May 21, 2010

Sukuk 1Malaysia

Bank Negara Malaysia has launched a government savings plan, Sukuk 1Malaysia, for Malaysians above 21 years old. This is a 3-year syariah-compliant savings plan which guarantees tax free 5% profit rate per annum, to be paid quarterly. The minimum and maximum subscription is RM1,000 and RM50,000 respectively. There will be a 0.1% admin charge payable to the agent banks when you buy the sukuk.

The key features of this savings plan is available here and the extensive FAQ is available here.

From my personal observation, Sukuk 1Malaysia is good because:
  1. Provides much higher profit rate than fixed deposit/cash fund
  2. Government guaranteed returns
  3. Can sell/transfer easily without any cost.

May 20, 2010

An antidote to volatility

Would you be interested in an all-weather portfolio that, despite hardly ever changing its composition, performs creditably in almost all market environments?
I thought so -- especially after yet another day of incredible volatility, with the Dow Jones Industrial Average reversing from a nearly 100-point gain early in the session to finish down by 115 points.

Well, consider the so-called "Permanent Portfolio" that Harry Browne recommended to his clients in the late 1970s. At the time, of course, Browne was editor of an investment newsletter called "Harry Browne's Special Reports." Several decades later, he became the Libertarian Party's candidate for president. He died in 2006.

Several of the investment books that Browne wrote during the 1970s and 1980s became bestsellers. One, "Why the Best-Laid Investment Plans Usually Go Wrong," published in 1987, was devoted in large part to introducing investors to the virtues of a diversified portfolio whose composition would stay constant year in and year out -- permanent, in other words, except for annual rebalancing.

Though Browne's idea is not new, the markets of late have led to a renewed interest on the part of many investors. First, it was the worst bear market since the Great Depression, being quickly followed by one of the strongest 12-month rallies in history. And then came the "Flash Crash" in which nearly a thousand Dow points vanished in a period of minutes.

May 18, 2010

How to profit from the sovereign debt crisis

Skidding currencies, plunging stock markets, soaring government bond yields -- if the type of debt crisis that just hit Greece heads to U.S. or other shores, investors may think the safest place for their savings is the mattress.

Yet plenty of strategists say there's a way to make money off the next phase of the sovereign debt crisis.

Strategies range from the obvious -- trimming holdings of long-term U.S. Treasurys and buying gold -- to the esoteric -- buying Brazilian reals while shorting the Czech koruna.

But the concept behind all of the approaches is that the current turmoil will last a long time.For the debt crisis, "we're in the middle innings of that game," said Max Bublitz, chief investment strategist at SCM Advisors.

Investors should prepare to wait and perhaps suffer some pain along the way, money managers say. Many suspect the U.S. economy could suffer low growth and bouts with deflation before high debt levels give rise to an upturn in interest rates.

"If you put these trades on, you have to be in it for the long term," added Russ Koesterich, head of investment strategy for scientific equities at BlackRock.

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