Unit Trust Gain

I have read the financial column regarding unit trust.

One of the reader has requested the government to reduce the interest for unit trust depositor which is 5% now (for cash depositors)

He had made a calculation like this.

If you invest RM1000, the unit trust amount will be RM950 only since RM50 will be deducted for the unit trust fee. So the amount invested will be RM950.

Normal ASB deposit Unit Trust
First year RM1000 RM950 (if the unit trust unit RM1.00)
Second Year RM1070 (7%) RM1070 (you need 11.21%) (Unit trust need to
be RM1.11 in order to make similar profit like ASB)


If we calculate for long term (5 years)
UT Unit Unit Trust % gain needed ASB
First year 1.00 950 0 1000
Second Year 1.11 1054.5 11.21% 1070
Third Year 1.19 1128.35 7% 1144.9
Forth Year 1.27 1207.25 7% 1225.04
Fifth Year 1.36 1291.8 7% 1310.79

What Combination of Investments Will Be Right for You?

What Combination of Investments Will Be Right for You?
It all depends on:

* Your age - How old are you now? Start at early age is better

* How much you have to invest? Save aside at least 10-30% for investment.

* What financial goals you are pursuing? How much you want to earn and when?

* How long you can invest for? Long term is better

* Your investment knowledge? Seek for financial knowledge. Go to financial seminar

* Your expectations? At the end of the day, what do you expect in life? financial freedom??

Understanding of Dollar Cost Averaging

Dollar Cost Averaging Dollar cost averaging is a way to build your assets by adding to your investment at regular intervals. Here is an example of how it works. Example of Dollar Cost Averaging Let's say you invest RM6,000 per year for five years in a unit trust that started at RM10 per unit. The unit price changes over the five years, falling by 80%, to $2 then recovering to the original RM10. Dollar Cost Averaging Here is how it works out:   Year 1 Year 2 Year 3 Year 4 Year 5 Total Investment RM6,000 RM6,000 RM6,000 RM6,000 RM6,000 RM30,000 Avg Unit Price Paid RM10 RM4 RM2 RM6 RM10   Units Bought 600 1,500 3,000 1,000 600 6,700 Value           RM67,000        The total value of portfolio at the end of year five is 6700 units x RM10 = RM67,000. Altogether, you have invested RM30,000.

Impact of Inflation

What is the Impact of Inflation? Assume you have RM10,000 today. Below is a chart which shows you what happens to your RM10,000 given the varying rate of inflation from 2-10%. Inflation Rate(%) 10 years 15 years 20 years 2 8,203 7,430 6,370 4 6,755 5,552 4,563 6 5,583 4,172 3,118 8 4,631 3,152 2,145 10 3,855 2,394 1,486 Therefore, if you don't grow your savings through carefully chosen investments, your RM10,000 will be eaten away by inflation to RM4,563 after 20 years at 4% inflation rate.

Choosing Your Credit Card - Well I don't encourage you to have one!

Choosing Your Credit Card

As you probably already know, there are many credit cards out there. The one you choose however, should reflect your lifestyle and your ideal spending amounts. If you are looking for the best possible deal and the best company for your credit card, you’ll obviously need to look around at what you have to choose from and what works best for you.

The first thing you’ll need to decide when choosing your credit card, is why you need one in the first place. Some people choose to get a credit card for cash flow purposes. With a credit card, you can make purchases and buy things, leaving your paycheck or other source of income in your bank account to draw interest. This way, your money will continue to grow while you continue to buy the things you need. Then at the end of the month, simply pay your bill.

Others will choose to get a credit card and use it for instant cash purposes. This way, they can use their credit card at an ATM and get instant cash, which is great for travel or going on a long and extended vacation. If this is why you want a credit card, you should look for one that has the lowest rate possible for instant cash transactions.

With a credit card, you’ll also need to think about the payments. You’ll need to decide if you want to pay the balance in full each month, or only the required amount. When you select your credit card, you should look at the introductory rates, balance transfer rates, and other offers that may apply to new credit cards and new holders. Some will offer you truly amazing deals, especially if you have good credit.

Another important area to look at when choosing your credit card is the incentives. There are several cards out there that will give you incentives, such as reward points and even cash back with purchases that you can use towards paying back what you owe. There are several incentives out there with credit cards, all you have to do is look around and compare.

The key area you’ll need to look at and compare is the APR (Annual Percentage Rate). The APR is what you will pay on what you purchase when the incentive period runs out. APR rates will vary among credit cards, so it is always in your best interest to compare and shop around. The lower APR rate you get, the better off you’ll be.

Another concern with choosing your credit card is the minimum payment amount. Most minimum payment balances will start around 5%, although some can be lower while others tend to be quite a bit higher. The interest free period is a concern as well, as you will obviously want to choose the longest period that you can keep the payments down.

When you make that final decision and choose your credit card, you should always make sure that you know exactly what you are getting. Credit cards are great to have, although they can lead to a downfall if you don’t choose them carefully. If you put some time and research into choosing your credit card, you’ll find the best one for you. As long as you take care of your credit card and pay the bill on time, you’ll help raise your credit and eventually be able to purchase even bigger things - such as a car or even a house.

For me personally, I need one to help me during financial difficulties but pay full every time.

How To Avoid Late Fees

How To Avoid Late Fees

Although it may be overstated, there is a lot of truth to people ruining their credit score due to missing payments and paying their credit card bills late. The fees can pile up and the interest rates can grow before you know it, and after a while you won't even be able to pay the minimum amount of payment. If you don't do something fast - it could be the beginning of the end.

To make sure this don't happen to you, you should always pay your bill on time, and always avoid missing a payment. Sometimes, it can be hard to make your payments on time, although you should always do everything in your power to ensure that you stay on top of things. Below, you'll find some tips to help you with your credit card payments.

As stated above, you should always pay your bill on time. If something comes up and you aren't able to pay, you'll be penalized. Even though you may think what has come up will justify a late payment, it doesn't justify the means in the eyes of your credit card company. Inside of your bill, you'll find detailed instructions regarding payment. You should always follow them as accurately as possible, pay where and when you are supposed to pay - and do it on time.

If you simply aren't able to pay your entire bill, you shouldn't worry about it - but instead pay the minimum amount possible. Even though you may be able to pay more later, you should always pay at least the minimum amount. Then, when you have more money, you can always add to your minimum payment by sending in an additional payment.

The easiest way to do this, is to always have the minimum payment amount set aside, so that you have it once your credit card bill arrives. Once you have assured yourself that you won't be penalized or charged any late fees, you should look into paying a higher amount than just the minimum balance. By paying the minimum amount, you'll also ensure that no other fees will be added to your next credit card bill.

Another option includes skip a payment, although you'll need to check whether or not your credit card company offers it or not. This service will allow you to request a waiver regarding your payment, when something comes up and you don't have the money to pay your bill. Make sure that you use this service wisely if you have it, as it can only be used once a year. Therefore, you should always ensure that the situation is truly an emergency and there are no other options available for you. This service will normally have a cost as well, and you'll need to pay it the following month.

Although credit cards can be great for numerous reasons, you should always know your interest rates and have a good general idea of what your bill is going to be before you make a purchase. Many times, those who have credit cards will make purchases, knowing they can't make the payments - then suffer when they get the bill and aren't able to pay it.

Anytime you have a credit card, you should always make sure that you have the money to pay the bill, or the minimum amount, the minute it arrives. This way, you'll remain in good standing with your company and your credit score will continue to increase. If you simply aren't able to make your payment, you should contact your credit card issuer immediately and see if you can work something out.

A problem called ‘Credit Card Debt ‘

Credit card debt: A problem called ‘Credit Card Debt ‘

Credit cards are no more a luxury, they are almost a necessity. So, you would imagine a lot of people going for credit cards. In fact, a lot of people posses more than one credit cards. So, the credit card industry is growing by leaps and bounds.

However, the credit card industry and credit card holders are posed with a big problem called ‘Credit Card Debt’. In order to understand what ‘credit card debt’ actually means, we need to understand the workflow associated with the use of credit cards as such.

Credit cards, as the name suggests, are cards on which you can get credit i.e. make borrowings (your credit card debt). Your credit card is a representative of the credit account that you hold with the credit card supplier.

Whatever payments you make using your credit card are actually your borrowings that contribute towards your credit card debt. Your total credit card debt is the total amount you owe credit card supplier.

You must settle your credit card debt on a monthly basis. So, you receive a monthly statement or your credit card bill which shows your total credit card debt. You must pay off your credit card debt by the payment due date failing which you will incur late fee and interest charges.

However, you have the option of making a partial (minimum) payment too, in which case you don’t incur late fee but just the interest charges on your credit card debt. If you don’t pay off your credit card debt in full, the interest charges too get added to it. So your credit card debt keeps on increasing, more so because the interest rates on credit card debt are generally higher than the interest rates on other kind of loans/borrowings.

Further, the interest charges add on to your credit card debt each month to form the new balance or the new credit card debt amount. If you continue making partial payments (or no payments) the interest charges are calculated afresh on the new credit card debt. So you end up paying interest on the last month’s interest too.

Thus your credit card debt accumulates rapidly and soon you find that what was once a relatively small credit card debt has ballooned into a big amount which you find almost impossible to pay. Moreover, if you don’t still control your spending habits, your credit card debt rises even faster. This is how the vicious circle of credit card debt works.