January 9, 2012

Financial Review - Year 2011

It's a new year and a good time to look back on the year of 2011 to review my financial standings, i.e. what I have done great and what needs improvement. Here's the review for my financial situation:

The Great Stuffs:

  1. Expenses: Compared to year 2010, expenses further decreased 8.6% despite the ever increasing inflation and larger spending amount during the year end sale 2011. Actually i surprised myself that i still manage to cut down expenses year after year.
  2. Savings: Compared to year 2010, savings increased 20.5% over the year 2011. Again, this is great achievement despite the meagre increment and higher inflation in the year 2011. So far, I've managed to save on average 44% of my net household income.
  3. Net worth: Compared to year 2010, net worth increased 31.2% over the year 2011. This is mainly due to the disposal of an investment property.
  4. Stocks investment: Stocks portfolio has grown 2.5x mainly due to higher allocation to stocks investment. I cut some losses during the market riot in August, and yet still managed to churn out positive gains over the year 2011.
The Not-So-Great Stuffs:
  1. Unit trusts investments: A bad year for unit trusts investments overall due to market turbulances in February and August. The whole unit trusts portfolio lose about 7% over the year 2011.
  2. Too Asian centric: My unit trusts portfolio is too Asian centric, and due to underperformance of Asian and emerging market regions in year 2011, this has drag down the performance of the whole unit trusts portfolio. 
Changes for Year 2012:

I expect year 2012 to be much more volatile with higher downside risks, mainly due to the economic situation in the Euro zone. With this investment perspective, I would make changes to my investment portfolio as follow:

  1. Focus on local investments: This is due to the more defensive nature of Malaysian stock market. Investments into local stocks/funds will be split into blue chips, dividend play and REITs.
  2. Streamline Asian centric unit trusts investment: I will review Asian centric funds in my unit trusts portfolio. I will probably dispose off one of the fund in my holdings now.
  3. Higher cash holdings: With the anticipation of more market turbulances this year, I will make use of the extra cash from the investment property disposal to make some opportunistic investments for the stocks in my watch list.
Times are hard for people on the streets due to high inflation and low income base. With super high price bracket of properties in recent years, I would say there's not much values can be found in the market nowadays.

So, with the higher expected volatility in the stock market and low investment prospect in propert market, what would be your choice of investment vehicles this year?

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