Top 10 Money Mistakes
Here’s a list of 10 major mistakes in managing your money. It is compiled by our Church Pastor. And even if our Pastor is not an expert in finance & investment, I must say it’s a pretty good guide:
1. Too Much Debt – no elaboration needed
2. Get Rich Quick – no elaboration needed
3. Don’t Save – no elaboration needed
4. Being Lazy – no elaboration needed
5. Co-sign or guarantee a Loan – no elaboration needed
6. Being Stingy (or Greedy)
There’s a saying some people live by:
Get all you can.. Can all you get.. Sit on the can!
If you are one who always let someone else foot the bill, if you are one who’s always counting the cost, then sooner or later you will feel very empty indeed.
7. No Budget – no elaboration needed
8. Buy-Buy-Buy! – Sale Sale Sale! The more you buy, the more you save…. sound familiar?
9. Choosing Wrong Career – no elaboration needed
10. Not getting God’s direction – no elaboration needed
Our pastor was speaking from the book of Ecclesiastes, which is widely believed to be written by the richest man who ever lived.
Nope, that man is not Bill Gates or Warren Buffet but a guy called King Solomon. When God appeared to Solomon in a dream, Solomon could have asked for anything he wanted including all the money in the world.. but he asked for wisdom. God was pleased with his request, and Solomon got a big bonus from God:
And I will also give you wealth, riches and honour, such as no king who was before you ever had and none after you will have.
2 Chronicles 1:12 (NIV version)
In Ecclesiastes 11, Solomon in all his wisom and riches said:
He who observes the wind will not sow,
And he who regards the clouds will not reap.
(NKJV version)
As investors, it is important that we stay invested and grow our wealth over time. There will be ups and downs, I’m cultivating myself to invest regularly in this up-cycle but my choice of stocks is increasingly defensive. The large caps are trading well over 15x PE ratio, while earnings growth is generally sluggish. Just as we had extreme Fear this time last year, we will move towards extreme Greed.
Selectively picking smaller caps with good dividends and REITs is what I’m doing for now.
I would normally agree with you but comeon, we are talking about...
December 1st, 2009 at 1:44 am
well said…
life is all about BALANCE.
what stocks in particular are u targetting, or already holding?
i am very new in klse, trading account opened 2 months back.
learning from u here wld be very much appreciated.
December 2nd, 2009 at 12:39 am
Hi Dominic, my main holdings are AMMB, CIMB and Petronas Dagangan. Other ones are APM Automotive and NCB Holdings (which are 2 very cashed up companies that pay decent dividends) plus some tiny stakes in a few other small-mid caps such as Kris Assets, Manulife, Jobstreet and Zhulian. I also have tiny stakes in some REITs for the yield. Currently I’m looking to increase my exposure in APM, BSD REIT and Zhulian but at prices slightly below the current levels.
December 2nd, 2009 at 11:56 am
what do u mean by reit? is that property? sorry i am new to this word.
in stocks, what type of investor are u, do u buy low p/e with good profit counters? as i take dividend as a bonus, i prefer to enter when the volumn is low. what say u?
and what do u recommend to the general public in picking a counter?
buy to hold and invest, and once in awhile when there is a dip, pick up and trade T-4?
thanks.
December 2nd, 2009 at 11:05 pm
A REIT is a Real Estate Investment Trust, usually a passive vehicle whose activity is to hold properties for rental income. Most REITs on Bursa Malaysia are currently yielding 8% plus on average. We have compiled a list of them here: http://www.horizon.my/investor/reits.php
Sorry but I’m not a good trader at all, so can’t really give you any trading tips. I’m a long term investor, mainly value driven. PE ratio is one thing to consider but more importantly to me is financial strength and cash flow. I don’t focus too much on volume but I usually go for companies that have strong net cash position or low gearing (less than 30% of Shareholder Funds preferably). Also important is a track record of consistent earnings, increasing net cash position and importantly, good consistent dividends.
Dividends are pretty important to me, a company may be sound financially with a solid track record, but could be stingy on paying dividends. A classic example is Oriental Holdings Bhd, it’s got so much surplus cash but does not reward shareholders with dividends, one day it may blow all its cash on some dumb acquisition… what Peter Lynch calls “diwoesification”.
December 25th, 2009 at 4:49 pm
Hi,
Can you explain why Hupseng is splitting its share into 2 and halving the price? I do not hear of any rights or dividend issues. What is the rationale behing this action ?
Regarding REITS. Should I start to build up my stocks on Hektar? I was delighted with the recent dividend that was paid out.
Cheah
December 26th, 2009 at 11:33 am
Hi Cheah, I don’t really follow Hap Seng so not sure about it. Anyway share split & bonus issues do not add value to shareholders but sometimes the share price runs up because of the silly factor. Usually share splits & bonus happens when share price has gone up so much that it is unaffordable for many people to buy even one lot.
Hektar is one of the highest yielding REIT currently but if you only have 1 counter in your portfolio, it’s a good idea to diversify a bit, even into slighly lower yielding ones. For a small to medium size portfolio, a portfolio of 5-10 well researched counters would be a good size. Hektar’s gearing is on the higher end and it helps increase their yield because debt funding cost is lower than the property yield. High gearing creates risk for the investor.
May 13th, 2011 at 9:11 am
Can you elaborate further for:
6. Being stingy – Why would your spending habit be an issue in investing money?
9. Choosing Wrong Career – How do you define “wrong career”?