How to be a millionaire by using compound interest

How to be a millionaire? This is such a difficult question in many people's mind. But it can be very easy too. Let’s see my analysis below:

1) Start with current saving: RM10000
2) 1st year saving(capital)= RM6000 (RM500 per month)
3) Every year add capital RM100 per month (means 2nd year saving is RM7200, 3rd year saving is RM8400, etc)
4) Investment get 15% return per year

Since you choose to invest in share market, 15% return per year is just a minimum target. If your target of earning is below 15% yearly then you can just choose other lower risk investment tools.

If you can fulfill the 4 requirements, 18 years later you will be a millionaire. If you start invest at 25years old, means 42years old you can get 1million from share market. This is the power of compound interest.

消费股

受这次的金融风暴影响最低的就是消费股。所以，星期五就去逛了逛据Jusco，搜集一些在我的watchlist里的股票的一些资料。对象-F&N, NESTLE.

F&N Holding
所有品牌-coca cola, sarsi, sprite, F&N, 100plus

最大的竞争者- Permanis Sdn Bhd （100% 属于 CI Holding Bhd)
所有品牌-pepsi, kickapo, A&W, mirinda, gatorade, Excel, 7up

两间公司都有著名的品牌。对于我而言，难以分辨到底哪一间的市场占有率比较强。于是，我就在那里闲逛了几圈，看看那个品牌有较多的人喜爱。逛了大概一个小时吧，结果发现，100plus, sprite, coca-cola 都有人买，Permanis 的品牌却没人爱。在产品架上也可以发现，pepsi被排得满满的没人要，而100plus和coca-cola却所剩无几。

当然，我也不会只看一间Jusco的销量来判断那一间公司有较大的市场占有率。所以，我比较了一下他们各自的财务状况，无疑的，不管是EPS, 公司的成长，股价的起伏，都是F&N值得投资的多。

Nestle

而Nestle呢，更加不用说。Nestle 的主要食品Milo，几乎是每一个家庭主妇都会买两包。我公司也有五六架Nestle得饮水机。Milo, Nescafe...一天之中就要开好几包。Nestle的股价从以前到现在都是呈上升趋势的。只有在98, 99年小跌了一点。而在这一次的风暴中，完全没被影响，想买地一点的价钱都卖不到。我认为合理价是25-26。

Malaysia Economy Crisis

Let chat a little about Malaysia Economy crisis in this year - 2008. As what i know, this crisis caused by 3 reason :

1) Malaysia's Politic issue
2) US financial crisis/economy crisis
3) Crude oil price drop


1) Malaysia Politic issue
Malaysia stock market has a significant drop after election in March. People has no confidence to stock market especially Government link Company's stock(GLC) due to unstability of our government. The political issues has not end yet, that may be end up on next year..

2) US financial crisis/economy crisis
US financial crisis caused Lehman Brother bankcrupt, AIG nearly to bankcrupt if no government support and etc. Although Malaysia's bank has not much impact of this crisis, but investor was scared and try to sell off the stocks in hand. The economy in US is really down. But why US's economy will impact to Asia. Why Asia is always depend to US?

This is because many product is made in Asia and export to US.
Example:
if Asia produce clothes and export to US, when the US face economy crisis, US people just need to control their expenses and do not buy any clothes if not needed. But Asia people will face jobless because of the sales of the clothes is bad and company need to cut cost and try to fire some employee to make the company's earning and expenses become balance to pass this economy crisis smoothly.

Therefore, someone said if US getting a flu, Asia will get a serious illness.

3) Crude oil price drop
Recently, KLSE index has drop till 800-850. The main reason is because of the dropping of crude oil price. Crude oil price drop has negative and also positive impact to Malaysia.

Negative impact: Malaysia's economy depends on plantation industry, Crude Oil price drop means plantation industry making loss. Economy down.

Positive impact: Petrol price will drop accordingly, other material price will drop. Inflaction rate Drop.

3分钟让你全面了解当前世界金融危机

对金融危机最普遍的官方解释是次贷问题，然而次贷总共不过几千亿，而美国政府救市资金早已到了万亿以上，为什么危机还是看不到头？有文章指出危机的根源是金融机构采用“杠杆”交易；另一些专家指出金融危机的背后是62万亿的信用违约掉期（Credit Default Swap, CDS）。那么，次贷，杠杆和CDS之间究竟是什么关系？它们之间通过什么样的相互作用产生了今天的金融危机？在众多的金融危机分析文章中，始终没有看到对这些问题的简单明了的解释。本文试图通过自己的理解为这些问题提供一个答案，为通俗易懂起见，我们使用了几个假想的例子。有不恰当之处欢迎批评讨论。　　　

一。杠杆。目前，许多投资银行为了赚取暴利，采用20－30倍杠杆操作，假设一个银行A自身资产为30亿，30倍杠杆就是900亿。也就是说，这个银行A以 30亿资产为抵押去借900亿的资金用于投资，假如投资盈利5％，那么A就获得45亿的盈利，相对于A自身资产而言，这是150％的暴利。反过来，假如投资亏损5％，那么银行A赔光了自己的全部资产还欠15亿。　　

二。CDS合同。由于杠杆操作高风险，所以按照正常的规定，银行不运行进行这样的冒险操作。所以就有人想出一个办法，把杠杆投资拿去做“保险”。这种保险就叫CDS。比如，银行A为了逃避杠杆风险就找到了机构B。机构B可能是另一家银行，也可能是保险公司，诸如此类。A对B说，你帮我的贷款做违约保险怎么样，我每年付你保险费5千万，连续10年，总共5亿，假如我的投资没有违约，那么这笔保险费你就白拿了，假如违约，你要为我赔偿。A想，如果不违约，我可以赚45亿，这里面拿出5亿用来做保险，我还能净赚40亿。如果有违约，反正有保险来赔。所以对A而言这是一笔只赚不赔的生意。B是一个精明的人，没有立即答应A的邀请，而是回去做了一个统计分析，发现违约的情况不到1％。如果做一百家的生意，总计可以拿到500亿的保险金，如果其中一家违约，赔偿额最多不过50亿，即使两家违约，还能赚400亿。A,B双方都认为这笔买卖对自己有利，因此立即拍板成交，皆大欢喜。　　
　　
三。CDS市场。B做了这笔保险生意之后，C在旁边眼红了。C就跑到B那边说，你把这100个CDS卖给我怎么样，每个合同给你2亿，总共200亿。B想，我的400亿要10年才能拿到，现在一转手就有200亿，而且没有风险，何乐而不为，因此B和C马上就成交了。这样一来，CDS就像股票一样流到了金融市场之上，可以交易和买卖。实际上C拿到这批CDS之后，并不想等上10年再收取200亿，而是把它挂牌出售，标价220亿；D看到这个产品，算了一下，400亿减去220亿，还有180亿可赚，这是“原始股”，不算贵，立即买了下来。一转手，C赚了20 亿。从此以后，这些CDS就在市场上反复的抄，现在CDS的市场总值已经抄到了62万亿美元。　　　　

四。次贷。上面 A,B,C,D,E,F....都在赚大钱，那么这些钱到底从那里冒出来的呢？从根本上说，这些钱来自A以及同A相仿的投资人的盈利。而他们的盈利大半来自美国的次级贷款。人们说次贷危机是由于把钱借给了穷人。笔者对这个说法不以为然。笔者以为，次贷主要是给了普通的美国房产投资人。这些人的经济实力本来只够买自己的一套住房，但是看到房价快速上涨，动起了房产投机的主意。他们把自己的房子抵押出去，贷款买投资房。这类贷款利息要在8％－9％以上，凭他们自己的收入很难对付，不过他们可以继续把房子抵押给银行，借钱付利息，空手套白狼。此时A很高兴，他的投资在为他赚钱；B也很高兴，市场违约率很低，保险生意可以继续做；后面的C,D,E,F等等都跟着赚钱。　　　　

五。次贷危机。房价涨到一定的程度就涨不上去了，后面没人接盘。此时房产投机人急得像热锅上的蚂蚁。房子卖不出去，高额利息要不停的付，终于到了走头无路的一天，把房子甩给了银行。此时违约就发生了。此时A感到一丝遗憾，大钱赚不着了，不过也亏不到那里，反正有B做保险。B也不担心，反正保险已经卖给了C。那么现在这份CDS保险在那里呢，在G手里。G刚从F手里花了300亿买下了 100个CDS，还没来得及转手，突然接到消息，这批CDS被降级，其中有20个违约，大大超出原先估计的1％到2％的违约率。每个违约要支付50亿的保险金，总共支出达1000亿。加上300亿CDS收购费，G的亏损总计达1300亿。虽然G是全美排行前10名的大机构，也经不起如此巨大的亏损。因此G 濒临倒闭。　　　　

六。金融危机。如果G倒闭，那么A花费5亿美元买的保险就泡了汤，更糟糕的是，由于A采用了杠杆原理投资，根据前面的分析，A 赔光全部资产也不够还债。因此A立即面临破产的危险。除了A之外，还有A2，A3,...,A20，统统要准备倒闭。因此G,A,A2,...,A20一起来到美国财政部长面前，一把鼻涕一把眼泪地游说，G万万不能倒闭，它一倒闭大家都完了。财政部长心一软，就把G给国有化了，此后A,...,A20的保险金总计1000亿美元全部由美国纳税人支付。　　　　

七。美元危机。上面讲到的100个CDS的市场价是300亿。而CDS市场总值是62万亿，假设其中有10％的违约，那么就有6万亿的违约CDS。这个数字是300亿的200倍。如果说美国政府收购价值300亿的CDS之后要赔出1000 亿。那么对于剩下的那些违约CDS，美国政府就要赔出20万亿。如果不赔，就要看着A20,A21,A22等等一个接一个倒闭。无论采取什么措施，美元大贬值已经不可避免。　　　　

以上计算所用的假设和数字同实际情况会有出入，但美国金融危机的严重性无法低估。

NTPM - 30++years old company

Today i went to Carefour for a walk and buy something, then i observed that many ppl buy tissues and toilet papers. I curious of what brand they use. let me list down the brands in carefour:

1) Premier
2)scott
3)kleenex
4)carefour
5)Royal Gold
6)Cutie

I have do a research. Actually Premier, Royal Gold and Cutie is from same company which is NTPM. NTPM has a stable growing on it's profit. It is not only produce tissues but personal product like diapers and feminine hygienic product.

It's target customer is from lower level-premier to higher level-Royal Gold, Cutie compact.

But i am worry about the economy now is not very good, many ppl search for cheaper things to substitute the thing they're usually use. Like me, i prefer Carefour brand's tissue because i not really care the quality of tissue and the price is much cheaper.

I will keep this stock in my watchlist and do some survey and research. If the reason enough, i may invest on it.

Share watchlist updated

Althought i have confidence to Airasia and KFC but i still sold out all my stocks when the prices is consider high. This is because that i scare of the government issue in Malaysia and economy unstable over the world. After i sold out my stocks, finance crisis has blow over US and affected Malaysia's banking line. I have updated my stocks watchlist and many cheap stocks is very attactive to me.

Stock Watchlist

(1) PBBANK
(2) RESORT
(3) GENTING
(4) KFC
(5) NESTLE
(6) F&N
(7) IOICROP
(8) SIME
(9) AIRASIA

I have divided the stocks to 2 categories:
1) high risk high return - (2),(3),(7),(8)
2) stable - (1),(4),(5),(6),(9)

Analysis on AIRASIA

We will not buy any stock that we do not understand about it. Only buy which company you can understand the company's product and how it make profit.

Therefore, let me list down the reason why i bought AIRASIA and how i understand about AIRASIA.

1)Great management
2)High profitability
3)Leader in the LCC industry
4)It's Brand Name

Let me elaborate the points above.

Great Management

Two years ago, many people don’t like AirAsia. The only reason they choose AirAsia just because it is cheap. The reason they don't like is

-Attitude of its staff were bad.
-The food on flight is lousy.
-It doesn’t assign seat numbers for passengers.
-Delays and cancellations are common.
-Sometimes combined the passengers of two flights into one.

Previously, people has such complains because they are not familiar with LCC. Most of them is first time took LCC Airline. They just compared with MAS with the service, food, assigned seat and etc. However now people has used to it and know about what is LCC Airline.

An important thing which can prove AIRASIA has a great management is reduction of delayed flight. More people now prefer AirAsia than MAS, even when they are on business trip (employers will pay ticket's fees ), because they are fed up with the (infamous) flight-delays of MAS and AirAsia makes their schedules more flexible, because it has a higher flight frequency than MAS. They have more choice for the departure time.

Lets look at the chart below:

AIRASIA that has a consistent punctuality which the customers' respect and build up its name, thus gain a bigger market share in long run.

It has prove that it's management is great. Of course i also have confidence to Tony Fernandes:)

Analysis on KFC Holding Berhad

Financial report
As we know, KFC is a famous fast food restaurant in Malaysia. But KFC Holding Berhad's business is not only KFC restaurants. KFC Holding Berhad's business as below:-

1) KFC restaurants
2) Rasamas restaurants
3) Ayamas retail

Attached here the financial reports of KFC Holding Berhad.

From the report above, we can see that KFCH is negative profit on 2005. This figure has make me curious. Everyone know that KFC restaurant always full of people. How it's profit will be negative?
When i check the numbers of Rasamas retaurant and Kedai Ayamas then i come out a conclusion.

Number of Rasamas retaurants reduce from 31(2004) to 14(2005) that means 17 of the Rasamas retaurants in 2005 was not run well and end up to be shut down.

Number of Kedai Ayamas and Ayams Depots is keep reducing too.

KFCH has lost a lot when it try to expand Rasamas and Ayamas. After KFCH reduce the branches of Ayamas and Rasamas, it has a big increase in it's profit in 2006. Therefore i believe that KFCH will have a stable growth in future.

Competitors of KFC
From few fast food restaurant, only one can really competive with KFC in Malaysia which is Mcdonald. How many Mcdonald restaurants in Malaysia? As on 31.12.2007, only 177 Mcdonald in Malaysia since it's 1st restaurant on 1982. That means average 7 outlets opened per year compare to KFC is average 11 outlets opened per year.

In Malaysia, KFC is top fast food restaurant.

Share portfolio from 14.07.2008 to 12.08.2008

Previously i have mentioned that i deleted TENAGA from my watchlist. The reason as per below:-

1) It is a Government link company.
2) Malaysia's politics is unstable.
3) i am not trust enough to the management of TENAGA.

After i sold out TENAGA, few stocks with good management system is in my mind. i had make a decision to choose two of the stocks in my watchlist. The transaction i made from 14.07.2008 to 12.08.2008 as per below:-

Date stocks name buy/sell units Avg price transact cost
14.07.2008 AIRASIA buy 2000 0.86 14.52
15.07.2008 KFC buy 1000 5.875 32.4
01.08.2008 AIRASIA sell 1000 1.13 14.34
05.08.2008 AIRASIA sell 1000 1.13 14.34
12.08.2008 KFC sell 1000 6.5 36.25

Total investment amount = RM7641.92
Total net profit = RM 1053.16
% of net profit= 13.78%

Why i choose AIRASIA and KFC on this time? And why i sold out them?

Share portfolio from 01.11.2007 to 09.06.2008

From 01.11.2007 to 09.06.2008, i have put all my capital in one share which is TENAGA. The reason i choose it at that time is :-

1) 80% of electricity of West Malaysia is from TENAGA.
2) Other companies difficult to involve in this sector.

Combine the two reason above, TENAGA is nearly monopoly in electricity sector of West Malaysia.

Attached herewith the transaction i make from 01.11.2007 to 09.06.2008.

Date Buy/Sell Units Price
01.11.2007 Buy 500 9.3
15.01.2008 Sell 500 10.1
01.05.2008 Buy 1000 6.7
09.06.2008 Sell 1000 8.5

I have make some profit from the transaction of TENAGA as above. But after i study more, i decide to delete TENAGA from my watchlist. I will share my concern and what stock is in my current watchlist in my next post. Enjoy everyone of investment in KLSE.

Investment road

Hi everyone, i am just a simple guy who interested in investment in Malaysia stock market. I start doing research and study of Malaysia's stock market since i was in Univesity. "Compound interest" these two words really attract me and make me feel how amazing of investment. I read many books about investment. From so many investment tools, i had make a choose which is invest in stock market. Why i choose invest in stock market? Why not property? I have three main reason why i choose share market as my investment tools.

1) Do not need much capital
2) High return
3) Warren Buffet(richest man in the world)

Investment in share market is not a gamble. Therefore, study and researching is very important to make sure you choose a right stock and a right time to invest. Knowledge and experience is important to make you rich.

I has start my investment plan from last year October. The first share i bought was TENAGA. I make a 10% profit for my 1st investment. Which i really satisfy my result of my 1st time. But TENAGA is already not in my watchlist. I will share my investment portfolio from time to time and the reason for choosing this stock in this blog. Hopefully who has any comment or any suggestion, can just leave me a message here, let us discuss and improve together in share market.