Saturday 22 May 2010

Seek adequate protection for you & your dependents

In the process of building wealth, you must also PROTECT yourself and your dependents!

If you are an employee and you work for a good company that provides you a reasonable coverage on medical and perhaps good pension, congratulations! But what if you leave the company or get fired? Are you or your dependents properly covered at all time? If you are an independent professional, you are responsible for taking care of yourself. Here is what I suggest:
  • Protection for yourself
    • Health insurance: To cover for medical bills
      • Outpatient benefits
      • Hospital benefits
    • Disability income protection: Get some income if become unable to work due to medical reasons
    • Critical illness: Get a lump sum to help cover cost if hit by major illness that prevent you from work and possible requires special care
  • Protection for your dependents
    • Life insurance: Your dependents will get a lump sum should the unfortunate event happens
How much coverage is enough? When should I start taking out an insurance? Let's discuss that in my next posting.

Wednesday 19 May 2010

Buffett Is Selling

#Biz Buffett Is Selling^

Wednesday 12 May 2010

Don't make the same mistakes like I did - Insurance coverage reviewed

I started taking out a life insurance policy when I just turned 30. Like a lot of people, I didn't quite understand what I was in for! I mean I THOUGHT I understand all the terms like "cash value", "sum insured", "dividend", and the meaning of life insurance with saving, how dividend can cover the premium at some point. So I committed a long long long long term plan with high premium. 

And every year I scratch my head and ask myself again, do I really understand what I am in for, so I talk to my insurance agent every year to review and every time she convinced me that the plan is fine, until this year that is!

I found an independent person who is an expert in insurance products and she actually explained term by term again of my insurance plan and presented to me all the available insurance products out there instead of just product of one insurance company! 

Now I understand what I really need in terms of protection for my own self, as well as for my dependents, and how to calculate the sufficient amount of coverage! And above all what the right premium for such protection should be, taking into my own financial goal and what I consider to be a comfortable way of paying the premium!  It is such as realization that I want to write this to share with my friends.

Don't make the mistakes that I did!!!

Land investment in USA - something new to me

I have made some investment in "Land" in the USA, Texas to be more specific.  These are small investment that I consider "low risk" and medium return on a medium-term horizon. Here is how it works:

The company bought some farmland in somewhere in USA, the land is selected base on many economic and risk factors, for example the state has a positive grow trend of population, i.e. there will be demand in future housing and facilities. There are already some developments in the nearby area and it is near good transportation, i.e. high way. So the demand will come typically in 2-6 years.

The company sells the land to many small investors like us and we jointly own the land. Individually, we hold our investment like a small "trust", so we can name beneficiaries in the event of death. This is an interesting way of owning a trust which otherwise would cost a lot of money and capital to setup. Just a thought!

The company has many teams to work on increasing the value of the land, including, town planning, housing project planning, and legal team and lobbying team to make sure the plan is in order and be accepted by town council.  Once the plan is accepted, it awaits for developer to buy it, hence the exit.

In most cases, if 65% of the investors agree to sell, the deal will proceed, and typically the gain is a multiple of the investment. 

The cost of investment is lower than property because we are investing in land before it was developed. The farmland has low downside of value depreciation. 

I picked that particular land projects from the company because the company has  been around in Canada/USA for 30+ years, the agent for the company has been around 8+ years and I have trusted friends who have invested before and done his home work including going to the headquarter of the company and verified his ownership of the land after making his investment, with the town council of the land he invested. I have looked at the CAGR (return) and the time length of return of the previous land projects by the same company, and I am satisfied with their rate of return. From what I see their past compound annual growth rate of return were typically 15-29% per annum with project exiting in 2-15 years. The 15-year case was a very early project when the company was small and not as influential, the return for that project was 10 times though (16.6% per annum return)

This is new to me, but I'm glad to be trying some alternative investment product.

Monday 10 May 2010

Seeking low cost investment portfolio builders

I have been looking at various investment portfolio builders. 

What is a investment portfolio builder?
An investment platform that provides access to a wide range of investment products in the format of funds. The charges that it MIGHT impose include (1) initial setup charge, (2) fund subscription charge, (3) fund switching charge, (4) management fee, (5) redemption fee (free after a number of years)

Some investment portfolio builders are "insurance wrapped" that offers a "101%" protection if the portfolio owner passes away and the beneficiary will get 101% of the portfolio value.

In my mind, a good portfolio builder should:
- Have a very very wide range of investment products from a wide range of product providers (fund houses)
- No initial setup charge
- No fund subscription charge
- No fund switching cost
- Low management fee
- No redemption fee

Well, I have tried using a few of these portfolio builders and I believe I have finally found a good one. :-)