Investing in Unit Trusts

Besides insurance plans for my son, I am thinking of buying some unit trusts for him. He has a great advantage over me in growing his investment and that is time!

Unit trusts is suitable for him because of his longer investment time frame and also because of dollar cost averaging.

A unit trust is a type of investment vehicle that 'pools' your money with other investors'; the collective amount is then invested to buy a range of shares or other instruments.

Unit trust offers a few advantages:

1) Diversification
Unit trusts offer an affordable and convenient way to diversify an investment. With as little as $1,000 for most funds, investors are able to hold a diversified portfolio of stocks of companies (or other instruments) that may otherwise be out of their reach.

2) Professional management of funds
When investing in unit trusts, investors are also leveraging the expertise of fund managers who are full time professionals. Fund managers will sometimes have analysis or research that an ordinary investor would not have access to and this could enable the fund manager to make better investment decisions.

3) Access to foreign markets
Unit trusts represent a convenient and effective way to invest in foreign markets. Quite often these would be out of reach of most individuals.

4) Liquidity
Unit trusts are highly liquid and investors can convert their unit to cash anytime, as fund managers are obliged to buy back the units from the investor. Moreover, there are no restrictions on how long an investment has to be held before units can be sold. Investors can easily buy extra units or sell down their holdings piecemeal. They don't have to depend on other buyers in order to sell their units either, because units are created or cancelled depending on demand.

5) Economies of scale
Investors with relatively small amounts to invest may still enjoy economies of scale: each investor can gain access to a much wider number of stocks, or markets than if he had tried to buy them individually. For example, to buy all the shares in a typical unit trust portfolio would be very expensive since dealing in small lots in individual shares is pricey.

6) Ease of use
Unit trusts are convenient and their fund prices are quoted daily in the newspapers and on web sites. They can be invested with cash, CPF and SRS.

7) Regular savings
After making the initial investment, investors can do a RSP (Regular savings plan). Can be as low as $100 per month. RSP is good for accumulating wealth in the long term due to dollar cost averaging.

However there are also drawbacks with unit trusts. Will be discussing that in future.

Insurance for baby?

Inflation is certainly higher than that given by the Department of Statistics as I looked at my breakfast this morning.

Why the discrepency? It is because the Department of Statistics define Consumer Price Index (CPI) as an index that measures the price changes over time of a fixed basket of goods and services commonly bought by the majority of the households.

This basket of goods and services is not reflective of each household's spending. At best we can only call it a snapshot.

What about goods costing the same price but less in quantity? This is also considered inflation as you effectively need to pay more to enjoy the same quantity as before.

Back to my breakfast. My $0.70 noodles though cost the same, the amount given was drastically less by about 25%. So in theory, to enjoy the same amount as before I would have to pay $0.93. Then my soya bean milk drink has increased from $1 to $1.30. This is to say, I now need to pay $2.23 to enjoy what I used to enjoy at $1.70. A 31.18% increase!!!!

Faced with all these increases, I am thinking of getting some insurance for my son. An endowment might be good. It offers the chance to save for his future education (who knows how much higher it will cost then?) and to have some safety net in place :p

Hmm think I will need to spend sometime looking at the different products available. Any recommendations?

Buddha Jumps Over the Wall ?

Buddha Jumps Over the Wall (佛跳墙) is a chinese delicacy that originates from Fuzhou, Fujian Province. With a history of over 100 years, Buddha Jumps over Wall is prepared with more than 20 ingredients, such as chicken, duck, pig's trotters and mutton, and stewed over a low fire with a jar for holding Shaoxing wine. Whenever this dish is served, the whole restaurant will be full of aromas. In the past a scholar composed a poem, saying: "All the neighbors enjoy pleasant aromas when the dish is served; and even a Buddha who is attracted by the smell jumps over the wall." Hence the name.

Last Saturday, my extended family celebrated my granny's 88th birthday in Spring JuChunYuan .The place is tastefully done up but a bit small.

Recommended dishes are:

1) Red Wine Chicken - chicken meat cook with ang chow 红糟 (residue from the making of red yeast wine). The chicken meat is very tender!

2)Stir Fried Heng Hwa Bee Hoon - if by just looking at the bee hoon, one would not find the bee hoon platable, as it looks too dry. However once you pour the sauce over it, it tastes very nice.

3) Fuzhou Yam Pudding 芋泥 - this is unlike the teochew yam pudding which is oily. This yam pudding is lighter on the oil and is yummy!!

besides the above 3 items, i think the other dishes are forgettable.

The Buddha jumps over the wall, supposedly the speciality dish, is a bit disappointing. I wonder if buddha will really jump over the wall for this? Haha. Though the ingredients used were good but the tastes is so so only.

The package we took was $1688+++ per table, and total bill came up to $8222 for 5 tables as there is a promotion of 20% off for HSBC platinum credit card holders. I personally think that once is enough liao for this Buddha Jumps Over the Wall.

Happy 2008

Happy 2008 to all! Erm a bit late though because it is already the 5th day into the year.

Today went fish seeing with one of my good friend. It was goldfish galore!!! Saw lots of big and small goldfishes. When looking at them, it made me think about gold investing...

Investing in gold is actually quite easy for retail investors like us especially with the streetTracks Gold Shares. This commodities Exchange Traded Fund (ETF) can be traded on the Singapore Exchange under the stock name GLD10US$. Trading is in lot size of 10 units and in US dollars.

For further reading please refer to http://www.streettracksgoldshares.com/sg/index.php?noMsg=true

Huat Huat!! A prosperous New Year to all!!

Buying a car in Singapore

Buying a car is not a necessity to me but a convenience, especially since the birth of my son. I am now seriously thinking of buying one or joining a car sharing scheme like Honda Dirrac. Scratch head*

So far I have shortlisted Toyota Vios, Toyota Altis, Honda City and Honda Jazz. I will most probably go for the Off Peak Car Scheme as I will only use the car on weekday evenings, weekends and public holidays. Was happily looking around until a good friend of mine reminded me that I need a MPV if my whole family were to go out at once.... (My parents,grandma,wife,baby son and myself!)

Will have to look around again...will update when I have a new shortlist... Meanwhile got to look around at the car loan packages...

Goldfish for good Fengshui?

Been away from goldfish for quite some time. Recently my interest in keeping them is rekindled.

Goldfish are beautiful and non agressive, however the drawback is that you need to have a good filtration system or a good water changing regimen to deal with their excretion. Classical fengshui advocates keeping 8 red plus 1 black. I think it is more important to keep the fish healthy rather than cramp all 9 into a small tank. :)

With the increase in water and electricity prices, the cost for this hobby is escalating too...

Just to share pic of my previous batch of goldfish :)

Inflation setting in

Almost everyday I hear the price of a certain item has increased. 2007 is indeed a year of increases, notably the GST increase from 5% to 7%, bus fare increment, ERP rates increase, pork price increase, flour price increase....

This morning as I read last night's Chinese newspaper, there is this article on 10 sets of kaya,butter toast costing $15 in a chinatown coffeshop!! The owner cites high rental as the reason...

Just be prepared for more increases ahead. I personally believe that GST will be increased further with the government cutting corporate taxes to attract MNCs, high tech setup to open shop in Singapore. As they argued, this will give our citizens more job openings,etc. But in order to balance the "loss" in corporate tax revenue, they will have to increase consumer tax...

More to ponder on my next posting...