Financial Planning

	Wise Tips for Smart Investors

	4 simple questions Before selecting an investment, ask yourself these simple but essential questions: - Is the investment easy to understand? - Is there a good chance of making money? - Is there a ready market should I need to sell in a hurry? - Is the investment relatively inexpensive to buy, hold and sell? Next, understand the three rules of risk: - Don't risk more than you can afford to lose - Consider the odds - Don't risk a lot for a little Financial planning is about assisting people at all levels of income to achieve their short term and long term goals. Its objective is to accumulate enough to provide for long term financial goals, such as a college education for your children or a comfortable retirement for yourself. The average person may be confused or unsure how best to achieve this. Unsurprising, given the range of financial solutions and options available. But it's not all that difficult, so let's see how you can better your prospects of successful financial planning. Understand the trade-off between risk and return This is the Golden Rule of investments: Remember that the higher the return you hope to make, the greater the risk you take. Risk and reward are invariably linked. While you might be tempted to avoid risk altogether, be aware that doing so could give you lower returns. Perhaps better to choose a level of risk that you are comfortable with and match it to your investment needs. Know your attitude to risk Some people are willing to take on more risk than others. You should think about the risk level that you are comfortable with before deciding on the investment and approach that best suits you. Be aware of inflation risk Over the long term, inflation is a major issue to contend with and be aware of. As prices rise, the same amount of money will buy less and less each year. This means that unless the return on your money is at par with inflation, the value of your investment will actually be falling. For instance, if the inflation rate for the year is 3% and your investment vehicle generates a return of 5%, then you have only really earned 2% return in today's dollars. Understand short term risk A short term investment time frame can directly affect your returns and the risk associated to some investment options - especially if you take into consideration transactions costs and the time you have to recover these costs. As such, in the short term cash can be seen as a 'safer' option because its returns are fairly steady, whereas equities will be deemed riskier as share prices can rise or fall sharply, making it hard to anticipate or know what your return will be. Thus, if short term risk is a concern for you, consider investing into other investment instruments such as cash or fixed interest. However be cautious as over the long term, cash could become relatively riskier than equities due to inflation and it's subsequent erosion of purchasing power while equities could potentially have outpaced inflation. Also, a longer time frame allows an investor to ride out the volatility of equities. Realise the importance of time It is important to think about how long your money will be invested for, when deciding where to invest as this will directly affect the type of investment instrument you choose and it's risk factor. If you will need your money soon, you may want to protect it by investing more in lower risk areas. However, over a longer period, short term ups and downs tend to be smoothed out, and you may want to consider investment instruments with returns that will help combat the effects of inflation. Don't put all your eggs in one basket This is the key to managing risk. While the price of each investment option, i.e. cash, fixed interest, unit trust, property and shares, will rise and fall, it is unusual for each option to move in the same direction at the same time. As such spreading your money across these areas, otherwise known as diversification, may help enhance the overall return of your investment as a poor result in one area can be balanced by a good performance of another. Sound, conscientious financial planning is about taking charge of one's financial life as opposed to getting along in life. Nevertheless, research by Brinson, Singer and Breebower* , reveals that asset allocation plays a major role in long term investment success, and contributes to approximately 91 percent of the investment result. *Gary P. Brinson, Brian D. Singer and Gilbert L. Beebower, "Determinants of Portfolio Performance II: An Update, Financial Analysts Journal, May/June 1991." A little can mean a lot The best way to combat inflation is to invest in any investment vehicles which usually produce higher returns over time. Some people may brush off a few extra percent in returns as not worth the additional risk. Over time, however, a little can mean a lot. Take for example, the difference between a 6% and 8% return on an investment of RM50,000. After five years, the difference would amount to RM6,555. But over 20 years, the difference would have grown to over RM72,691 - that's more than the amount of the original investment! Use "Dollar-Cost Averaging" Dollar-cost averaging is a technique widely practiced in the unit trust industry. It involves investing a fixed amount at a fixed interval, such as monthly, quarterly, half-yearly or yearly, regardless of what goes on in the stock market. When fund prices are higher, your regular additional investment buys fewer units. But when prices are lower, this same amount of money allows you to accumulate more units. If the stock market rises over time, you could eventually end up with units that are worth far more then the original prices you paid. This strategy also allows you to avoid timing the market and gives you both the courage and discipline to keep investing - especially if you do not want to miss out entirely on a bull run or be burnt by a severe market correction. Tap into expertise Enlisting the help of professional Unit Trust consultants can be worth more than a cursory thought. The job of these people is to follow the behaviour or direction of global markets in order to anticipate trends and be positioned to make timely investment decisions on your behalf that best suit your financial needs and objectives. They have the time, information and expertise to guard your financial house and protect your well-earned portfolio from other potential financial problems. More often than not also, these Unit Trust consultants are backed with years of experience. Having these Unit Trust Consultant looking after your money could be useful for you in the long run.

Warning Statement!

BEFORE INVESTING, YOU ARE ADVISED TO READ AND UNDERSTAND THE CONTENTS OF THE MASTER PROSPECTUS DATED 29 APRIL 2000 AND THE INDEX-LINKED FUND PROSPECTUS DATED 8 JUNE 2000 (INCLUDING SUPPLEMENTARY PROSPECTUSES THERETO, IF ANY). SUCH PROSPECTUS HAS BEEN REGISTERED WITH THE SECURITIES COMMISSION WHICH TAKES NO RESPONSIBILITY FOR ITS CONTENTS AND IS OBTAINABLE AT ANY OF OUR OFFICES.

YOU SHOULD CONSIDER THE FEES AND CHARGES INVOLVED AND CONSULT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER IF YOU ARE IN DOUBT ABOUT ANY FEATURE OR NATURE OF THE FUNDS. THE PRICES OF UNITS AND DIVIDENDS PAYABLE, IF ANY, MAY GO DOWN AS WELL AS UP AND PAST PERFORMANCE OF THE FUND IS NO GUARANTEE OF ITS FUTURE PERFORMANCE. ANY ISSUE OF UNITS TO WHICH THE PROSPECTUS RELATES WILL ONLY BE MADE ON RECEIPT OF THE APPLICATION FORM REFERRED TO IN AND ACCOMPANYING THE PROSPECTUS.