Recommandé
Contenu connexe
Tendances
Tendances (20)
En vedette
En vedette (6)
Similaire à Investment 101
Similaire à Investment 101 (20)
Dernier
Dernier (20)
Investment 101
- 1. Basic Investment Knowledge to GetYou Started Your Financial Wellbeing Workshops Keith Tan
- 2. DISCLAIMER This information contained within this presentation has been obtained from sources that author believes to be reliable and accurate but no representation or warranty, expressed or implied, is made as to the fairness, accuracy, completeness or correctness of the information. Neither the author nor any of his associates, nor any director, officer or employee of his company accepts any liability whatsoever for any loss arising directly or indirectly from any use of this presentation. The presentation is being made available to you solely for your information only. It does not have regard to your specific objectives, financial situation and particular needs.This presentation is not intended for distribution to any other person.The information in this presentation may not be reproduced in whole or in part without the prior written consent of the author.
- 3. FEELING OVERWHELMED? Buy high dividend paying stocks only. Don’t bother with the rest. ~ HuatZone Forums guru KeyboardWarrior 9413 strike 2 times last month!This time sure strike again! ~ Uncle Wah Boh Lui My follower made $10,000 in just one trade last week from my call. You can too! Come to my preview course to find out more. ~ Chart Wizard Hindsight Master This fund has consistently beat the benchmark for the past 3 years.You probably won’t go too wrong buying this fund. ~ KampungBank Banker FeetBook is an up and coming tech company. Target price: $8.88. BUY ~ Flip-Flop Securities Research Latest stock tip. TakeMeOver is rumoured to be a takeover target. ~ Colleague Jin Zui Tips Don’t risk losing your hard earned money. This policy is much less risky than stocks and shares. ~ Aunty Lulu Insurance Agent Land is limited in Singapore.You can never go wrong buying property. Grab as many as you can. ~ StreetsOfGold Property Agent
- 4. DOYOU HAVE A PLAN? Random? Opportunistic? Gamble? HOW HAVEYOU BEEN INVESTING?
- 5. Strategy / Risk Management INVESTMENTS CAN BE PURPOSEFUL Plan Execute Investment Objective Time Horizon Financial Goals Specific Instruments Allocation Specific Funds / Securities Target Asset Allocation Feedback Changes in Circumstance Market outlook Risk Appetite
- 6. PLAN • What is your investment objective? • Passive income, retirement fund, children’s education fund, etc. • What is your time horizon? • Short (3-5 yrs), Medium (5-10 yrs), Long (>10 yrs) • Determine your financial goal as specific as possible • e.g. to have a retirement fund of $1.5M by the age of 60 • Determine the inputs required to reach that goal • e.g. to set aside $1000 a month, assuming a return of 5% p.a.
- 7. CASE STUDY
- 8. TERTIARY EDUCATION PLANNING Time horizon 18 years Goal Provide for daughter’s tertiary education (local - 4 yrs) Current fees/allowances: $12,500/yr Goal = 1.06^18 x 4 x $12,500 = $142,700 (assume edu inflation of 6% p.a.) $368.40/mth UseTVM calculator: PV=0, FV=-142,700, N=18x12, Rate=6%,
- 9. WHAT DO PEOPLE COMMONLY INVEST IN? UnitTrusts Funds Exchange Traded Funds Money Market Funds ILP Products Endowments Investment Plans Bonds Commodities Properties CashStocks Underlying
- 10. COMMON RELATIONSHIPS UnitTrusts Funds Exchange Traded Funds Money Market Funds ILP Products Endowments Investment Plans Bonds Commodities Properties CashStocks Underlying
- 11. COMMON RELATIONSHIPS UnitTrusts Funds Exchange Traded Funds Money Market Funds ILP Products Endowments Investment Plans Bonds Commodities Properties CashStocks Underlying
- 12. COMMON RELATIONSHIPS UnitTrusts Funds Exchange Traded Funds Money Market Funds ILP Products Endowments Investment Plans Bonds Commodities Properties CashStocks Underlying
- 13. STOCKS Bonds Commodities Properties CashStocks Underlying • Share in the ownership of a company • Have voting rights • Entitled to share of profits or claim on assets • Profits are often paid out to shareholders as dividends • Dividends are not mandatory (Many companies do not pay dividends)
- 14. STOCKS Bonds Commodities Properties CashStocks Underlying • Two sources: • Primary market: IPO • Secondary market: Stock exchange (e.g. SGX) • To buy and sell in secondary market, go through brokers
- 15. STOCKS Bonds Commodities Properties CashStocks Underlying • Understanding stock prices
- 16. BONDS Bonds Commodities Properties CashStocks Underlying • You ‘lend’ money (principal) to an entity (e.g. company, government) • Entity pays you a fixed interest (usually every 6 mths) • At maturity, entity returns you your principal • Often used a portfolio stabiliser Payout Period Fixed Maturity Period Principal Principal Coupon payments (1/2 yearly)
- 17. COMMODITIES Bonds Commodities Properties CashStocks Underlying • Precious metals (e.g. gold, platinum) • Energy (e.g. Crude oil, coal) • Agriculture (e.g. wheat, corn, rice) • Difficult to invest in physical asset (other than gold) • Can invest through proxies* • Companies that deal with commodities (mining, trading) • Funds (ETFs, unit trusts) • Futures • Generally favoured during periods of perceived high future inflation *Source: http://commoditiestradingsg.blogspot.sg/2011/04/how-to-invest-in-commodities-in.html
- 18. PROPERTIES Bonds Commodities Properties CashStocks Underlying • Types • Residential (HDB, landed, condos) • Retail (shop lots, strata title shops) • Office • Industrial (flatted factories, landed factories)
- 19. PROPERTIES Bonds Commodities Properties CashStocks Underlying • Factors • Freehold / Leasehold • Rental yield • Proximity to public transport, shopping malls, good schools • Catalysts (New developments) • Occupancy rate • Feng shui
- 20. PROPERTIES Bonds Commodities Properties CashStocks Underlying • Calculating yield Net rental yield = Gross rental - Expenses Property price Yield on invested capital = Gross rental - Expenses - Interest Invested Capital
- 21. CASH Bonds Commodities Properties CashStocks Underlying • Bank savings or in fixed deposit • Protected under Singapore Deposit Insurance Corporation (SDIC) at max $50,000 per bank* • Work towards 3 to 6 times of your monthly expenses for emergency needs • Retain savings for short term needs (<3 yrs) in cash *Refer to www.sdic.org.sg for participating banks.
- 22. UNITTRUSTS Bonds Commodities Properties CashStocks Underlying • a.k.a. Mutual Funds • Basket of stocks and/or bonds • Actively managed by a group of fund managers • Every fund has an objective/mandate which the fund managers are required to adhere to • Benchmarked against an index
- 23. UNITTRUSTS Bonds Commodities Properties CashStocks Underlying • Exercise: How to read a fund fact sheet
- 24. ETF Bonds Commodities Properties CashStocks Underlying • a.k.a. index funds • Objective is to replicate a particular known index • Passively managed, which may result in lower expense ratio than unit trusts • Traded in a stock exchange • Price determined by market maker, not supply-demand • Types* • Cash-based • Synthetic • Swap-based *Types based on available ETFs traded on the SGX. Source: http://www.moneysense.gov.sg/understanding-financial-products/investments/types-of-investments/exchange-traded-funds.aspx
- 25. MONEY MARKET FUNDS Bonds Commodities Properties CashStocks Underlying • Low-risk • Invests in cash equivalent assets • Gives slightly higher interest than bank deposits • Not insured under Singapore Deposit Insurance Corporation (SDIC)
- 26. INVESTMENT LINKED POLICIES Bonds Commodities Properties CashStocks Underlying • Hybrid insurance-investment vehicle • Charges for protection benefits are deducted monthly according to age and sum assured • Advantage: Flexibility to reduce premium / sum assured • Disadvantage: Protection charges increases exponentially with age
- 27. ENDOWMENTS Bonds Commodities Properties CashStocks Underlying • Savings plans by insurance companies • Fixed maturity period determined at start of policy • Maturity benefit consists of a guaranteed and non- guaranteed portion • Protection benefits varies from plan to plan • Guaranteed Issuance Offer (no medical underwriting) plans are increasingly popular. Note that their protection benefits are very limited.
- 28. ENDOWMENTS Bonds Commodities Properties CashStocks Underlying • Understanding benefits illustration table
- 29. ENDOWMENTS Bonds Commodities Properties CashStocks Underlying • Many variants, but can be classified into 3 main types • Classical (e.g. 5-pay-10) Accumulation Period
- 30. ENDOWMENTS Bonds Commodities Properties CashStocks Underlying • Many variants, but can be classified into 3 main types • With cashback (e.g. 5-pay-10) Accumulation Period Payout Period
- 31. ENDOWMENTS Bonds Commodities Properties CashStocks Underlying • Many variants, but can be classified into 3 main types • Retirement (e.g. payout at 60, mature at 70) Accumulation Period Payout Period
- 32. INVESTMENT PLANS Bonds Commodities Properties CashStocks Underlying • E.g. Blue chip investment plans • Allows for regular investment of selected stocks using little amount of money. • Advantage: may be lower cost than unit trusts • Disadvantage: may be less diversified than unit trusts
- 33. Risk Level Liquidity Income Suited for Medium to High Medium to High Dividends (if any) Trading, Capital appreciation Low to Medium Low to Medium Coupons Regular fixed income Low to High High NIL Hedge against inflation Low to High Low Rental (if any) Hedge against inflation, rental income Low High Interest Liquidity needs COMPARISON - UNDERLYING Bonds Commodities Properties Cash Stocks
- 34. Risk Level Liquidity Income Suited for Low to Medium High Dividends (if any) Long term capital growth Low to Medium Medium to High Dividends (if any) Trading, Capital appreciation Low High Interest Short term investment COMPARISON - FUNDS Unit Trusts Exchange Traded Money Market Funds
- 35. Risk Level Liquidity Income Suited for Low to Medium Low NIL Long term capital growth, protection at young age Low Low Cashback (if any) Capital guarantees Depends on product Depends on product Depends on product Depends on product COMPARISON - PRODUCTS ILP Endowments Investment Plans
- 36. WHAT SHOULDYOU INVEST IN? UnitTrusts Funds Exchange Traded Funds Money Market Funds ILP Products Endowments Investment Plans Bonds Commodities Properties CashStocks Underlying
- 37. HOW MANY WAYSTO MAKE COFFEE? Funds Products Underlying
- 39. LET’S PLAY!
- 40. 4 MAINTYPES OF MARKET INVESTORS Market Timer Long Term Investor Fixed Income Investor Managed Portfolio Investor
- 41. 4 MAINTYPES OF MARKET INVESTORS • Market Timer (Trader) • Try to buy at bottom of market cycle and sell at top of market cycle • Difficulties: • Spotting the top and bottom • Emotions (greed vs fear) • When to cut loss when market moves against you • Typically alternates between stocks and cash
- 42. 4 MAINTYPES OF MARKET INVESTORS • Long Term Investor • Buy fundamentally strong stocks or funds and hold for the long term • Catch the general uptrend of the market • Difficulty: • Maintaining invested vs taking profit • Some stocks or funds may never recover
- 43. 4 MAINTYPES OF MARKET INVESTORS • Fixed Income Investor • Buy bonds and hold till maturity, collecting coupons periodically • Buy bond funds and hold • Typically fuss-free and low risk, but may run the risk of company defaulting • Popular for retirees • Difficulty: • Reinvesting coupons
- 44. 4 MAINTYPES OF MARKET INVESTORS • Managed Portfolio Investor • Typically invested in unit trusts and/or ETFs • Strategic allocation ratio: e.g. 70% stocks, 30% bonds • Tactical allocation ratio allows for minor form of market timing • Tradeoff: Potential returns are trimmed due to fees
- 45. GAME PLAY Moves Modifier Bull Neutral Bear Stocks 6-sided die (M) 2-sided die +5M +/- M +M +/- M -5M +/- M Bonds 3-sided die (M) NIL +M +M +3M Managed Portfolio (Stocks heavy) 4-sided die (M) NIL +3M +M +M Managed Portfolio (Bonds heavy) 4-sided die (M) NIL +M +M +3M Cash NIL NIL 0 0 0 Buy-and-hold Stocks Stocks only MarketTimer Can switch between stocks and cash Fixed Income Investor Bonds only Managed Portfolio Can switch between MPS and MPB
- 46. Moves Bull Neutral Bear Stocks 6-sided die (M) +5M +/- M +M +/- M -5M +/- M Bonds 3-sided die (M) +M +M +3M Managed Portfolio (Stocks heavy) 4-sided die (M) +3M +M +M Managed Portfolio (Bonds heavy) 4-sided die (M) +M +M +3M Cash NIL 0 0 0 1 2 3 4 5 6 7 8 9 10 20 19 18 17 16 15 14 13 12 11 21 22 23 24 25 26 27 28 29 30 40 39 38 37 36 35 34 33 32 31 41 42 43 44 45 46 47 48 49 50 60 59 58 57 56 55 54 53 52 51 61 62 63 64 65 66 67 68 69 70 80 79 78 77 76 75 74 73 72 71 81 82 83 84 85 86 87 88 89 90 100 99 98 97 96 95 94 93 92 91
- 47. Strategy/ Risk Management BACKTOTHE BIG PICTURE Plan Execute Investment Objective Time Horizon Financial Goals Specific Instruments Allocation Specific Funds / Securities Target Asset Allocation Feedback Changes in Circumstance Market outlook Risk Appetite
- 48. HAVE A PLAN AND STICKTO IT! Cash Endowment Endowment Bond Fund Bond Fund Stocks Property Equity Fund Gold / Silver HY Bond Fund HY Bond Fund