Use bank facilities smartly to save interest

If you can't avoid from using bank loan to purchase house, then use it smartly to save interest. I have 2 ways for you to consider:-

1) Use flexible home loan to finance your house, the loan must be realy flexible that it allow :-

• daily compound interest
• can bank in money anytime, anyday.
• can withdraw money (by ATM machine) anytime, any day without letter or notice to bank
• the bank's location must be near your house or work place, so that you can bank-in your monthly pay cheque in your home loan account every month,keep the money in home loan account to reduce interest, draw it tro ATM only when you need it to spend or used as petty cash .

2) Use credit card to purchase the necessity, only go to supermarket that offer lowest price, and at the same time allow you to spend on credit card without extra charges. This allow you to keep the cash in home loan account for extra 1 month or at least 21 days which can reduce your housing loan interest.

BUT you must be discipline enough to settle your credit card bill on due date. Never let your credit card bill overdue.

The above 2 ways can save you a lot on interest expenses, it can be a significant amount for 20-30 years housing loan period.

Do U know Your Personal Finance

If you have not done this before, just try to calculate out what is your net worth (your personal assets - debts) and your monthly cash flow ( Income - expenses ).

After completed the above 2 statement, you will at least have some idea on 'how much you have' and 'how your monthly income being used every month' on this simple calculation.

You are able to monitor your 'financial health' monthly by doing this calculation and to see whether your finance are improving or worsen each month.

Please note that if :-

The net worth is negative (Meaning your debts are higher that assets and you are rely on borrowing to live) or

The cash flow statement is negative ( Meaning your expenses is higher than income, your personal wealth is being eroded every month if no action to be taken to ractify it )

The interest expenses is high in proportionate to your income ( Meaning large portion of your income is being PAID to finance company, you are actually working for the finance company rather than for yourself )

RED is alarming, urgent actions need to be done to ractify it !

Attached above a sample of 'Personal Net Worth Statement' and 'Personal Cash Flow Statement' to help you to compute your own financial statement.

Have U Being Protected By Insurance Financially ??

Talking about having an emergency fund, it's not less important to have a well designed insurance plan. ( medical, life, personal accident etc )

For most of us who work for a living, It is highly difficult (not impossible ) to save "thousands of money" to set aside for urgent use in the event of emergency or critical point of time (like major illness, dealth, or fire ), therefore it's important that we use insurance to act as a tools to protect us so that we at least will be insured by certain amount of money if unwanted event strike us. (to prevent financial distress)

Make sure your objective clear, we buy insurance is for protection, not for saving or investment. ( cos we have better choice than insurance plan if we want saving/ Investment)

So, go for insurance policy that give you highest protection ( high insured sum) with lowest fee charged.

Have You Save An Emergency Fund ???

You need money when emergency or something unexpected happening. Instead of borrowing from someone to pay for this urgent expenses which you may end up to pay ' high interest' or you may suffer from financial distress if you can't get the money in times of urgent needs.

I suggest you to consider to save enough money as your own " Emergency Fund". A fund that equal to 6 months salary is consider ok for time of urgent needs.

If you have no such saving, pls save it!
If you have no such saving, think twice and again before you spent!

Added 2 New links

I have added 2 new credible links as below, I choose them because each of them has their own unique opinion on share investing, we can learn from them to enhance our understanding on investment, hence better chance to gain from equity investment :-

1) Where is Ze Moola ------ He used to critisice the listed company (Malaysia) on Corporate Gavernance, Financial Performance, Minority Interest .............

From his comment, we will have better understanding on how to differentiate a good company and a so so company.

2) Talking Stock With The Doc --------- He use Chart to trade stock (Technical Analysis). Eventhough I do not believing in using chart for equity investment, but the chart technique is important for us to make decision on when is the appropriate time to buy a good stock.

TIMING is important in share investment, a good timing to buy will make you buy a stock at low price, hence reducing the risk of making losses, then increase your investment returns.

Exciting time ahead for Lion Industries

*As per Lion Industries Annual Report 2005.

A) Lion Forest Industries Bhd:
Share price @ 1/9/06 : RM2.50
Market Cap : 525 mil
*Owned 80%= 420 mil

B) Lion Diversified
Share price @1/9/06 : RM4.70
Market Cap : 3,255 mil
*Owned 36% = 1,172 mil

Total Market Cap Owned (A+B) = RM1,592 mil

Lion Industries
Total paid up capital is 697 mil ordinary shares @ RM1.00.
It's NTA as at 30/6/06 is RM2.85
It's shares price as at 1/9/06 is 0.82,
Market cap is 697 mil x RM0.82 = 572 mil

There are a few reasons for us to believe Lion Industries is attrative :

1. The current price of 0.82 is only 28% of it's NTA of 2.85
2. The Market Cap of 572 mil is only 35% of the market cap owned on Lion Forest & Lion Diversified.(1,592 mil)
3. Lion Diversified is still undervalue at price of 4.70 ( she just disposed off 10% of Parkson Hong Kong with price above RM650 mil. Lion Diversified owened 65% shares of Parkson Hong Kong equalvalent to 650 x 6.5 = 4,225 mil, 30% higher than existing market cap of 3,255 mil ) Lion Industries will benefit from the upside potential on Lion Diversified through 36% shareholding.
4. If you notice that Lion Industries has substantial short & long term borrowing of 2,282 mil, however the borrowing will be reduced by capital reduction from Lion Forest.
5. Lion Industries shares price reached RM1.40 in May 2006, now down to 0.82, going down almost 40%, couple with reasons stated in 1 & 2 above, the down side risk is limited.
   
6. And the most important one,
   The current corporate exercise by Lion Diversified to sell 10% of Parkson Hong Kong shares will made this cash rich company flush with cash of above RM1,600 mil, we can expect more corporate exercise undertaken by Lion Diversified to “UNLOCK THE VALUE” in Lion Diversified, and within the companies under the Lion Group.