Rich Snail

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Every profession like to have its own vocabulary and slang. Vocabulary is essential in describing something precisely, while slang helps give meaning to a professional terminology or concepts – and a sense of belonging to a community.

The financial markets are packed with slang. I thought it would be interesting starting a new category which will describe a few specific words or slang concept associated with the markets. Let’s start this new “terminology” category with a slang which I recently came across in a discussion: Bull & Bear Markets.

The use of “bull” and “bear” to describe markets comes from the way each animals attack an opponent. A bull will attack with horns high up in the air. The bear will slash down its paws. It’s quite easy to grasp this allegory: if the trend is up it’s a bull market; if the trend is down, it’s a bear market.

Bull Market
A bull market is characterized by optimism. Investor confidence is high; the markets are on the rise, and they expect them to keep going north for quite some time. As investors are logical homo-economicus, they will take advantage of this situation and buy in anticipation of further capital gain. They usually happen as a result of an economic recovery, an economic boom or investor psychology.

Bear Market
A bear market is characterized by pessimism. Investors lose confidence in the market; they anticipate them to go south in the future; as a result, they sell their stock to freeze their profit - or limit their losses. The negative sentiment feeding on itself from there. They usually occur as a result of a moribund economy, with high unemployment and / or inflation rising.

As some of you know I just started a new job; I’m actually struggling a little to update Rich Snail on a regular basis. I am looking forward to settling down fast so as to find more time for regular posting soon. Meanwhile, I read some very interesting articles over the past few days & wanted to share some of them here:

Trent wrote a very interesting article on what he calls the Superman Syndrome. Some people want to be financial heros – they want to save the day by paying for the group. Should you recognize yourself in this category, I highly recommend Trent’s prose. He makes many good points.

While the superman syndrom is not cool for your finance, the avare (miserly) syndrome is not great either. Britt Bravo got a great point across in her article on how giving may cheer one up. We should never forget that we are social creatures & that sharing is one of the most enjoyable thing we could do with our money.

Last quick one for the road; I just came across some reading on Benjamin Graham in the local newspaper. Mr Graham was an influential economist and professional investor. Graham influenced many investment gurus as Warren Buffett or Michael Price. He wrote two “bibles” in the Security Analysis and The Intelligent Investor. I’ll try to find them in here & do as well as Mr Buffett…

Today is a good day. I just turned one year wiser, and I received my first readers question in my Snail Inbox. Stephen is a foreigner living in Singapore, and is looking to invest in the Malaysia property market. He ask the following question:

I hope you don’t mind my writing to you directly like this with a relatively straightforward question. As a foreigner living in Singapore, how can I finance the purchase of a property in Penang? Do I contact a local bank in Malaysia/Penang? In other words, do Malaysian banks lend to non-residents? I am not applying for the MM2H. Do you have any particular recommendations? Thanks very much.

The good news is that Malaysian Banks do not discriminate against foreign buyers of Malaysian properties. In fact, the approval process is identical to that

of a Malaysian borrower. You can usually expect to get 70% financing. Some can go as high as 85%. More and the customer/bank relationship is kind of special… even though Peter England from CIMB says they can go as high as 95%.

But you can also get your historic bank to help you. Some are ready to consider financing a property in Malaysia; especially Singaporean Banks. You should check wi

th them first. Should they not consider it, you should try to get them to recommend you to their local branch in Malaysia. A letter of introduction can go a long way toward negotiating better rates.

If you prefer to go with local bank, I usually recommend CIMB. Thanks to their re-branding, they still are considered new to the market – hence more aggressive - and are quite professional, by Malaysians standards…

Few things to keep in mind when buying a property in Malaysia:

• Foreigners are restricted to buying properties with a minimum price threshold. The threshold usually is of RM250K, but can vary from state to state. So check it out first.
• The buying process is slightly longer for a foreigner as it includes a compulsory state authority consent before the property can be transferred to the foreigner. It can take up to 6 months, even though the Malaysian government is trying to reduce this length.
• No need to come down to Malaysia to sign your Sales & Purchase Agreement. You can do it at the Malaysian High Commission of your country of residence.
• I still highly advise for you to check the property or its location before putting down your deposit. If you can’t, take the time to Google Map the location. You never know what surprises the developer / owner can try to hide… 3 days ago I came across a water-tank located right inside a new development premises; Not a good surprise!

Unfortunately, I am not very familiar with Penang. Therefore, I can not help you much further here. But should you be looking for properties in Kuala Lumpur, I highly recommend JED Realty as Real Estate agents. They are very friendly and professional.

Good luck in your searches & investment !

Few interesting links
Think Property – Promising New RE website
Bank Negara Malaysia – BNM info for foreign investors
My Property Talk – Best Malaysian RE forum, not much on Penang unfortunately

Your budget and its reporting are at the basis of your personal finance plan. Setting up a budget is an important milestone on your path to financial independence. You will refer to it regularly, enter data, extract data, and analyze it. It is a great tool to review and improve your situation along the way.

Budget template?

Finding the right budget template is important. At the end of the day, you need to feel comfortable using your sheet or program in order to update it regularly and use it to its full potential. Doc Stoc can help you find your template. They have many of different templates ready for you to download. You should try many, and select the one you feel most comfortable with; Furthermore, you should adapt it to your needs.

So you now have opened your eyes, defined your goals, started tracking your spendings on a daily basis, defined your budget, are on track to get out of debt, and discovered - or re-discovered - the need for emergency funds and protective solutions. Quite a few basics we have there !
You now have to start working on maximizing your money; and the best way to do that is to Invest.

Your Risk Tolerance

Some may be afraid to invest; especially over uncertain times like presently; yet, studies have proved that investing is the best way to grow capital in the long run. To get started, you have to know what risk you are ready to take. You need to ask yourself what you want to achieve, and how comfortable you are with the potential value fluctuations of your investment. This will define your risk tolerance. To quickly define your risk tolerance, you can ask yourself the following questions:

• Your personality – Gambler or risk-averse?
• Your objectives – How critical to your well-being are your objectives?
• Your discipline – Can you stick to your plan in times of uncertainty?

Your Timeline is Everything

Knowing your risk tolerance is essential in defining what kind of investments you should go after. Yet, there is an even more important factor to consider once you defined your risk personality: your investment timeline. The shorter your timelines is, the less risk you should take.

For two or less years goals you should do your best to keep an easy access to your money. Keep it in cash; in a saving account or a fixed deposit. Your interest rate will be slightly higher; and you keep a clear control on your money. This is very secure.

For two to ten years goals you can start playing with your money a bit more. By having a few more years ahead you downplay your risk factor. Still, the market being what they are, you never know what the future may hold for your. Try to find a balance between easy-to-access investments and the stock market.

For longer than ten years goals you should really look into stock market; As long as you are not afraid of sticking to your plan over difficult times, you will enjoy good returns. In the long run, the stock market outplay all other passive investments.

Stock Market Kick-Start

The stock market can be quite frightening for a newcomer. Therefore, you should start with a few index-funds,managed by large investment houses. They help you kick-start your discovery process, while making sure you diversify your investment.

And should you really want to learn what the stock market is about, you should set aside a small sum to play with, and invest it yourself. By investing directly on the market you will discover what it really means to trade. You will experience the stress, and pleasures, associated with reviewing, selecting, and following your stocks. You may not outplay the market with your investments – yet you could surprise yourself - but you certainly will learn a few things on the way.

As you read on day 4, even the best budgets cannot anticipate everything. You can have good surprises - on the spot bonus anyone? - or bad ones. In order to cope with the bad ones you need to secure your situation. You need funds to fall back should hard times come by. You need an emergency fund and a few insurance coverages.

Emergency Fund

An emergency fund is cash you set aside in a dedicated account to cover your unanticipated emergencies. You need to set aside a minimum of 3-months-worth of basic living expenses. It is difficult to precisely define what an emergency fund encompasses. The better you get at dealing with your finances, the more your emergency definition becomes strict; hence, things that you see as an emergency today may not be in a few months time - funny how that works isn’t it?
An easy way to get yours started is to open a dedicated savings account for your fund. Once you create it, you just transfer a few dollars every month, and you have it. Try to only take money out for emergencies.

Insurance

The emergency fund should help you manage unanticipated emergencies. But sometimes you will faced with bigger surprises than you can cope with. For such times, you need to subscribe to insurance. The concept is similar to the emergency fund: you set money aside now to secure for potential difficult times. The difference is that the insurance system protects you against bigger risks by transferring them to a large group of subscribers. The essential ones are health, home and car insurances; I see life as a non essential one for non-parents.

I personally like to have a 6-month emergency fund, and only subscribe to insurance covering risks I know I won’t be able to cover on my own. This means I cover my laptop risks with my emergency fund and only subscribe to house, car and health insurances for now. What about you?