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Thursday, April 21, 2011

Can you afford a property for investment?

This is for INVESTMENT. I will work on an example and you see whether you can afford that or not.

RM300,000 double storey linked house (outside KL or Klang Valley)
Rental RM800 per month
Salary RM4000, spouse RM3600
Bank loan RM270,000 for 30 years
Installment per month RM1300
Cash RM30,000 to pay down-payment.
Then withdraw EPF RM30,000 and now having cash RM30,000

As we know, many people don’t have money left at the end of the month.
Rental income is just $800, how to pay the installment of RM1300?

Rental is RM800 per month, and assuming on average of few years, you can only get 10 months of rental income per year due to change of tenant, expenses, etc.
So your rental income per year is RM8,000.
Your installment per year is RM15600.
You short of RM7,600.

Where to get the RM7600?
You and your wife commit one month of bonus each year, RM4000 + RM3600 = RM7600.
Some companies or some banks normally pay out minimum 2 months of bonus.
One month you commit to property and the other month to minus tax and EPF and other things that you need to use or pay.

One Big question.  What if there is no tenant?
Will you buy a property that is no tenant? You need to survey before you buy. We just assume market is bad and sometimes no tenant.

In the above, you have already buffered that you only have 10 months rental income in a year. With RM30,000 cash in hand, you can afford to suffer another 23 months without rental. 
If you always have tenant and only occasional no tenant, the RM30,000 can last for more than 10 years. After 10 years, you decide whether to sell or not.

With RM4000 per month salary, you will also be adding RM276 per month into your EPF Account Two that later can also be withdrawn to pay the installment. With bonus, after 5 years, your EPF account two will have more than RM20000 and you can instruct EPF to pay your installemt. That will also last you for 1 year plus.

The above example is on buying a high price house with low rental income.
You can look for condo that is cheaper and with high rental income, and therefore the financial situation will be better. But normally condo appreciation is less than house.

Whether we can afford the property for INVESTMENT depends on our income or salary, savings, rental income, property price, etc.

Comparison of housing loan interest rate



Monday, April 4, 2011

How I kill my friends in Bursa Malaysia Stock Market

If you hate someone and want to kill him financially, you can introduce him to read my blog. This is because if he follows the shares that I buy, he will suffer great loss and may die financially.

I really don’t understand why. I myself am making money from the stock market. But those who follow what I buy, they will lose money. I give you few examples. I want to clarify that I did not recommend or give any advice. People want to follow what I buy, I cannot stop them.

Friend A.
I bought stock A in 2007 and my Friend A followed.
Within few days the stock went up 10%, I realized the stock is not as good as what the newspaper said, I decided to sell and take profit. I gave a call to Friend A, but before I could say anything he was so happy and asked me “STILL CAN BUY?”  I was speechless and didn’t know what to say. Now he is still holding, and the share price has dropped more than 50% from his purchase price.

Friend B
I bought stock B warrant (main board counters) in year 1996 and my Friend B followed. His parent also followed but bought Stock B (not warrant).
I was new to stock market. In year 1996, most second board counters were having bull run and went up to more than RM10, some RM20, RM30, some even more than RM100.
Three of us were seeing other people make money but out stocks price came down.
My friend complained that if he and his parent did not follow me, they would have bought second board counters and make huge money.
I and my friend managed to sell and breakeven. His parent was still having losses. I don’t know what happened to his parent’s stock especially year 1997 was in financial crisis.

Friend C
I bought Stock C in 2010 and my friend C followed. But he played contra and made losses. Friend C doesn’t invest in stock market and I don’t understand why he wanted to follow and furthermore played contra. I think it was an idea from his spouse.
I was pity on friend C, and I pay some of his contra loss. I managed to sell Stock C at about 10% gain within 6 months. Actually two other friends also bought it at the same time, and sold after few weeks with a loss.

More examples can be found at the bottom of this article.

One blog reader Ah Leng said by using PEGGY Method she missed some of the best stocks. I am using PEGGY Method and making money. And now Ah Leng followed and missed best stocks. I don’t know what Ah Leng bought or what she didn’t buy.

I also missed many good stocks. KBunai shares was up few hundred percent in 2010 and so as HWGB shares up don’t know how many percent. Keuro share also up. And many more.

As for PEGGY Method, it is a very simple method but cannot predict the best stocks. What it can do is select good stocks and avoid bad stocks, and can give an above average returns in long term. But it can never give you best return, and only above average good returns.

I really don’t understand why those who follow what I buy will lose money. Now even worse, some follow PEGGY Method and missed out best stocks.

I think the main reason of people losing money from following me is because they didn’t follow till the end. They lose faith after the first step.

1)When I buy, my friends hesitated. When after my share price up, then only they get excited and buy it. Their cost is already higher than my cost. Sometimes when they buy, I was already selling.

2)When my stocks price went lower than my cost, they said I am not good. So, they didn’t buy. If they buy they would have bought at better price than mine.

3)I also make mistake and bought wrong stock. But normally I make 80% good decision and my mistake is 20% (trying to reduce to 10%). Those who follow me, normally follow my 20% stocks, I don’t know why.

4)For those who have bought, when I cut loss or take profit, they didn’t follow.

5)They didn’t know my FULL trading activities. When do I buy, and when do I sell. Timing is also important.

A reader asked me whether it is ok to share my portfolio. Last time I have no problem sharing my portfolio or transactions. But after seeing my friends one by one suffered losses, I think it is not wise for me to share my stocks or portfolio.

I think only after few years, that I have established and have very good track records, with good % return and print screen to support, then maybe it may be time.

But now, people will lose faith in me if little bit of things went wrong. Because currently if I tell you I make money, who is going to believe. Many will say “THEN NO NEED TO WORK”.
Therefore, now is not time to share stocks.

By the way, if I make money I still need to work. If I have RM30,000 and make 20%, I only make RM6,000 in that year. With RM6,000 a year, no need to work? Still have to work. One more question, who has RM30,000 cash? Not many working class people.

I want to make it clear that I did not recommend or advise people to buy certain stocks. It is only people asked what stock I buy. I cannot stop them from following.

Therefore, if you want to kill a friend financially, you can recomemed them to read my blog.

This article ends here. But If you have more time, you can read on the following more examples on how people lose money by following me.

Please add my link to your blog or bookmark.

Bought Stock D in 2008 and Friend D followed.
Stock D was doing very well before I bought it. But after I bought it, 2008 was having financial crisis. Stock D company got cash flow problem and difficulty to turnaround. Company still make profit but very little and sometime make losses. I cut loss (about 50% loss). My Friend D cut loss more than two years after I cut loss (loss also about 50%). I am not afraid to lose 50%, because my wrong decision maximum loss is 100%, but the right decision the gain is unlimited. I am not sure whether my friend D is going to invest again.

Bought stock E in 2010. When I sell to take profit because the company suddenly got problem, Friend E followed me and bought it when I was selling. Having 40% losses now.

Bought stock F in 2007. Two friends followed. Then 2008 was financial crisis. They still hold on to the losses until today.

Bought stock G in 2010 from recommendation from analyst. Friend H followed. But the stock profit was below analyst’s recommendation. Friend G still holding to the loss, about 20% to 30% I think.

And many more cases.

Please add my link to your blog or bookmark.




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The information contained in this blog is my personal diary and has been prepared solely for myself. Without any previous reading material or discussion, by just reading my blog contents, reader may misunderstand the contents.
All the contents I am talking to myself and most contents are hypothetical or imaginary.
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This blog also is not an advice, recommendation or an invitation to buy or sell or invest in anything, eg shares, futures, derivatives, gold, etc. Consult your investment adviser before making any decisions.
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