(Note: Link to a social enterprise where I sometimes contribute to below.)
You may think that the only social good companies should do is to earn a profit. However this is missing the point.
These days, firms not just have to make a profit, they have to fulfill at least an indirect social change. They have to be socially responsible corporate citizens.
Some companies choose to be organised as a social enterprise. A social enterprise aims to improve not just financial, but also social and environmental well-being. Although firms still have to make money, at least firms have to be perceived to exist to do social good.
It is the muddy and hazy perception of social good that make it so hard to define a social enterprise. Often they may pass off as a charity that aims to make money. However, my experiences with social enterprise, more than typical enterprises, is that they are very pushy. Yet, public funds are often disbursed to social enterprises because they are able to do some things that the private market alone may not fully achieve. They direct enterprising people to do some things that are seen as 'beneficial'.
I consider myself very familiar in the social service sector currently. Almost everywhere I turn, there is always someone from a social enterprise who keeps asking for more funding, even with profitable businesses.
It seems to me that social enterprise is not just about the triple bottom line of profits, people and planet. It is about the triple aims of profitability, credibility (competition among social enterprises grants and awards is keen among social enterprises) and capacity to make the most out of the inputs of social enterprises.
I am skeptical of many social enterprises. They are like wannabes. They talk about achieving dreams or betterment, but work like (sometimes even worse than) conventional firms. Plus, some social enterprises are funded by government monies. We taxpayers might as well just pay for the social programmes provided by communities, rather than by private enterprises.
Time and again I hear: if I do not hire you, no one else will - in countless social enterprises out there. It is very demeaning and insulting to the people in the social enterprises. They are treated not as full human beings, but beneficiaries, to be pitied at. Where is the truth and love in these social enterprises?
The worse is that social enterprises are critiqued on 'sustainability'. That being, how their operations can sustain. If they fail, tongues wag around 'this firm should have a sustainable financial model, they can't keep relying on grants'. If they succeed, they are rewarded the spoils, they are celebrated and they get the positive media attention and spin without asking.
I strongly believe that to do social good, even with all the nastiness in social enterprises, there should at least be decency and authenticity. A social enterprise must be honest with its stakeholders, employees and clients: we are not a non-profit organisation and we work for profits. A social enterprise has to be real. Be honest, the social enterprise is just one out of the many firms crowding the do-gooder space, what differentiates the different social enterprises, even if they are almost all cut of the same cloth of desire and want, should be the connection to one's life stories.
For all the negative things I harbour about most social enterprises, as I am impressed by the honesty and authenticity of the boss of AbleThrive. As an autistic individual, I may not fully understand spinal cord injury and the effect of the people. However, I believe if I were to be that someone who is on the seed fund-seeking circuit and go getting, AbleThrive's Brittany Dejean would be my role model. I love the focus in AbleThrive to showcase abilities, celebrate rehabilitation every step in the way towards recovery, and the thematic approaches to the different aspects that improve the quality of life for people with the injury.
Monday, February 26, 2018
Thursday, June 16, 2016
Singapore Stocks Stink
Hardly anyone trades Singapore stocks these days. There simply are not enough stocks in volume that can be traded.
Indeed, what is done in the Singapore Stock Exchange is perplexing - why would they introduce a minimum trading price and watch-list for stocks that do not meet volume and minimum price requirement, when the issue is low trading volume. Indeed, steps should be done to increase the volume of stocks traded, which include abolition of standard lots.
There is a deeper problem in Singapore stocks, though. Around half Straits Times Index component stocks are mainly government-linked, and a few are land and property developers and commodity trading firms. I feel that the Singapore stock exchange is not reflective of our economy, because the technology and biomedical sectors, important engines to our economy that reflects our dynamic economy better, are not represented enough in the Straits Times Index. Indeed, our economy might as well be controlled in either Hong Kong/Shanghai or New York/London/Frankfurt.
I do not suggest investing in Singapore stocks. Singapore-based stock investors could still keep a tab in long-term investment paths, those firms with long-term strategies that are actually well executed (e.g. DBS, CapitaLand, ST Engineering). Even with good management, I shall always wait for a better time to long the company. When the market is heading sideways, it is better for me to avoid Singapore markets completely.
Singapore markets do indeed stink!
Indeed, what is done in the Singapore Stock Exchange is perplexing - why would they introduce a minimum trading price and watch-list for stocks that do not meet volume and minimum price requirement, when the issue is low trading volume. Indeed, steps should be done to increase the volume of stocks traded, which include abolition of standard lots.
 |
| It's as if we have a nuclear fallout in Singapore Exchange... |
There is a deeper problem in Singapore stocks, though. Around half Straits Times Index component stocks are mainly government-linked, and a few are land and property developers and commodity trading firms. I feel that the Singapore stock exchange is not reflective of our economy, because the technology and biomedical sectors, important engines to our economy that reflects our dynamic economy better, are not represented enough in the Straits Times Index. Indeed, our economy might as well be controlled in either Hong Kong/Shanghai or New York/London/Frankfurt.
I do not suggest investing in Singapore stocks. Singapore-based stock investors could still keep a tab in long-term investment paths, those firms with long-term strategies that are actually well executed (e.g. DBS, CapitaLand, ST Engineering). Even with good management, I shall always wait for a better time to long the company. When the market is heading sideways, it is better for me to avoid Singapore markets completely.
Singapore markets do indeed stink!
Stock Investments
Investing in stocks is for you - who seek to tell the story for a long time.
Stocks are not where you get the highest returns for your investments in the short run. We will never know what happens in the future. However, you do actually own a share of the economic engine of the economy, and fund its growth path and plans.
I am unlike the typical stock investor. I look at what do I expect in the future. What will I keep using and enjoy using now and in the long run, I think it is perfectly reasonable for me to pump my funds in these companies. For instance, I do expect to use a lot of Internet and telecommunications services, I expect to use online banking, I may drive around in fuel-efficient and perhaps self-driving cars. I will probably live in downtown in a city where the weather is good and the job opportunities aplenty (and so do both elderly folks and younger working professionals), I do grocery shopping in both places where I need to touch and see things and online.
Also, I try to match what I expect to spend in the near future to the portfolio I am having, so telecommunications never go above 20% of my portfolio, cars never above 20%, housing never above 30% and so on.
I wish you good luck in your investing journey!
Stocks are not where you get the highest returns for your investments in the short run. We will never know what happens in the future. However, you do actually own a share of the economic engine of the economy, and fund its growth path and plans.
 |
| Stock Market |
I am unlike the typical stock investor. I look at what do I expect in the future. What will I keep using and enjoy using now and in the long run, I think it is perfectly reasonable for me to pump my funds in these companies. For instance, I do expect to use a lot of Internet and telecommunications services, I expect to use online banking, I may drive around in fuel-efficient and perhaps self-driving cars. I will probably live in downtown in a city where the weather is good and the job opportunities aplenty (and so do both elderly folks and younger working professionals), I do grocery shopping in both places where I need to touch and see things and online.
Also, I try to match what I expect to spend in the near future to the portfolio I am having, so telecommunications never go above 20% of my portfolio, cars never above 20%, housing never above 30% and so on.
I wish you good luck in your investing journey!
Wednesday, March 2, 2016
Germany: not the future of our economy
We always praise Germany for the good Germany does: free higher education, free and effective healthcare and robust economy. Germany benefits from low oil prices through low oil prices and increased contributions from renewable energy. It does not hurt one bit that Germany's national football team are world champions. Almost everyone I know sings the praises for Germany. However, I do not think like ordinary people.
Germany is not what the future of the economy is like. Her education system is not working to maximise their populace's diversity, her most innovative people do not get the opportunity to live out their opportunities, and her banks are not globally competitive to make the most of our global opportunities.
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| Commerzbank Tower, Frankfurt. What a bank should not be like.By Mylius - Own work, GFDL 1.2, https://commons.wikimedia.org/w/index.php?curid=11184505 |
There is considerable schisms between classes in Germany.
Just look at the education system. Indeed, the education system is free at all levels. However this does not give the best outcomes to all students who work hard and do their best in schools. Schools can decide, at age 10, to sort students into different tracks: the university preparatory (gymnasium) track, the realschule track and the vocational hauptschule track. There is no social mobility to speak of. There is no chance a bright shy person whose parents or grandparents move from another country, say, Turkey or Serbia, to move up the social ladder, if his school principal decides no matter how hard a student works or how good he is, he still belongs to the hauptschule schools anyway.
I am not against vocational schools. I am against their ineffectiveness on German society.
The hauptschules are regarded as dumping grounds of certain groups of students: students from minority backgrounds, students with special learning needs, students with absent parents who are unemployed, and so on. There is only a remote possibility of a student from hauptschules to get to universities, if any. They just do not work to fill job positions. The employers often do not see the work ethic or the technical know-how to enable graduates of hauptschules to begin their apprenticeships with these companies. A permanent underclass, dependent on welfare, results, and they are not able to contribute to the economy. What a waste to the potentials of German society!
In contrast, Finland has a better model for vocational schools. Students are only divided by ability at age 16, by when many students had already reached puberty and are mature to have a handle on their lives. Also, students in both the academic and vocational paths in Sweden do get the same opportunity to study in university.
The German societal model is also not looking forward to the future. She is too rigid to withstand the ever changing world.
Germany does not has an inspiring environment for fashion, unlike France, UK or USA, for fashion or the creative arts. Germans restricts religion to the point organised religion, a huge unifier of community issues in many countries, is in decline: both the Protestant (Lutheran) and Catholic churches see declines in church attendance. Even rich German people are not able to live up life, as they get criticised in their home countries to live opulent lifestyles. No wonder it has fewer startups than other countries, and even to recent past.
A better societal model may be South Korea. Like Germany, South Korea prides herself as a country with rich cultural and racial heritage, which is essential because I do not think there is another country where ethnic Koreans can call 'home'. Unlike Germany, however, South Korea is more open to new ideas, new inspirations in life and even religions. Also, South Korea has plenty of Ivy League admissions, pop culture and startups, above the size of the country (which is smaller than Germany), that the country could be proud of.
Then there is the case for banks. They are losing to foreign competitors and are not able to catch up. German banks may be a sign of things to come for firms in other sectors, such as heavy industries and environmental management, as we all face a world with unrestricted trade globally.
There used to be three large banks in Germany: Deutsche Bank, Commerzbank and Dresdner Bank. In 2008, however, the parent company of Dresdner Bank decided to sell the bank to Commerzbank, which then ceased to be an independent legal entity. Then, in 2012, even Commerzbank is deemed as a bank with declining systemic importance.
Such is the decline of banks in Germany. Banks in Germany are supposed to be shareholders and decision makers of companies, which works to bring better alignment of banks and the companies they loan to. However, with new capitalisation requirements in banks worldwide, they are not able to compete with the larger banks overseas, especially British, American, French and Japanese banks. If they are weak today and do not have the strong resolve to reform for the future, how can German banks be relevant in the future to the companies they loan to, no matter how fantastic those companies are?
Germany certainly has good organisation, good and effective governmental and social institutions and are working towards a more sustainable future. They all need fine tuning for the future, with financial reforms, more openness to new ideas around the world, and a more inclusive and attentive education system to the diverse needs of the Germans.
There used to be three large banks in Germany: Deutsche Bank, Commerzbank and Dresdner Bank. In 2008, however, the parent company of Dresdner Bank decided to sell the bank to Commerzbank, which then ceased to be an independent legal entity. Then, in 2012, even Commerzbank is deemed as a bank with declining systemic importance.
Such is the decline of banks in Germany. Banks in Germany are supposed to be shareholders and decision makers of companies, which works to bring better alignment of banks and the companies they loan to. However, with new capitalisation requirements in banks worldwide, they are not able to compete with the larger banks overseas, especially British, American, French and Japanese banks. If they are weak today and do not have the strong resolve to reform for the future, how can German banks be relevant in the future to the companies they loan to, no matter how fantastic those companies are?
Germany certainly has good organisation, good and effective governmental and social institutions and are working towards a more sustainable future. They all need fine tuning for the future, with financial reforms, more openness to new ideas around the world, and a more inclusive and attentive education system to the diverse needs of the Germans.
The Small Long
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| Charging bull By Aseba - http://www.flickr.com/photos/aseba/6179708990/, CC BY-SA 2.0, https://en.wikipedia.org/w/index.php?curid=28333508 |
The banking sector in Singapore now has a P/E ratio below 10, around the bottom P/E level of bear markets. Among all the banks, DBS has the lowest P/E at 8.56 currently.
However, future earnings in banks seem uncertain. Oil and gas prices collapsed and will probably stay low for a long time. Our banks have substantial exposure to China - 17% for DBS especially, and there is an expected slowdown in the Chinese economy. Also, there is no substantial new economic activity in Singapore, as Singapore is still struggling in healthcare, education and technology sectors. Where can banks find higher quality, more financially sustainable sources of loan?
Even with the recent gains in Straits Times Index (STI), I doubt the gains will go on for a long time. If you ever invest in stock markets now, you may consider long the market, but not for long.
Only when DBS reaches around 8 dollars then I may consider buy back DBS, such is the lack of market confidence in the Singapore stock market that we should be wary of false hope.
Thursday, November 12, 2015
Why invest in stocks? A primer on stock investing
Why invest in stocks?
You buy in stocks - because you get to own companies.
Ownership. This is more exciting than earning a profit on trades or flips. You actually have a stake in something that is so important, that hires some people and pays taxes to the Government for its programs.
The stock market platform is a platform where you can buy and sell ownership of companies fairly and equally. They can attract investors to trade fairly. They help companies to raise funds from us in a highly liquid market, where shares can be easily traded.
When a stock is listed, it must meet certain criteria. A company's stock on the catalist needs to be sponsored by a financial institution. To list on the mainboard, a company needs to meet certain criteria of scale, such as pre-tax profits of S$30 million in more than three financial years recently, and capitalisation of more than S$150 million.
There are different stocks to buy. They include: stocks, real estate investment trusts (REITs, where property and financial institutions' managers bundle properties into tradable portions), exchange traded funds (ETFs), warrants, extended settlements, bonds and preference shares.
For REITs listed in Singapore, there are 34 of them in 6 different categories: residential, office, retail, hotel, industrial and hospitality. Although interest rate environments are difficult for REITs, I think given the recent property cooling measures, it is actually more attractive to invest in residential REITs that cater to the higher end markets than in mass-market or suburban developments.
ETFs, on the other hand, buys and sells shares to reflect performance without the use of a fund manager, in accordance to an indicator. Examples include Lyxor, SPDR, STI ETF by Nikko AM, and so on.
Bonds are fixed IOUs where we buy a company's borrowings. Unfortunately, liquidity in Singaporean bond markets is not liquid enough, as we are a small market.
Preference shares are shares that give us a higher priority than ordinary shareholders, when companies dissolve and distribute residual profits. In exchange for a fixed dividend, preference shareholders do not hold voting shares. Also, there might not be maturity dates on preference shares, unless they are callable hares.
There are two schools of thought in share investing: technical analysis (TA) and fundamental analysis (FA).
TA is the art of predicting the future price movements of a company, based on both price and volume. TA gives us a point of reference on when we can enter and exit a market. Most stock beginners tend to be carried away by the hoopla of TA, because they will remember the patterns and candlesticks of intraday and inter-day charts, and make a living out of timing the markets. But the market is not made up of just winners. People are as likely to lose money as they do gain profits in the stock market. Indeed, only 5% of traders consistently succeed. I am trying my best to be one of the top 5%.
One should buy companies at the right pricing and exit at the right juncture. Hence, TA is useful as a guide to stock entry. However, it shouldn't be used alone.
Enter FA.
For new investors, I would strongly recommend they learn FA, if they want to get serious about share investing. If you need some guidance on share picking, do +1 or contact me on Google+ or Blogger. It will take some time as I have a day job (explaining the long gap between posts on this blog), but FA will definitely be worth it. The good thing is, to trade stocks, you just need to be old enough to legally trade them, and you have the desire to know more about the companies you are investing in.
Stock market investing should be a pleasant, sweet experience. We should preferably invest in the companies that we understand well. We should be familiar with the business models of the firms, understand that they are in great financial health, being satisfied with their returns and capital gains and satisfied at their growth or corporate development.
The main tool FA aficionados use is the Price-Earnings, or P/E ratio. Earnings grow, but the prices may not reflect the growth of earnings proportionately.
For stocks with a P/E ratio of below 10, they are deemed as 'cheaper'. For stocks with a P/E ratio of above 20, they are deemed as expensive. Most firms have P/E ratio of between 10 and 20. This means, when a firm has a P/E ratio of 5 to 9 and it is doing well, we should snap it at the right timing from TA trends. When a firm has unsustainable P/E ratio of more than 25 times, unless it is a growth stock with exciting developments the firm can afford to pay, I would not touch the stock.
When you invest in shares, you have to take note of cumulative dividends and cumulative rights, or cum dividend/CD or cum rights/CR in short. Stocks with CD do not yet distribute dividends, while stocks with XD (eX-dividend) has already distributed dividends. For CR, they are meant to help the company to raise money for existing shareholders. The company is issuing more shares, and it may offer current shareholders to buy new shares at discounted prices.
Earlier, I mentioned that buying shares mean buying shares of management in the company. You do not hold physical certificates in owning shares these days. They are kept with the Central Depository. Unless you go to their office to ask for share certificates, you don't get share certificates to show you're an owner of some shares of the company.
When you look at stocks, you have to consider the operations of a firm.
Basic ratios have to be profitability ratios (gross and net profit margins), liquidity ratios (think current ratio) and solvency ratios (along with interest coverage ratio). It has to be one with solid potential growth in the next 5-10 years. With globalisation, I expect the typical telecommunications, logistics, transport and hospitality-linked firms to keep growing. Also, with climate change, oil prices may not sink forever, and this may result in the rise of commodities, alternative energy (think oil palm, for example) and water.
You can trade your stocks either through a remisier/trading representative, or through the online platform of your stock broker. The trading representative is still relevant to you because he may manage your transactions and credit risk, as you are supposed to make payments within 3 days of the share transaction.
Brokerage houses charge commission rates. Hence, if you want to minimise your brokerage fees, you try to trade within $8,500 for most companies, as most brokerage houses charge 0.28% fees with a $25 minimum commission rate. If you are going to pay $25 per trade anyway, why not trade at around S$8,000 if you can afford it?
You buy 50% of your stocks at the first opportunity. When you're right, buy 30% more stocks at the second entry point, and 20% at the third one. If you're wrong, sell fast.
You buy in stocks - because you get to own companies.
Ownership. This is more exciting than earning a profit on trades or flips. You actually have a stake in something that is so important, that hires some people and pays taxes to the Government for its programs.
The stock market platform is a platform where you can buy and sell ownership of companies fairly and equally. They can attract investors to trade fairly. They help companies to raise funds from us in a highly liquid market, where shares can be easily traded.
 |
| Kuala Lumpur Stock Exchange |
When a stock is listed, it must meet certain criteria. A company's stock on the catalist needs to be sponsored by a financial institution. To list on the mainboard, a company needs to meet certain criteria of scale, such as pre-tax profits of S$30 million in more than three financial years recently, and capitalisation of more than S$150 million.
There are different stocks to buy. They include: stocks, real estate investment trusts (REITs, where property and financial institutions' managers bundle properties into tradable portions), exchange traded funds (ETFs), warrants, extended settlements, bonds and preference shares.
For REITs listed in Singapore, there are 34 of them in 6 different categories: residential, office, retail, hotel, industrial and hospitality. Although interest rate environments are difficult for REITs, I think given the recent property cooling measures, it is actually more attractive to invest in residential REITs that cater to the higher end markets than in mass-market or suburban developments.
ETFs, on the other hand, buys and sells shares to reflect performance without the use of a fund manager, in accordance to an indicator. Examples include Lyxor, SPDR, STI ETF by Nikko AM, and so on.
Bonds are fixed IOUs where we buy a company's borrowings. Unfortunately, liquidity in Singaporean bond markets is not liquid enough, as we are a small market.
Preference shares are shares that give us a higher priority than ordinary shareholders, when companies dissolve and distribute residual profits. In exchange for a fixed dividend, preference shareholders do not hold voting shares. Also, there might not be maturity dates on preference shares, unless they are callable hares.
There are two schools of thought in share investing: technical analysis (TA) and fundamental analysis (FA).
TA is the art of predicting the future price movements of a company, based on both price and volume. TA gives us a point of reference on when we can enter and exit a market. Most stock beginners tend to be carried away by the hoopla of TA, because they will remember the patterns and candlesticks of intraday and inter-day charts, and make a living out of timing the markets. But the market is not made up of just winners. People are as likely to lose money as they do gain profits in the stock market. Indeed, only 5% of traders consistently succeed. I am trying my best to be one of the top 5%.
One should buy companies at the right pricing and exit at the right juncture. Hence, TA is useful as a guide to stock entry. However, it shouldn't be used alone.
Enter FA.
For new investors, I would strongly recommend they learn FA, if they want to get serious about share investing. If you need some guidance on share picking, do +1 or contact me on Google+ or Blogger. It will take some time as I have a day job (explaining the long gap between posts on this blog), but FA will definitely be worth it. The good thing is, to trade stocks, you just need to be old enough to legally trade them, and you have the desire to know more about the companies you are investing in.
Stock market investing should be a pleasant, sweet experience. We should preferably invest in the companies that we understand well. We should be familiar with the business models of the firms, understand that they are in great financial health, being satisfied with their returns and capital gains and satisfied at their growth or corporate development.
The main tool FA aficionados use is the Price-Earnings, or P/E ratio. Earnings grow, but the prices may not reflect the growth of earnings proportionately.
For stocks with a P/E ratio of below 10, they are deemed as 'cheaper'. For stocks with a P/E ratio of above 20, they are deemed as expensive. Most firms have P/E ratio of between 10 and 20. This means, when a firm has a P/E ratio of 5 to 9 and it is doing well, we should snap it at the right timing from TA trends. When a firm has unsustainable P/E ratio of more than 25 times, unless it is a growth stock with exciting developments the firm can afford to pay, I would not touch the stock.
When you invest in shares, you have to take note of cumulative dividends and cumulative rights, or cum dividend/CD or cum rights/CR in short. Stocks with CD do not yet distribute dividends, while stocks with XD (eX-dividend) has already distributed dividends. For CR, they are meant to help the company to raise money for existing shareholders. The company is issuing more shares, and it may offer current shareholders to buy new shares at discounted prices.
Earlier, I mentioned that buying shares mean buying shares of management in the company. You do not hold physical certificates in owning shares these days. They are kept with the Central Depository. Unless you go to their office to ask for share certificates, you don't get share certificates to show you're an owner of some shares of the company.
When you look at stocks, you have to consider the operations of a firm.
Basic ratios have to be profitability ratios (gross and net profit margins), liquidity ratios (think current ratio) and solvency ratios (along with interest coverage ratio). It has to be one with solid potential growth in the next 5-10 years. With globalisation, I expect the typical telecommunications, logistics, transport and hospitality-linked firms to keep growing. Also, with climate change, oil prices may not sink forever, and this may result in the rise of commodities, alternative energy (think oil palm, for example) and water.
You can trade your stocks either through a remisier/trading representative, or through the online platform of your stock broker. The trading representative is still relevant to you because he may manage your transactions and credit risk, as you are supposed to make payments within 3 days of the share transaction.
Brokerage houses charge commission rates. Hence, if you want to minimise your brokerage fees, you try to trade within $8,500 for most companies, as most brokerage houses charge 0.28% fees with a $25 minimum commission rate. If you are going to pay $25 per trade anyway, why not trade at around S$8,000 if you can afford it?
You buy 50% of your stocks at the first opportunity. When you're right, buy 30% more stocks at the second entry point, and 20% at the third one. If you're wrong, sell fast.
Pots of Money
Going to any FRANK store, you see that there are four financial principles in life:
1. Saving
2. Investing
3. Insuring
4. Spending
Usually, we save before we spend, we save at least 10% of our income, and we maximise higher returns by looking at banks with higher interest rates. We also try to spend only the necessary, so we can eventually have more money for other uses.
Other uses may include insurance and investments.
Insurance protect our wealth. There are two types of insurance, namely: life and personal insurance.
For life insurance, we need coverage of 7 to 10 times of our monthly income, we need monies to cover our future hospitalisation and medical expenses that is an integrated healthcare plan and rider, we need a whole life or permanent disability insurance policy to cover our financial obligations when we are diagnosed with permanent disability. We may also need dependants' insurance, to cover our loved ones when we are not around.
Personal insurance covers travel insurance, home (housing loan and housing content) insurance and vehicle insurance.
As for investments, we multiply our wealth by two tools: fundamental analysis and technical analysis. Fundamental analysis looks at the intrinsic value of companies, while technical analysis looks at the direction of market prices and their effects on companies' stock performance.
May I humbly add something never mentioned in 'pots of money' -
5. Contributing.
What is the use of having so much wealth and protection when we are not relevant at all with our society? Our society has so much that we can improve on, especially with the widening rich-poor income gap, we need to do more to help the poor and helpless.
1. Saving
2. Investing
3. Insuring
4. Spending
 |
| Bank of England |
Other uses may include insurance and investments.
Insurance protect our wealth. There are two types of insurance, namely: life and personal insurance.
For life insurance, we need coverage of 7 to 10 times of our monthly income, we need monies to cover our future hospitalisation and medical expenses that is an integrated healthcare plan and rider, we need a whole life or permanent disability insurance policy to cover our financial obligations when we are diagnosed with permanent disability. We may also need dependants' insurance, to cover our loved ones when we are not around.
Personal insurance covers travel insurance, home (housing loan and housing content) insurance and vehicle insurance.
As for investments, we multiply our wealth by two tools: fundamental analysis and technical analysis. Fundamental analysis looks at the intrinsic value of companies, while technical analysis looks at the direction of market prices and their effects on companies' stock performance.
May I humbly add something never mentioned in 'pots of money' -
5. Contributing.
What is the use of having so much wealth and protection when we are not relevant at all with our society? Our society has so much that we can improve on, especially with the widening rich-poor income gap, we need to do more to help the poor and helpless.
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