Stocks vs. Mutual Funds

The recent rise in the popularity of mutual funds has brought them under wider and more substantial scrutiny. Many people are discovering that mutual funds are an excellent investment option, but stocks are still better.

A mutual fund is a mass portfolio that has been collected by a mutual fund manager and is professionally managed for its owners or shareholders. 

 

A mutual fund can be composed of any combination of investments, or it can focus on only one investment vehicle—stocks, for example. In fact, the vast majority of mutual funds are totally composed of stocks, or at least contain some stocks in their composition. It would appear, then, that investing in a mutual fund composed of stocks would differ only slightly from investing in the stocks themselves.To some extent, this is true. But because mutual funds come as a package deal, there are substantial differences between the two as investments.First, you lose a lot of control over the mix of your investments. When you purchase a share of a mutual fund, you purchase a portion of each of the stocks in the fund. You cannot sell off any stock in the mix with which you are not comfortable, nor can you add stock that you think might be a valuable asset to the fund. Of course, you could always buy that stock on your own, but then you would be purchasing stock instead of mutual funds. The ability to select stock individually has become particularly important with the advent of social investing. Staunch environmentalists, for example, may wish to purchase stock only in those companies that are environmentally friendly. This might prove difficult to achieve with the broad number of securities within a mutual fund.

 

In addition, theoretically you could never make the same amount of money with a mutual fund that you could if you purchased the stock contained in the mutual fund’s mix directly. This is because a portion (albeit a small portion) of the money you spend to purchase a share of the mutual fund is used to pay the people who manage the fund, rent the building, and otherwise cover any expenses associated with maintaining the fund. These same charges wouldn’t apply if you purchased the stock directly. I said “theoretically” because the broker fees you would pay to purchase shares of all those stocks would probably quickly overtake any management fees you would pay to a corresponding mutual fund.

 Stocks by default provide higher returns than mutual funds since management fees are not levied on stock owners. Mutual funds, however, offer a higher degree of diversification. 

For that reason, mutual funds, like bonds and cash, do have a place in the investment arena. By purchasing a share of a mutual fund, you as an individual investor can place your money in much the same circumstances as the money of a large investor. By investing in a mutual fund, you can spread a minor investment over several stocks, thereby diversifying your holdings and mitigating risk. At some point, however, the safety of the mutual funds will become constraints that will eventually make you move on to purchasing individual stocks.

It has been a while since I post a book review. Sometimes after reading a book, it is hard to choose which to recommend to others.

This is more or less a compulsory read for every entrepreneurs. I have heard many people recommending this book and I am glad that I picked up a copy.

Apart from just trying to fix your mindset like other conventional business books, it also teach you what to do about it. The book describes the difficulties Susan was facing with her shop. Instead of having a work life that she wants, that is being her own boss, she actually just bought herself a new job without a boss.

One of the things that I find particularly interesting is a business owner must be a balance blend of 3 characters:

(a) The entrepreneur - The visionaries that see the future and ambitious side of a person

(b) The manager - Likes to keep things in order, practical and know the importance of rules.

(c) The technician - The fix it all guy. It is the inner part of a person who can perform all the tasks required.

A fail business would occur when we don’t keep a balance of the three.

Entrepreneur side of us enables us to see the big picture and envision the future so that we can expand the business but sometimes a little too ambitious. A manager side will balance this weakness.

The manager side on the other hand love rules and orders and hate changes. A manager characteristic will not allow the company to adapt to changes quickly.

A technician side however, is someone who wants to do everything from accounting to cleaning. This kind of characteristic will make your job owns you and cannot facilitates growth because you are too busy with things without value.

A balance between the 3 would be the formula of a successful business.

If you think that is good, I am only talking about points in the first and second chapters. The rest would be up to you.

Blog has become a common thing nowadays.

In fact, companies are using it to evaluate the candidate for a certain job position.

Running a search in the internet can basically track a person record. However the company will not disclose that they actually perform a search for it that might invade your privacy right.

Nevertheless, they can still do it and they will.

A blog shows the maturity level of your thinking because naturally we will express ourselves freely in our own blog. Before you can argue that you can express anything you like in your blog, one should also consider what image you are portraying to the public.

I have went on 2 interviews that pull out my blog site on the spot and they pick questions from there. Of course they did ask for my permission.

So is blog still a place that you can yell out all your dissatisfaction the childish way, or a place that you use to show the one that you admire how much she/he meant to you by writing funky stuff?

I believe yes it can still be but proceed with caution as internet identity is a new wave that will invade our privacy right. Anyway we started blogging is to express ourselves and not promoting ourselves to get a job or pretend to have an “intellectual” image.

You can always password protect your blog or easier still, turn off the search engine indexing option so that you can be yourself again.

Ok my blog isn’t great and I admit. Just look at my english and you will know what I mean. Anyway I already turned off the search engine option.

Sometimes I was looking for something that I can grow my small pile on cash on but my money always ended up in one place.

I know of an investment that can give me at least 100% ROI at least.

An investment that can only be affected by me and not so much of external factors.

Yes I am talking about me, you ….ourselves.

Amazingly, people hardly understand this fact. That is why we seldom buy books for ourselves.

Having such high layoff rate in the working environment right now and the volatility of both the stock and property markets, seems like nothing can be certain. Not your job, the value of the house you bought or even the gold stick u hide under your bed.

Putting the money in yourself never fails you, I mean it should not. If you upgrade yourself well, no matter how hard the environment is, you will never lose out. No one can take that knowledge from you. This is why the new generation is talking about learning outside school focusing to be multi-skilled. Versatility is the new way of adapting to the ever changing environment.

When we are investing ourselves, we do not only invest money but also time and patience. By using our time more wisely (a good way to start is enhancing your daily productivity), we could be ahead of others so much more. However remember that trying to learn everything under the sun in a hurry will never do you any good.

I am a gadget freaks so I buy myself gadget that I love and I work hard to repay for what I have spent. It is an investment by buying the gadget because if you treat yourself right, you will enjoy the return too. You can be self-fish to everyone else but not to yourself. Always treat yourself the way you feel is right and work back for whatever u spent to make yourself happy.

Not only you get something you like, work it all back, gained experience, you also turn out to be a happier person filled with confidence.

So would you do something for yourself tomorrow?

The Two Main Issues of Stock

Lets start with something very basic for the beginner. That includes me really as I am really trying to know more of everything I could.

I think investing is an essential knowledge nowadays. We do not have to deal as sexy as those at Wall Street or watch CNBC like a sitcom but knowing more about how to handle your hard earned cash always help. You won’t want it to be devoured by pathetic FD rate and high CPI/inflation (Consumer Price Index) rate every year. 

Lets cut the crap and start with some real simple terms.

 A stock is a means by which the average person can purchase a company by dividing its purchase price into shares small enough to be accessibly priced for everyone.

A When the company makes a profit, the whole profit, or some of it, is divided up among everyone who has a share. These payments are called dividends stock is a proportional ownership interest in a company. Or, in simplest terms, a stock is a portion of the value of a company. When you buy stock in a company, you are actually purchasing a piece of that company. 

But not all companies pay dividend. They may decide to put the earning back to expanding their business.

 So how do you make money? Say today you buy the stock for 2 dollar a unit and end of this year it is about 4 dollar in market price, you can sell and make a profit.

It is a game of supply and demand and nothing fancy. It is very dynamic in nature and controlled by many factors and the effects are almost immediate. 

 What are the kinds of stock?

• Blue Chip Stock.  

  A share of one of the most established and financially secure companies in the country. Example will be Tenaga Nasional Berhad. It has a large asset value and backed by the government if anything happens. It also means very slow growth.

• Secondary Stock.  

  A share of a company with substantial backing that is not quite considered blue chip.

• Income Stock.  

  A stock that is usually characterized by its issuing company’s focus on providing higher dividends.

• Growth Stock.  

  The stock of a company that is still small but is believed by its shareholders to have great growth potential.

• Penny Stock.  

  A highly speculative stock in a company with little or no real value other than its uncertain growth potential. Many IT companies during the IT bubble period are penny stocks. Many have no office and just a domain or a concept that might have growth. It has virtually no asset but the potential is subjected to speculation.

In addition to the unofficial kinds of stocks just discussed, the market has two issues of stock to accommodate different types of investors: common stock and preferred stock. As a very general rule, the benefits of common stock tend to be more geared for individual investors while those of preferred stock tend to be more geared to the needs of institutional investors such as pension funds, mutual funds, and banks.

Common Stock

Aptly named, common stock is the one most people think of when they hear the word stock. It’s also the kind of stock most widely bought and sold, or in investor lingo—traded.

Preferred Stock

Preferred stock is different from common stock in that preferred stock owners get their dividend payments before the common stock owners. Also, should the company go out of business, preferred stock owners get paid their share of whatever’s left before the owners of common stock get paid.

Then why people do not buy preferred stock? It is because companies do not issue preferred stock before they issue common stock.

There was a day, that I truly experience a proper networking in business environment.

It was my third day of internship in a SME. The good thing in SME is you get to try everything under a sun and this is what MNC cannot provides.

My boss, for some reason asked me to attend a Customer Relationship Management workshop alone. Well I mean I have no idea what the heck is that and hey it is my 3rd day!

So I happily go with my supervisors name cards in case I banged myself into some sticky situations so I can put my supervisors in front.

Upon entering the room, it was quite shocking. 5 persons. One presenter and 4 bosses aged between 50-60 and they are all business owners. They gave me a weird look though and I can feel the climate isn’t favorable for me. I bet their first impression is ” what this kid is doing here?” I can feel I am being “analyzed”.

Well, I always remember to keep my feet on the ground. Still have no idea how to turn the situation, I acted professionally, put down my briefcase and open it to pretend I am here for something.

They was talking to each other, start giving out cards among themselves and that moment I really feel isolated and it was a real odd situation.

Eventually, I got up, start giving them my supervisors card and lied that I ran out of my own card. Being a 3-day intern, I am amazed I start promoting the company like I am promoting my own company. Kudo!

Then I start pouring water for them (pathetic huh), to turn the whole environment around favorable to me. I keep my tone a bit heavy so that I can project a mature and “he knows something” image but trust me at that moment I know nuts. If they would have probe deeper, I am officially dead.

The lesson I figured out that day is, age has a direct relationship with credibility and experience.

This reminded me of one of my favorite entrepreneur, Ben Casnocha which founded a company called Comcate at the age of 16. I believe he must have been so mature at his age and so much more capable.

Keep cool at any situation and u will be fine …..most of the time…

It has been an enjoyable month back then. Having hard time adjusting myself back to life. Furthermore I am on industrial training this semester. Tonight is the night I finally accumulate enough energy to start pushing myself again. I have a big weakness, when I am playing, I will abandon everything and immerse myself fully in enjoying myself. Well I guess life is suppose to have fun right? I mean “appropriate level”.

I love decorating my desktop partly because I like to be different from everybody else. I love uniqueness and have a very broad taste. For instance I don’t have any specific genre of songs that I truly passionate about. From conventional Pop to specific niche such as Lo-Fi are all my favorites.

My style is I don’t have a specific style. I can easily adapt to any environment but need some time

Anyway to those who curious how a window XP can look like, here it is:

I tried Window Vista for half a year on both mid level machine and a capable dual core desktop and it is one of the worst OS ever made for gamer to be fair. Despite having 2Gb of ram, it takes out all the available ram very quickly. Not to mention my Audigy 2 is not supported in Vista. One thing I like in vista though, it is their transparent window and sidebar. Bye bye for the vista hype.

So my desktop modification combines the goodness of ALL 3 operating system

1. The friendly interface of a Mac.

2. The cool looking transparency and sidebar of Vista.

3. The responsiveness and stability of Window XP.

Who says in life we can’t have it all?

Stay tuned…..more goodies coming soon!

2 weeks ago, Singapore petrochemical industry got a big boost after 2 biodiesel plants are going to be built in the island worth about 100million dollars. Before I start to jump in joy because that means more job opportunities for me, we should really start to see where we are going. Not just you and me but the entire development of mankind.

Investing that amount of money can means 2 things. One, we are focusing on relying on biofuels and secondly, every countries and corporations are trying to monopolize this trend and developing nations are also jumping onto the bandwagon. So what about it?

We all know petroleum is going to run out pretty soon and we are aware we need to find a solution before our cars and fighter jets could not move. Looking at the alternative energy sources we came out with, apparently we are TOO focused on biofuels and hydrogen powered vehicles. If we observe closely, our generation has lose the ability to innovate because all these years, we are only care to develop that few ideas as corporations are trying to compete to see who develop it faster, make a big hype of it and the race continues. 

This simply means we are forgetting to think outside the box.

What happens when we are too innovative?

From the issue of Fortune this week, Google has decided to build a revolutionary phone that is open source and operates on a totally new platform.  We all know Microsoft cannot innovate, just look at our window vista and their attempt to build a new platform called window mobile for smartphones. They are so buggy. Apple, an icon of innovation requires so many years to re define how a computer should work. But Google who has most of the brightest minds on board has decided to launch something revolutionary in such short period of time(to fight back against iphone), can Google be called innovative then? Well at least the editor at Fortune would not say they will make it big, at least not near future. All we will possibly get would be a handheld with more barrages of ads.

I think Google start with a right direction. Instead of copying or mimic’ing other platform by enhancing them, they decided to design something new. But they could plan it better and give themselves a little more time.

Innovation takes time but we need to be able to think outside the box. Our rigid education system had robbed us off our creativity. Now it is time for us to sit back and reflect. Have I done something innovative today?

 

Kids are so cute and funny in some ways. Just take a look at this video, good stress reliever during my exam week huh..

So innocent and sweet. Ahha those good old days…. The world will be a better place if our education system and society “elegant and correct” moral standard did not contaminate such thoughts in kids, or in us.

By the way, he is so BRAVE at his age! *salute*

We know Ipod took the world by storm. After Apple lauched the Iphone a while back where people actually queue 3 days to buy it, here is a new piece of toy.

The mighty iPod touch. Simply put, it is an exact copy of iPhone without the phone function and it is cool.

Apple is good in leveraging the product they already have. Instead of developing a total new line of iPod, they decided to remake the iPhone to serve different market segment.

I was interested with iPhone when it is available but the price and the functionality still could not match my phone I am using and it is waayyyy more expensive than my current crappy phone.

Well iPod touch would be the cure. Less steep price and all I would love it and it has a cool advertisement with a nice music…..Music is my imaginary fren??….lol

Brilliant Apple! way to go. You have got a new order from me.