The other day, I came across this partcular news article - http://biz.thestar.com.my/news/story.asp?file=/2007/3/16/business/17163286&sec=business
To make it short, this article tells that if a person who bought one thousand of Public bank shares amounting RM1000 in 1967, and hold on to it until current year (2007), and any dividend/share split during this period are re invested, the value of the shares would have grown to RM1,000,000 plus. Not a bad retirement fund to have and this clearly proves the power of compouding interest.
Of course not all shares promise such growth in value, thus you will need to plan your share investment carefully.
After reading this article, I have decided to invest my fund mainly in large stocks that are giving consistent dividend. Hopefully, by the time i retire, I will have another few hundred thousands to spend during my retirement age.
Friday, May 4, 2007
Thursday, May 3, 2007
8.0% Interest from Foreign Currency Accounts
Do you know that you can earn interest rate as high as 8.0% by placing your money in foreign currency saving accounts by some of our banks? The saving works the same way as normal Fixed Deposit that you can make fixed deposit placement for tenures of 1-month, 3-month, 6-month and 12-month. The money will be used to invest in saving accounts in different foreign country that offer high interest rate. So far, New Zealand offers the highest rate of 8++% per annum.
Up to now, I only come across both UOB bank (http://www1.uob.com.my/webpages/p_deposits_ForeignCurrency.htm) and Public Bank (http://ww2.publicbank.com.my/cnt_press207.html) that offer these kind of savings.
The ONLY risk that comes with the investment is the foreign currency conversion rate. How is that? Assuming you have made a 3-months deposit of RM10,000 into New Zealand saving account on 1/1/2007, and the conversion rate during that time is NZD1.00 to RM2.50, that means you have made RM10,000/2.5=NZD4,000 deposit in New Zealand.
During the 3 months period before maturity, our Ringgit Malaysia grows in value and as at 1/4/2007, the conversion rate is NZD1.00 to RM2.00. If you decide to end your deposit account, your capital would have shrink from RM10,000 to RM8,000, a total capital loss of RM2,000! However, if the conversion rate is NZD1.00 to RM3.00 and you decide to end your deposit account, your capital would have grow from RM10,000 to RM12,000, a total capital gain of RM2,000!
Above is just an extreme illustration to show the impact of investing in foreign accounts. So long your earned interest is more than the loss in conversion rate, it still a worthy investment.
Lastly, the high deposit amount, around RM10,000 may prevent the majority of us from investing in this.
Up to now, I only come across both UOB bank (http://www1.uob.com.my/webpages/p_deposits_ForeignCurrency.htm) and Public Bank (http://ww2.publicbank.com.my/cnt_press207.html) that offer these kind of savings.
The ONLY risk that comes with the investment is the foreign currency conversion rate. How is that? Assuming you have made a 3-months deposit of RM10,000 into New Zealand saving account on 1/1/2007, and the conversion rate during that time is NZD1.00 to RM2.50, that means you have made RM10,000/2.5=NZD4,000 deposit in New Zealand.
During the 3 months period before maturity, our Ringgit Malaysia grows in value and as at 1/4/2007, the conversion rate is NZD1.00 to RM2.00. If you decide to end your deposit account, your capital would have shrink from RM10,000 to RM8,000, a total capital loss of RM2,000! However, if the conversion rate is NZD1.00 to RM3.00 and you decide to end your deposit account, your capital would have grow from RM10,000 to RM12,000, a total capital gain of RM2,000!
Above is just an extreme illustration to show the impact of investing in foreign accounts. So long your earned interest is more than the loss in conversion rate, it still a worthy investment.
Lastly, the high deposit amount, around RM10,000 may prevent the majority of us from investing in this.
Friday, April 20, 2007
BSN SEDAR Saving
This is one saving that I recommend to almost anyone that I come across. The product is SEDAR Saving account by our national bank, Bank Simpanan Nasional. You can open more than one account and it offers basic annum interest rate of 4.5%. Upon completion of 1st year savings, you will earn interest + 15% bonus on interest, that is, total interest for 1st year is 4.5+(0.15*4.5) = 5.175%. Upon completion of 2nd year and subsequent year of savings, you will earn interest + 30% bonus on interest, that is 4.5+(0.30*4.5) = 5.85%.
To earn this kind of interest, you need to keep the account for at least a year and make the same monthly saving. Cancellation of account before completion of a full saving year will only earn you the normal saving interest rate.
The benefit of this kind of saving is that it forces you to make regular monthly savings. What I recommend is that, if you plan to save RM500 per month, split the amount into separate SEDAR accounts, for example, monthly saving of RM150 in two accounts and RM200 in another account. Just in case you need your money, you can cancel one of the active accounts and still earn the higher interest rate from the remaining savings. For more information, please visit http://www.bsn.com.my/1-AccountType.html.
To avoid monthly visit to the bank, you can open a GIRO account and make a standing instruction to automate money transfer from your GIRO to your SEDAR account. After this, all you have to do is to ensure that your GIRO account has sufficient amount for the money transfer.
To earn this kind of interest, you need to keep the account for at least a year and make the same monthly saving. Cancellation of account before completion of a full saving year will only earn you the normal saving interest rate.
The benefit of this kind of saving is that it forces you to make regular monthly savings. What I recommend is that, if you plan to save RM500 per month, split the amount into separate SEDAR accounts, for example, monthly saving of RM150 in two accounts and RM200 in another account. Just in case you need your money, you can cancel one of the active accounts and still earn the higher interest rate from the remaining savings. For more information, please visit http://www.bsn.com.my/1-AccountType.html.
To avoid monthly visit to the bank, you can open a GIRO account and make a standing instruction to automate money transfer from your GIRO to your SEDAR account. After this, all you have to do is to ensure that your GIRO account has sufficient amount for the money transfer.
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