News, views & reviews

We still have places left for the financial talk on 8 May 2010. Please hurry and book your seats now! The public can also sign up through the events page.

All attendees will receive a free copy of the Practical Guide on Financial Planning book. This means both the members and the public will receive the book! The book is written by our very own President. I'm sure you can get him to sign your copy there. :)

Why wait? Tell your friends. Bring your family. For more details of the Financial Talk, please visit this page.

Or any time before 1 January 2013, you will get two months before your birthday the following

-- a letter telling you how much you can withdraw

-- a brochure giving you three reasons why you might want to keep your money with CPF and not withdraw all or some of money you are entitled to*

-- a withdrawal form 

-- CPF Life application form (remember you have to opt in, otherwise you remain on Minimum Sum Scheme)

*The reasons given for not withdrawing your money straightaway

-- up to 5% interest

-- can withdraw at anytime

-- continue using savings in Ordinary Account to service hosing loan.    

 

Lemizaraq has just admitted to making a $125 investment mistake. This may sound small to some, but if your investment amounts are larger or if the market is very wild, this amount can easily be blown out of proportion, especially if you make use of any leveraging or gearing (see gearing definition here).

So why do I mention making mistakes here?

Lemizaraq is candid enough to share how he made his mistake and how he will never forget it now. And I believe that's the point about mistakes.

Mistakes are worth making if you learn from them. We will always make mistakes. There is no running away. Admit your mistakes. Know why and how it went wrong. Learn how to avoid it the next time. Move on. Life is too short to dwell on your mistakes.

But if you choose to ignore your mistakes, it will come back to haunt you. You can't expect better results if you were to do the same thing over and over again. You will make the same mistakes if you were to do the same thing over and over again.

Make the mistakes. Learn from them. Do not ignore them. If you ignore them, you'll be making 2 mistakes for the price of 1. This is one free item that I would rather not have.

First up, our very own FiSCA President was quoted on the new online car insurance offered by Aviva. As always, exercise your own independent thinking when buying any insurance.

Other articles worth reading this week:

• Why life insurance is not an investment
• Pay for your vacation in cash
• Seven steps to get out of debt
• 10 psychological, valuation, adaptive investment rules
• Know your limit, risk tolerance, and when to stop gambling
• Deep truth about the markets and investing
  
• Reuters Financial Glossary

Have a good weekend!

The business or company you think is responsible for a problem should have the chance to look into any complaint ...

Many complaints are caused by misunderstandings that the business can quickly sort out, once you explain the problem.

Making a complaint to a business might seem stressful especially when it relates to your finances. So here are a few hints to help you take it one step at a time and to get your complaint taken seriously:

• What's the problem? Before you make a complaint, be clear in your own mind what you think the problem is - and how you would like the financial business to put things right for you.
• Stay calm. No matter how upset you are, try to stay civil and unflustered. You will get your points across much more clearly and effectively. Put yourself in the shoes of the person at the end of the phone, who you want to help you. Would you like someone shouting at you?
• Write or phone? If you complain by phone, make sure you keep a note of when you called and the name of the person you spoke to. If you write, put "complaint" clearly at the top of your letter.
• Keep it brief. It is always best to keep things short and to the point. Say simply and clearly what you are not happy with and what you want the business to do to resolve the problem.

This an excerpt from an article for BBC Online by Natalie Ceeney Chief executive, Financial Ombudsman Service of the United Kingopm 

Your car goes for maintainence. Your teeth goes for dental checkup. It is time for your finances to go for a tuneup as well.

The New York Times put together a checklist for you to tick off as you tuneup your finances. You can also customise this checklist by removing the ones that are not applicable to you e.g. student loan.

The checklist can be found by clicking here.

Here is an example of how the Consumer Union is calling for action on financial reform. You can show your support by sending a message or by donating to them.

If you feel strongly about a financial matter, you can also start your own call for action by submitting your views in our member discussions. Your voice is stronger than you think.

"Education is the most powerful weapon which you can use to change the world." - Nelson Mandela

Have you had your financial education yet?

It turns out that there is a very thin line separating speculation and investing.

According to Wikipedia, “speculating is the assumption of risk in anticipation of gain but recognising a higher than average possibility of loss. The term speculation implies that a business or investment risk can be analyzed and measured, and its distinction from the term investment is one of the degree of risk. It differs from gambling, which is based on random outcomes.”

Also it turns out that there is no time frame to speculation. So I can buy and hold a stock for 10 years and it can still be a speculative investment. Especially if it is highly risky. Like SIVs (Special Investment Vehicles), Lehman’s Minibonds Notes, DBS High Notes etc

At the same time, speculation actually helps out in the real economy. It spreads the risk for the producers as speculators may buy say, corn crops in advance and the famer will be more willing to plant more corn crops and have more money to develop his land with advance money from the speculator.

The side effect of speculation was observed in the last financial meltdown in 2007-2009 where huge speculative positions in mortgage markets caused a build up in a property bubble which imploded with drastic consequences.

However, if you refer to “The Intelligent Investor” by Benjamin Graham, he puts the difference between an investor and a speculator into quite clear and distinct terms. He says:

“An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.”

And in the first chapter after introduction, he spends a whole chapter differentiating between the two and defining what an investor is. He classes these people as speculators:

 

People who short stocks	Every non-professional who operates on margin (using leverage)
Everyone who buys a “hot” common stock issue (ie your IPOs)	Involved in trading in the market- ie high turnover of stocks in a short time

In the book, Graham also states that speculation is not illegal nor is it morally wrong. In fact he states that there is an element of speculation in every investment.

Without bearing some sort of risk, there isn’t any returns to speak of.

However, if you look at what happened in the housing market in United States, where ordinary people had two or three mortgages at its height and thinking that ever higher prices it will go on forever, you will be maybe draw parallel with what is happening in Singapore and Asia?

So what are you? More investor or more speculator?

 

Sources:

1. Wikipedia on Speculation versus Investment

2. The Intelligent Investor by Benjamin Graham

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This is a post from our guest writer Lemizeraq who runs the website Financial Freedom SG. The original post can be found here.

If you want to be a guest writer as well, or if you have a story to share that will help our readers understand financial matters better, please contact us.