After 10 years, the American rushes out of the prison, trembling like a leaf, and says, “Anybody got a match?”

The French comes out with his beautiful girlfriend and half a dozen of children..

The Jew emerges and announces that his assets had tripled and is now a multimillionaire! With access to the internet , he has not stop investing during the prison time. He is very thankful to the prison warden and promised to give him a Roll Royce as a gift!

Above is just a simple joke on how investing can help to accelerate your wealth if you do it right. While not all investments will always turn out to be fruitful, by not investing in any forms will only see the value of your money being gradually eroded by inflation. Investing is a good tool use by many to combat inflation and it is never too late to start. Check out my earlier post to have a rough idea of what investment tools are available if you are clueless to investing.

The fact is before you can really start investing, you need to get out of debt as quickly as possible. The reason is that you are generally paying interest on all of those debt balances. Albert Einstein said that compound interest is the eighth wonder of the world. So time is your biggest asset and a tool that will help grow your money over time if you invest wisely. However, the same theory applies to bad debts as well and it will grow even bigger over time.

For example, most credit cards impose a 24% per annum interests on outstanding amount. So if you can actually invest in your credit card debt, you will get a healthy 24% return with zero risk. So think carefully if you consider to invest when you are already carrying along burden of bad debts with you. It will almost be like taking two steps forward and one step back each time. In the same scenario, even if you managed to get into an investment that returns a good 25% for your money, you only reap 1% return after taking all the investment risks involved. And if your credit card interest is more than your investment return, which is not uncommon, then you are actually going backwards financially instead.

Getting out of debt first will require you to put off investing for the time being. However, once the debt is taken care of, you will be able to catch up and then go farther ahead than you would have been able to with the debt load. So start by making a list of the debts by creditor, interest rate and amount of money owed is a good way to get a comprehensive view of what is owed. The debt with the highest interest rate should be paid off first whenever possible. Revolving accounts such as credit cards should generally be paid off before personal loans and other instalment accounts. Once the revolving accounts are paid off, the individual can then decide whether to pay off instalment loans, save the extra money or invest it for better returns.

How Much Can You Afford to Invest?

Firstly, take a look at how much money you can afford to invest currently. Will you be using your savings or spare cash to invest? If you are using your savings to invest, what were your savings originally for? If the money is meant to be kept for rainy days, you would not want to cut yourself short when you tie your money up in an investment. As it is recommended to keep up to six months of living expenses in a readily accessible savings account.

Using this money to invest can cause plenty of stress and anxiety as you cannot afford to lose it. And we know all types of investment come with a certain degree of risks. You will be panicking so much that you could make a wrong decision in the investment. Hence, it would be best to invest with those spare cash that you have no immediate use or can afford to lose. When you invest with the money you can afford to lose, you are able to make sound investment choice. This is because that you know that you can always make a comeback if the investment goes wrong.

What Are Your Financial Goals?

Next, determine the investment period and your expectation for returns. Most investment tools will generate greater returns in the long run. So it would be good to have a time frame in your mind which you are comfortable with. For example, you expect a 3% to 5% returns over a 10 years period. Be realistic on the expectation for returns, remember that high risks equates to high returns and vice versa.

Once you have the returns and period expectation, start to shortlist for the most suitable investment tools that suit you best. There are many investment tools out there so choose one that you are most comfortable with, my article here explains a few of them. Do not be tempted and decide purely on the high return rates offered by certain investment tools as these are often coupled with much higher risks. If you are unable to decide, I would suggest to start with the lowest risk first or speak to a qualified financial planner for advice before you start to invest.

The rogue trades that cost UBS US$2.3 billion (S$3 billion) have turned attention to certain trading instruments that may carry risks unique to Asia.

Banks across the region, which have been busy peddling Asia-focused exchange-traded funds (ETFs), are now scrambling to ensure that similar nasty surprises are not lurking on their books, according to financial- industry sources in Hong Kong and Singapore.

Asia-focused ETFs are unique in that they allow foreign funds to gain exposure to markets that have difficult foreign- investment rules, such as China and India. The ETFs also offer a cheap and effective hedge against existing stock portfolios.

UBS stunned markets last week when it announced that unauthorised trades, allegedly concealed by executing fake exchange-traded fund positions, had racked up huge losses.

London trader Kweku Adoboli was charged with fraud and false accounting dating back to 2008.

ETFs focused on countries and sub-regions in the Asia-Pacific managed about US$138 billion at the end of last month, up 25 per cent from a year earlier, according to Thomson Reuters Lipper data.

Deutsche Bank, BlackRock and Societe Generale’s Lyxor are some of the biggest ETF providers in the region.

However, the growing popularity of what are called synthetic ETFs is causing particular worries.

A synthetic ETF uses derivatives to track the movements of an underlying share index, rather than using the shares themselves. Because they rely on some kind of swap contract, usually with an investment bank, they come with an inherent counterparty risk.

Said Professor Duan Jin-chuan, director of the Risk Management Institute at the National University of Singapore: “Investors want exposure to India and China, so it’s natural that there’s a market for these products here, but you mustn’t forget that there’s got to be a market maker and, if they see too much profit in that kind of contract, then history tells us it will become bigger, beyond what they can manage.”

Another area of concern are “quanto” products. These are derivative instruments such as stock-index futures that are denominated in a currency other than the base currency.

A trader of equity derivatives, including index products, at an Asian bank in Hong Kong said that an example of these would be the MSCI Taiwan futures contract listed in Singapore but denominated in US dollars.

Quanto products are not as popular in Asia as they are in Europe, said the trader, but the recent volatility in Asian currencies could make them vulnerable to errors in risk management.

Mounting fears about a Greek default have recently prompted foreign investors to slash their bets on Asian currencies, which had been widely expected to keep appreciating only a month ago.

That has caused, for example, 30-day realised volatility in the South Korean won to jump to the highest since early January.

As a result, many fund managers have been scrambling to hedge their exposure to Asian currencies.

Regulators are not ignoring the risks. Hong Kong’s market watchdog, the Securities and Futures Commission (SFC), said last month that synthetic ETF managers need to ensure that their products were 100 per cent collateralised to mitigate the risk of an investor losing his money.

The SFC’s tough stance has caused some ETF providers to decide against listing in the city.

“We have seen some cases where overseas ETF issuers have decided not to cross-list their ETFs in Hong Kong, because they are unable to comply with the Hong Kong requirements,” said lawyer Eva Chan, of Simmons & Simmons in Hong Kong, who specialises in advising investment funds.

However, a tough policy in one jurisdiction may not be enough to guard against the wider systemic risks when other regulators have laxer policies in place.

“ETF growth is good for financial-market growth and many jurisdictions like to see that happen,” said Prof Duan.

He argues that regulators should consider limiting the proportion of synthetic ETFs within an investment bank’s trading portfolio.

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I was looking to short both HL Asia and China Aviation Oil but only managed to open position for HL Asia as CMC Markets do not have shorting position for China Aviation Oil. Nevertheless, my first short position of the year turns out to be one fruitful trade. How I wish I was riding on China Aviation Oil’s southern ride too. Damn.

The other trade I took was going long on Giordano. It presented a nice trend which tempted me to trade although I was more bear than bull during that period. Emotion took over and I went in with a small lot. An mistake of being too eager to trade scored me another loss in my report card.

HL Asia
Position: Short
Enter @ 2.150 / Exit @ 1.610

Giordano
Position: Long
Enter @ 6.360 / Exit @ 5.910

Please note that all investment comes with a certain degree of risks and may not be suitable for everybody. The investment examples below are described to the best of my knowledge only. Therefore, please do your own further analysis or consult your financial planner before you invest any money. These examples are strictly not an invitation to invest in any form.

1. Invest in Unit Trusts & Regular Saving Plan

For an initial investment amount starting from S$1,000 (Cash or CPF), you can invest into any global managed funds (Some funds are not available for CPF investment). Some of the funds have regular saving plans for subsequent investment into the same funds (eg.S$100) after the initial required amount. This type of plan enables you to invest the funds with a dollar cost averaging method, read about the example here. It is a good plan since you do not have to time your entry and a good saving plan that give better returns than the banks’ fixed deposit if you invest wisely.

Do your research throughoutly and choose the investment portfolio which correspond to your liking and risk appetite. Since the funds are professionally managed by funds manager, there will be the usual annual management fees. Take note of the sales charges when you buy or sell the funds before you invest. Unit trusts are more suitable for medium to long term investment as the gains from the investment are hard to realize immediately. The bid-offer spread varies for funds as well and the price movement is much slower compared to the stock market. Head over to Fundsupermart.com or Dollardex.com for more information.

2. Invest in Shares Builder Plan

Like the Regular Saving Plan mentioned above, Philip Securities has a dollar cost averaging investment plan by the name of Share Builders Plan. Instead of investing into unit trusts, the plan lets you invest in some of the Singapore blue chip stocks on a consistent and incremental basis so as to build up a portfolio of good securities for yourselves. Unlike conventional stock investing, there is no urgent need of timing your entry since you will be investing regularly whichever direction the stock market is heading.

However, there are only 19 counters available (at the time of writing this post) naming Capitaland, CapitaMall Trust, City Developments Limited, DBS, Fraser & Neave, Keppel Corp, Keppel Land, Neptune Orient Lines, OCBC, Singapore Airlines, Sembcorp Marine, SGX, SingTel, Singapore Press Holdings, ST Engineering, Starhub, STI ETF, UOB and Venture. For more information, head over to Shares Builder Plan FAQ or the product information page.

3. Invest in Exchange Traded Funds (ETF)

If you have no clue of which particular stock to buy or invest, why not consider buying one whole basket of them instead? Exchange Traded Funds (ETFs) are open-ended investment funds listed and traded on Singapore Stock Exchange. And you can buy or sell it off just like a normal stocks during intraday trading. An equities ETF will track the performance of an major index and the price will be based on that. You may consider looking at STI ETF and as its name suggests, tracks the performance of Straits Times Index. Similarly, you can also consider ETF that track commodities like gold. Check out the ETFs available on SGX here.

4. Forex

With the currencies being traded at a volume of more than 4 trillion per day, forex is the largest and most liquid market in the world. It operates 24 hours daily except during parts of the weekends which means you can literally trade almost any time of the day. Although the trading opportunities are aplenty in forex, the risks are equally higher as the pips can move at a fast and furious pace for or against you. Hence, having a good understanding of forex market movement and trading system will give you a higher winning probability. Signing up for a free forex demo trading account is a good way to learn more about forex market movement.

Demo accounts from the brokers are readily available online to get one to be familiar with the trading platform and the market movement. It is important to be familiarize with the trading platform before trading with real money as the price movement occurs all the times. Not knowing how to place a Stop Loss on your new position or Target Profit for your profitable position can put you in unfavorable situation. Another advantage of forex trading is the high leverage ratio. For example, most brokers offer a leverage of 1:50 and the size of a standard forex contract is 100,000 of the base currency. With the leverage, you will only need US$2,658 to trade a standard contract of EUR/USD pair valued @ US$132,900. There are also mini contract (10,000) and mirco contract (1,000) offered by some of the brokers. Learn more about forex with this ebook – A Quick Guide to Currency Trading.

5. Stock Market

One of the most commonly used investment tools by many. However, the common question here is always ‘how do I know which stock to buy or invest?’. There are several approaches in choosing the stocks and different people will have different sets of criteria. Some people buy stocks to speculate while others buy them merely for dividends. If you intend to buy stocks and hold them for long term, you should at least learn how to read the Income Statement and the Statement of Cash Flows in the companies’ Annual Report.

This is to find out the companies’ earnings and future earnings growth as this will roughly give you an insight of how valuable their stocks are and whether there are more growth potential. Some of the safe buys according to the experts are the Blue Chip Stocks, Real Estate Investment Trust (REIT) and Initial Public Offering (IPO). There are many ‘How to invest in stocks’ books available in the bookstores and I personally recommend Secrets of Millionaire Investors to those who are keen to invest.

6. Contract for Difference (CFD)

This is what I regularly use to trade stocks and my current brokers are CMC Markets and IG Markets. Contract For Difference (CFD) is a margin account that give you a leverage of up to 5 times your investment amount. The margins needed for the stocks varies but the cash layout is lesser than of normal stock trading. This means that you will only need to have S$2,000 in your CFD account, if you intend to buy 5 lots of Genting Singapore @ S$2.00 with the stock margin of 20% instead of S$10,000 out front. Take a look at this illustrated example for a better understanding. Do take note that there will be a minimum daily financing charges as long as you hold the position.

Another beauty of CFD is that it allow short selling during the bear market. Unlike naked shorting which requires you to buy back the stock in 3 T-days, you can hold the short position with CFD as long as you desire. However, any form of leverage is risky business if misuse so do understand the risks involved before trading. And do not be tempted to use the maximum leverage in your account, else you will risk a margin call to top up your account when the market moves against you. CMC Markets have recently launched a brand new platform which look pretty impressive. But the real good thing is that they now offer super low commission of 0.1% with NO MINIMUM CHARGES!! Previously, the minimum charge was $15.00. This is one good news for me as the savings can easily add up in the long run. Check out their revamped website for more information here.

7. Invest in Gold

There are a few options to invest in gold. You can buy the glittering metal in the form of gold bullion bars or gold bullion coins. At the current gold price, you will need plenty of cash to buy a standard weight gold bullion bar. If buying the physical gold is not an option, you may consider opening a Gold Savings Account with UOB. This unique savings account will convert the deposited amount into grams of gold and update it in your passbook accordingly. Head over to UOB website for more information. Another non physical option would be a Exchange Traded Fund (ETF) that tracks gold’s performance. SPDR Gold Shares (GLD 10US$) is listed on the Singapore Stock Exchange and can be traded at the minimum lot size of 10 shares.

8. Invest in Property

In a land scarce country like Singapore, property is surely one of the major investment vehicle use to generate capital gains or rental income. A very self explanatory topic that needs no further introduction. The only question is whether the current property market is over heated or there are more rooms to grow when you are considering to invest. Check out this book – Secrets of Singapore Property Gurus where the property gurus and pros share their insights on property investing.

9. Angel Investor

Beside all the equity investments discussed, you may also consider investing in business opportunities. This is to provide funds to people who have great money making ideas but lacking in capital. Look through all those related business proposals to find the unpolished diamond and invest in the next promising entrepreneurs. Check out Angel Investor website for more information.

10. Invest your Time

Well, am I going out of the topic here? Not really, because time is money. In modern setting, most of us will have at least one email account to stay connected. How about using your email account to make some money? Email Cash Pro is a “Get Paid To Read Emails” website that send you emails depending on your interests from the sponsored advertisers. You choose the topics that you are interested in and when there is a certain product or service that matches, you will receive an email from Email Cash Pro.

Opening the email and clicking on the link will instantly earn you some points which will be converted to cash. However, the payments that I have gotten from them so far is no serious sum of money and they will only send out the cheque when the account accumulates at least $10. But then again, the hardest work that I have done to earn the money is to click my mouse. Visit Email Cash Pro website for more information and invest some time.

Today marks the 10th year of that faithful day. My thoughts are with those who have lost their loved ones and the brave ones who sacrificed theirs to save others…

BEIJING – More Chinese cities saw the prices of new homes fall in July compared with the previous month, official data showed Thursday, as Beijing stepped up efforts to cool the booming property market.

The cost of new apartments in 14 out of 70 Chinese cities tracked by the government declined last month, compared with 12 cities in June, the National Bureau of Statistics (NBS) said in a statement.

Soaring property prices are a major source of official and consumer concern in China, with apartment costs rising out of the reach of many people and threatening to spark social unrest in the country of more than 1.3 billion.

China has introduced a range of measures aimed at reducing prices since late 2009, such as bans on buying second homes in some cities, hiking minimum downpayments and trialling property taxes in Shanghai and Chongqing.

But officials are treading carefully as the real estate sector is a major driver of economic growth and land sales to developers are an important source of revenue for cash-strapped local governments.

The NBS said new home prices increased in 39 cities month-on-month – down from 44 in June – and were unchanged in 17 others.

The cost of new homes in 68 of the cities surveyed rose year-on-year in July – up from 67 recorded in each month from April to June.

The government last month pledged to extend limits on new home purchases to smaller cities, adding it would tighten existing property restrictions in areas that have seen excessive price rises to push them “back to reasonable levels”.

Home purchase limits for second- and third-tier cities are expected to be announced by the end of this month, Wednesday’s official Shanghai Securities News said.

To tame soaring prices – and other consumer costs – the central bank has also raised interest rates five times since October and increased the amount of money banks must keep in reserve numerous times.

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