First question is always to find out the issue.
Mr Prospect, may I know what is holding your back to start this plan today?

From the answer only then you can start to handle the objection.

Example for Not Interested.

Mr Prospect, may I know why you are not interested?

What else to make you not interested? (Repeat as many times as possible, changing words)

From the ideas you shared, which one is the most important reason you not interested?

Mr Prospect, thank you for sharing your ideas.

Actually, nobody will be really interested if they do not have much information about something. That's the reason I am here to share more information with you. We can share ideas and ask more questions to clarify our understanding.

Can you share how to make you interested?

What else to make you interested? (Repeat as many times as possible, changing words)

From the ideas you shared, which one is the most important to make you interested?

Example of alternative words to “What Else” question?

Anymore?

Other ideas?

More reasons?

Example for No Money.

May I know why you are having no money issue?

What else that cause you to have not enough money? (Repeat as many times as possible, changing words and sentences)

From the reasons you shared, which one is the most important reason to cause you not enough money?

Mr Prospect, thank you for being honest and sharing with me.

So, Mr Prospect, as you know that was a problem, would you like to prevent the not enough money problem from happening again? One idea you can try is to save a small amount first before you start spending. It is better to SAVE FIRST, SPEND THE REST.
Another idea is for you to look into your expenses. Have a record of your expenses to know where your money had gone to.
Another interesting idea is to earn more. Would you like to know how to help people and also save money at the same time?


Example for No Need.

May I know why you think you have no need right now?

What other reasons that makes you say you have no need? (Repeat as many times as possible, changing words and sentences)

From the reasons you shared, I am just curious which one is the most important reason for the no need it now?

Mr Prospect, it is refreshing to hear your ideas.Thank you for your sharing and honesty.
So, Mr Prospect, if your opinion what possible circumstances that people may need it now?
As all of us will want to have a more comfortable life, we need to better prepare for it. If we prepare well, the possibility is better. Savings for our future is something we need to do although it seems so far away.


Example for Not Ready.

Mr Prospect, everybody is busy nowadays. There are so many things happening in our lives. It is never easy to plan for our future.
May I know why you are NOT ready right now?

What other reasons that makes you say you are not ready now? (Repeat as many times as possible, changing words and sentences)

From the reasons you shared, can you say which one is the most important reason that makes you say you are not ready?

Mr Prospect, thank you for sharing your reasons.
So, Mr Prospect, if your opinion when is the best time you will be ready? Nobody is really be fully ready for most things in life. The good thing is that when we start moving, we will go somewhere. That's why I am here to help and guide you. It will definitely be easier when you have someone be your guide. How about we start now and see how far we can go.