Impact of new BNM Rulings on Household Indebtness

Due to the rising household debts as compared to GDP in Malaysia, Bank Negara Malaysia (BNM) recently introduced new measures to further tighthen credit lending especially on housing and personal loans as follow:

 

1. Maximum tenure of 10 years for financing extended for personal use.
2. Maximum tenure of 35 years for financing granted for the purchase of residential and non-residential properties.
3. Prohibition on the offering of pre-approved personal financing products.

Now that we have these new measures, so what does it means to the people on the street? This is my opinion on the impact of new BNM rulings to the rakyat:

•  Housing loans will be less afforable to the property investors/buyers, especially for the younger investors/buyers. With the shorten loan period, monthly installment is expected to rise and affect debt-to-income ratio, which is probably one of the factor financial institutions take into considerations.
• Hopefully, the new measure can cool down/reduce the property market speculations, especially those developments without DIBS. Personally, i still wonder why Malaysian government hasnt banned DIBS as done by Singapore government few years back. In my opinion, DIBS is one of the factor that push property prices to beyond the reach for most of the rakyat.
• Reduced availability of personal loans. A lot of youngsters and people in the lower income brackets are taking personal loans to cover for daily expenses as well as paying off credit card debts. With the introduction of such new measures are going to be painful to those people affected, but i do agree that such measure is needed to instill better financial management for the youngsters.

In summary, the measures are good for long term financial stability of the country. No doubt that it's going to be painful for those affected, but it's necessary to bring down household debts. I guess people needs to get the basic fact right: you must spend less than what you earn!

Private Retirement Scheme vs Regular Savings Plan

Private Retirement Scheme (PRS) was soft launched by the Prime Minister in July as an  additional financial tool to supplement our sole retirement funds, EPF. After the initial hoo-hah, the hype about PRS has cooled down with not much information on the details of the PRS available to the public. However, you can refer to this booklet for some basic info and Q & A on PRS.

Since we've got this simple booklet to explain everything about PRS, I'm not going to dwelve in details about PRS. What I'm interested in discussing about is the comparison between PRS and Regular Savings Plan (RSP). Typically for a PRS investment, we are talking about regular top-ups to the retirement funds with your spare cash, be it on monthly/quarterly/one-off basis. This is basically the same principle as RSP.

Now, as an investor, if you already have active RSP with one of the fund houses or via online unit trust distributors, such as Fundsupermart, you might be wondering, should i cancel my RSP and invest in PRS? As a quick recap, let's look at the advantages and disadvantages of investing in PRS:

Staying calm in volatile markets

Short-term losses and volatility are inevitable and investors have to live with them rather than be stifled by them, writes PETER BROOKS

THE choppy markets of the past few months may have made investors feel like they were reliving 2008 all over again. The bad news is that spikes in market volatility appear to be here to stay. The good news, however, is that there are ways to navigate safely through such times by purposefully managing our responses.

Higher volatility usually comes with higher levels of investor discomfort. Many investors consider pulling out of falling markets while those who see a buying opportunity can find it difficult to commit due to fear of mis-timing the purchase.

If higher volatility becomes the new norm, it is important for investors to better understand and take control of their investing behaviour. There are three easy strategies investors can adopt to increase their comfort in difficult markets: (i) keep the correct perspective of time horizon; (ii) rebalance assets; and (iii) keep an investment diary.

Money Jar Savings Method for Children

To teach the children about the concept of savings is like to ask them to eat vegetable or chillies. It's almost impossible! I believe most parents will agree with me that children nowadays are very tempted with all the toys and gadgets in the market today. The children will probably bugged you everyday for the toy they like, until you give in.

So, how do you solve this problem? You can either give in and buy them the toys, but for the parents, it's a losing battle for them. Once the children get their ways, they will smartly use the same method again for the things they want. Alternatively, you can teach them the concept of savings and delayed gratification. Sounds tough huh?

Here's how i do it. It's called Money Jar Savings Method. There are a few variables of Money Jar Savings method, like 3-jar system or 5-jar system. What i preach to my children is the 3-jar system. Basically, you have to prepare 3 piggy bank/jars (preferably transparent) to start the savings.

For the first jar, I will tell my children that this is for them to save for their own goodies, such as sweets, toys and gadgets. When you tell them this, I'm sure you will get them excited already! But to teach them delayed gratification, this jar will receive the smallest savings portion so that it will take a while longer to save enough for them to buy goodies. For me, I will save 20 cents a day for them.

The second jar is for them to buy their school necessities, like school bags, pencil cases, books, shoes and etc. This normally excites them as well since most of them fancies the latest bags/shoes/pencil cases to show off to other kids. For the second jar, I saved 50 cents a day for them.

And now for the third and final jar, i will tell them this savings jar is for them when they grow up. This jar is meant for long term savings for the kids. From my experience, the children will be disappointed with this third jar since they cannot visualize what's there for them and they dont understand the meaning long term savings. But, it's ok. They dont have to understand about the usefulness of the third jar. For this third jar, I saved 1 dollar for them a day.

So now you have the 3-jar savings system. The idea of having transparent jars is that the children will get to see the money grows inside the jars and this will get them excited to save more. Will this work for your children? Why don't you try it? I'm quite sure it works wonders. Of course, we as the parent should have the discipline to do the savings part.

Once you have enough savings and the jars are full, it's time for you to keep the money in the bank. One option is to keep these money in the junior savings account where you can potentially earn more interests than the normal savings accounts. To find out more about junior savings account, go here.

忙碌了一輩子，大家來到退休時，都希望自己能夠輕鬆沒煩惱地享受自由的生活。


但想要沒煩惱，就要事前準備，因為今天的規劃，能夠換來他日的幸福。

退休前后的生活會有很大轉變，尤其收入會減少，因此，退休前即要減輕債務，又得準備退休后的開銷。

做好安排，才能確保退休后，沒有工作收入的情況下，有效使用退休金，避免短期內就消耗完。

只需在退休前，完成6件事，退休生活就能安穩無憂慮。


（一）優先清除債務

若能夠在退休前，就把所有債務清還，是最理想的情況。而且，償還債務次序以利率最高的債務優先，如信用卡債務。

退休生活，應當輕鬆自在進行自己喜歡的活動，不應該為了債務而煩惱，而且確保老本不會被債務侵蝕掉。

但理財師說，若退休前已把貸款納入退休開銷預算，貸款其實還不算可怕。

假設一個人的貸款會在他60歲時屆滿，加上已做出預備，則無大礙。但如汽車貸款，就不應該在55歲的退休年齡申請了，若要買車，儘量用現金。　

一般上，退休者也很難再獲得貸款，因為金融機構很少批准貸款給沒有收入來源的人士。

與時拼經．樂齡銀行戶頭價更高 年利息較高

退休不是人生的結束，而是另一生活里程碑的開始，那備好的籌碼又要如何運用才足以應付那麼長的老年時期？

考的是應對智慧。

風險承擔能力偏低，失去工作能力的老人們已無法從頭來過，又要應付通脹，又要為養老金築起防衛牆。

年利息較普通戶頭來得高的樂齡儲蓄戶頭或定期存款戶頭（簡稱定存），也許是退休財務規劃的另一個不錯選擇。

通常退休時，老人都會一次性取得一筆可觀的退休金，那該怎么確保這筆錢足以應付通脹、貶值及這么長的退休生活費？

邁利財務規劃董事經理張梅香在回答《中國報》記者提問時指出：“如何規劃退休后所獲得的那一大筆錢是非常重要的，但還是那句老話，別將所有的雞蛋放在同個籃子里。”

她說，樂齡儲蓄或定存戶頭或是其中不錯的選擇，畢竟風險相對較低，老人或可將大部分存入此戶頭。

綜合資料后發現，樂齡銀行戶頭整體利息（最低介于0.1%至2.8%），比較起市場上普通的儲蓄戶頭（最低介于0.1%至約0.9%）年利息相對來得較可觀。

就以最具看頭的艾芬銀行樂齡戶頭為例，只需區區5000令吉的開戶頭要求，就可享有高達2.8%的最低年利息，存放50萬令吉及以上，享有的年利息更可高達3.1%。

比較起普通的存款戶頭，需存放1000令吉以上方享有0.25%年利息，有者存款額更需1萬令吉及以上才會發給0.1%的年利息，樂齡銀行戶頭顯然更具吸引力。

Wealth is what you save, not what you spend

We all may not be millionaires but there are plenty of financial and life-planning secrets we can learn from the well-heeled.


Most people know that wealth in the U.S. is in the hands of a small percentage of the total population. And, today, most of those folks with a net worth of $1 million or more have earned it themselves.

They’re mostly entrepreneurs who create everything from high-speed networks to garbage haulers. They dig ditches and build houses and grow corn and make jewelry. They deal stamps or coins or artwork and control pests and cut lawns. They also cure people and give them new teeth. Others will defend their neighbors or even feed them.

And they’re not big spenders. In fact, most of those with big bucks live well under their means — think about Warren Buffet still living in that modest Omaha home — and they put their money instead toward investments that help them stockpile more wealth.

“Wealth is what you accumulate, not what you spend,” according to Thomas Stanley and William Danko, the authors of the seminal tome on America’s wealthy “The Millionaire Next Door,” first published in 1996.

“It is seldom luck or inheritance or advanced degrees or even intelligence that enables people to amass fortunes,” the authors wrote. “Wealth is more often the result of a lifestyle of hard work, perseverance, planning, and, most of all, self discipline.”

Seven steps to a sound retirement

There are seven keys to a lot of things in life. There are seven steps to heaven and seven types of intelligence and seven habits of effective leaders.


Now we have seven steps to retirement planning courtesy of the Society of Actuaries, which just released a 64-page report with the not-so-consumer friendly title “Segmenting the Middle Market: Retirement Risks and Solutions Phase II Report.”

“Retirement financial planning requires a methodical approach that identifies and quantifies each important component that affects the asset accumulation, income management and product selection/investment decision processes,” according to the report, which was sponsored by the society’s committee on post-retirement needs and risk and written by Noel Abkemeier of Milliman.

Not surprisingly Abkemeier says this approach is especially important for middle income Americans who likely have less than $100,000 set aside for retirement. So what are those steps?

Five common investing mistakes to avoid

Russell Investments recently posted a list of companies joining and leaving the Russell 3000 index on June 25. In anticipation of this event, many investors have either bought the stocks of companies being added to the index or sold those being deleted from it. Big mistake.

In fact, it might be better to do the exact opposite, because stocks deleted from an index tend to have significantly higher factor-adjusted returns than index additions, and stocks added to an index have "poor long-term returns," according to a study published in the Financial Analysts Journal in 2008 by Jie Cai, an assistant professor of finance at Drexel University, and Todd Houge, a chartered financial analyst and professor of finance at the University of Iowa.

1. Don't sell stocks deleted from an index, or buy stocks added to an index

The Russell 3000 index represents about 98% of the investable U.S. equity universe, and on June 25 about 261 companies will be added to the index and about 205 companies will be deleted from it.

That fact alone shouldn't prompt investors to make buy or sell decisions, said David Zuckerman, a certified investment management analyst and chief investment officer of Zuckerman Capital Management LLC.
"For investors who own stocks that will be deleted from an index, the empirical data indicates that they should not sell their holdings," he said.

"Buying stocks that will be added to an index ahead of reconstitution is not a viable investment strategy, and the data suggest that returns may suffer if such a strategy is followed," he said. "Ultimately, decisions to buy and sell stock should be based on fundamentals and not on index reconstitution."

Buying companies based on an index's reconstitution is just one of four common mistakes investors make.

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.

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.

Recession-proof your money

"ECONOMIC crisis" or "recession" - these are words you have heard of over and over, be it on the television or the radio and read in the papers. The financial headlines and where the economy is headed are things beyond our control. However, it isn't all bad! There are steps we can take that are well within our control to weather the bad times. All you need is just a little bit of foresightedness to prepare yourselves for the worst case scenario.

How to keep your head above water

Many of you out there have been asking this question, or variations of it. People are interested in the ways of surviving hardships that they foresee await them. Here, we list some of the things you can do; things that are definitely within your control to weather such hardships.

* Manage your expenses - watch what is going out of your pocket!

* Manage your expenses - watch what is going out of your pocket!To start with, scrutinise your expenses; identify your fixed and variable expenses. Variable expenses will include meals at your regular eateries, gourmet coffee breaks, shopping trips, which can be reduced and adjusted with a just a bit of self discipline and restraint.

How about fixed expenses then? These are the regular expenses that you cannot avoid or immediately reduce with your changing financial situation. Items that fall under this category are usually the big ones on your spending list.

Examples of fixed expenses include:

* Mortgage payments for your house, car loan or student loan

* Mortgage payments for your house, car loan or student loan* Insurance payments

* Insurance payments* Utility bills and service contracts, such as water, electricity, phone and internet services

* Utility bills and service contracts, such as water, electricity, phone and internet services

While you cannot really eliminate these expenses, there certainly are ways to reduce the spending in this category.

* Be an intelligent consumer!

* Be an intelligent consumer!During an economic down turn, what a government typically does is to take stimulus actions, such as reducing interest rate to encourage public spending. You can certainly benefit from this by shopping around for cheaper rates and better deals to refinance your mortgages. A variety of packages are offered by commercial banks and all you need to do is to choose the best deal, one that can cut down your interest payments. This move alone can save you quite a bit of money in the long run.

The same goes for other items. As the business environment gets more competitive, you will find an array of special deal packages and promotions being introduced in the market. You need to mould yourself into an intelligent consumer. Practice scouting around for the best deals available and make sure that every ringgit you spend is worth it.

* Resist! Resist! Resist!

* Resist! Resist! Resist!While you're busy trying to cut down on interest payments and looking for value for money alternatives, make sure you resist the temptations of further spending. Any efforts made to help you save will be meaningless if you deplete your cash and land yourself with additional commitments. So, Resist! Resist! Resist! Remember! Only spend on what is necessary and delay those that can be delayed!

* No More Credit Card Mania!

* No More Credit Card Mania!If you are one of those people famous for saying "Charge it!" with no qualms whatsoever, then it's high time you drop that habit.

As the market is flooded with credit card offers, it is quite common for a person to own a handful of credit cards. While credit cards provide convenience, it can work against you if you lack discipline.

Charging purchases to your credit card is basically spending future money. The more you spend and owe the bank, the more you have to pay as the interest builds up. Therefore, in order to manage your expenses more effectively, limit yourself to just a card or two and keep track of your monthly balances. Refrain from letting your credit card debt build up and, if possible, clear all your card balance every month at one go.

Failing to settle your credit can lead to dire consequences. If you look at the number of people who have filed for bankruptcy in Malaysia, you will discover that the number is rather alarming with many of the younger adults contributing to the statistics.

* Build up your reserve - keep the money in your pocket!

* Build up your reserve - keep the money in your pocket!Once you are able to manage your expenses, you will find a pleasant surprise - all of a sudden, you have extra cash! Use this to build up a reserve. This reserve needs to support you for at least 6 months of living expenses. If you have been laid off recently, don't use the compensation to renovate your house or buy a new car. It is meant to be your reserve. So keep it for the rainy days! If you have extras from the savings, then you can move on to the next step.

* Generate additional income - make your money grow!

* Generate additional income - make your money grow! "Inside of every problem lies an opportunity" - Robert Kiyosaki

If you are no stranger to the world of investing, then you can relate to what Kiyosaki is saying. Most people fail to see the silver lining behind a crisis; it is during the bad times that you will find plenty of good deals in investment, be it in the stock market, real property or other investment products.

As such, if you have the extra money, make it a point to study the market and look for investment opportunities within your risk tolerance level.

The bottom line is, you have to be more careful with your investment decisions, especially when dealing with your hard-earned money in times like these.

With careful planning and self discipline, you should be able to keep yourself afloat regardless of the economic situation.

How to accumulate enough money for retirement

Wealth for retirement, How to earn 30-year investment returns with different savings amounts and rates

ON Jan 28, we have written an article on We all need to become millionaires. That article explained that we need to have cash reserves of about RM1mil to be able to maintain our current lifestyle 20 years after retirement.

Some readers responded and would like to know more on how to accumulate enough money for their retirement.

In this article, we will look into 30-year investment returns with different savings amounts and rate of returns. Our computation is based on the assumption that we start investing at the age of 25 and intend to retire at 55.

·Based on how much rate of returns you can achieve

The table shows that if we save RM100 per month and invest the money into fixed deposits (FD), assuming the FD can provide about 3% return over the next 30 years, our investment portfolio will reach RM58,274 when we reach 55.

However, if we can generate 5%, 7% and 10% returns, our investment portfolio will achieve RM83,226, RM121,997 and RM226,049 respectively.

The EPF may be able to provide us about 5% whereas unit trust investments may be able to give us 7% to 10% returns over a very long-term period.

Assuming that we treat the 3% FD return as our risk-free rate, any extra returns above this rate will be the risk premium for the additional risk that we are prepared to face.

Therefore, we need to understand our risk tolerance level before considering any type of risky investment.

We should ask ourselves whether we are willing to accept the uncertainty of return that is inherent in those investments.

Besides, we need to understand whether we can afford to have our savings tied up for a long period before we can achieve our investment targets.

·Based on how much you save and not how much you earn

We agree that when you earn more money, you should have more money for your investments. Unfortunately, some investors are unable to save even though they earn high salaries.

From the table, we can see that if we are able to save RM500 per month in FD, assuming a 3% return per annum, our investment portfolio will reach RM291,368 when we retire at age 55, five times higher than the savings of RM100 per month.

Hence, if we can cut down on our expenses and live below our means, we should have more money to save.

We should always ask ourselves whether we want to spend money on unnecessary luxury items to keep up with the Jones or be more frugal and spend less to achieve financial freedom earlier.

The question on how to generate high returns is frequently asked by readers. Unfortunately, there is no straight-forward answer to this.

We can equip ourselves with strong financial and investing knowledge which helps us in making better investment decision that will eventually translate into better returns.

To do so, we need to be interested in the economic and business activities around us.

For those who are beginning to learn about investing, you can go to any bookstore to look for investment books that you can comprehend to build up the foundation.

Remember that there is no point in buying books written by top investment gurus in the world if you cannot understand what it is trying to tell.

Once you have built up your knowledge, you should be able to digest the financial information and do your own research in investment.

Source: TheStar

Should I buy education insurance policy for my children?

I believe most of the parents with newborn baby will wonder whether they should purchase an education insurance policy for their beloved baby. Current education insurance products from various life insurance companies in Malaysia consist of a mixture of endowment and investment-linked insurance policies. I will not delved into the details of each category of such product, but for a brief introduction to children education insurance policies, please go here.

Why do you need children education insurance policy? For some parents, they claimed that it is a must for their children while for others, they mentioned that there are other financial products in the market that can fulfill the education savings purpose much better. Therefore, I intend to list out the pros and cons of having a children education insurance policy.

Advantages:

• Tax relief: If you buy a children education insurance policy with limited term (i.e. 18 - 20 years) and with payor benefit rider, you are entitled to up to RM3,000 tax relief for medical/education insurance. For details on tax relief, refer here.
• Savings: For those who don't have the habits of savings, the insurance policy is a good way of forced savings since at the end of the insurance term, there will be some cash values for the children.
• All-in-one insurance package: You might want to add other insurance coverage, like medical card, to your children education insurance. This is especially possible for investment-linked policies.
• Piece of mind: Should there be any incident happened to the parents, there is at least some sort of guarantee that there will be a sum payable to the surviving children, if the children are the beneficiaries of the insurance policy.
  

Disadvantages:

• Low returns: Children education insurance is basically an insurance product with relatively low return rate. For those with experience in investments, they might do much better with unit trusts/stocks/property investments.

Comments: I think children education policy is a good option for those who don't have the knowledge and time to make their own investments/savings. For me, I prefer to buy term insurance to partially cover for the estimated future cost of education (of course, it is better to fully cover the cost of education if the cost of term insurance is not too prohibitive) and purchase a separate medical card for my children for the medical emergencies.

Know your needs and risk profile

While fund houses and investment banks said the time is right to re-invest in a diversified portfolio after markets have corrected 30% to 60% this year, investors should know their investment objectives and focus on long-term investments.

Knowing their own needs and risk profile was important in looking for a suitable asset allocation strategy, financial advisers said.

For those with excess cash but were not invested, CIMB Wealth Advisors Bhd’s chief executive Tan Beng Wah said without jeopardising their lifestyle, they should take the opportunity to have a diversified portfolio of investments in equities, fixed income and properties.

He said this was because investment valuations were at historical lows.

“They can also buy real estate as an investment. However, if the funds are limited, one may want to consider real estate investment trusts (REITs) or property stocks of funds, depending on what is available,” he added in an email reply to The Edge Financial Daily.

Tan said it was better for individuals with immediate pressing concerns and no cash cushion to keep greater allocations in cash and fixed-income instruments to cover short-term needs rather than investing in equities or other higher-risk assets, and debts should be settled first.

He added that young individuals with a high earning power and disposable income in relation to their lifestyle could stomach higher risks and opt to invest more aggressively now to take advantage of the current market selldown.

“Value averaging is a better strategy under the current market environment. If the individual has an investment time horizon of two years and above, we would suggest to the individual to gradually invest in markets adopting a well diversified asset allocation approach.

“The risk/reward ratio from investing in the markets at this juncture is too attractive to ignore,” Tan said.

Expressing a similar view, HwangDBS Investment Management Bhd (HwangDBS IM) chief investment officer David Ng said while no one could predict when the market would bottom, cost averaging was the better approach compared to lump sum investments as it took much of the emotional aspect out of investing and lowered the investment cost, especially in the equity markets.

“It is oftentimes best to start investing when one feels most uncomfortable with the outlook of the economy. However, we are not advocating investors plough all their savings into the market, but rather, to gradually inch their way into the market whilst it continues to languish at levels that are deemed to be attractive,” Ng said.

He added that it would be wise to exercise prudence in the current environment.

VKA Wealth Planners Sdn Bhd managing director Javern Lim suggested a 30:70 model for its clients, whereby 30% of the investments would be put into aggressive asset classes and the remaining in conservative assets.

“Aggressive assets including stocks, equity mutual fund, such as exposure to Greater China and US financial market-related counters, property (taking advantage of current low BLR rate) that give you chance to benefit from the recovery of the economy in the next few years,” he said.

“Conservative asset classes would involve fixed deposits, bonds, Employee Provident Fund (EPF) scheme, insurance, annuity and money market instruments that would protect your capital.

“Most importantly, it is to provide peace of mind. After all, money is not everything in life. You deserve to enjoy your life,” he added.

Local investors are moving into money market funds (MMF) since the global financial crisis took hold in 2007. Nevertheless, financial planners said MMF, which has a high degree of liquidity, was a short-term parking facility in times of uncertainty while waiting for the next investment strategy and decision.

MMF includes treasury bills, bankers’ acceptances, certificates of deposit, commercial papers and repurchase agreements (Repo).

Lim said MMF was an ideal alternative cash management instrument for corporate investors due to reasons of tax exemption, capital preservation, same-day redemption, liquid underlying investment, no penalty for early redemption, monthly distribution of income as well as higher return compared to fixed deposits.

Financial planners said local investors could grow their wealth by accessing overseas markets through offshore funds launched by financial institutions and fund houses in the country.

Lim said not many local investors would invest directly in overseas equity markets as they lacked the knowledge and related research information.

Nevertheless, Tan said local investors were increasingly aware they could easily invest in overseas markets. While some investors go through private bankers, individuals who invested on their own had the capital capacity, knowledge and access to stockbrokers overseas or opt to invest online.

Source: TheEdge Financial Daily, March 19, 2009