27 September 2009

Why is so important to be financially literate?

After Lehman Brothers' collapsing 1 year anniversary, did you noticing the urgent needs to be financially literate? If no, you must start now. And if yes, what have you done for the past 1 year on it?

Financial products (insurance, investment, loans, credit cards) are becoming more complicated nowadays, if we are not well-verse with it, how?
A very good example have been shown by the toxic-bonds thrown by Lehman Brothers.

If we are financially literate, we will be able to:
  • make effective personal decision
  • avoid financial breakups because of money
  • improve our mental and emotional well-being
  • know our own financial status, and not blaming others
  • asking the right questions and getting accurate answers
  • increase our ability to understand sophisticated products
  • mitigate the investment market risks
  • avoiding scams and toxic investment products
  • differentiate between network marketing and pyramid schemes

Sometimes, it's not necessary to fall into a hole, for the sake of knowing how deep the hole was.

If the hole is shallow, congratulation for having a 2nd chance with lesson learned.

If the hole is deep, you may not back to your feet anymore. Good Luck !!!

17 September 2009

2010 catalyst - Inflation?

Equity market started it's Bull-run since March 2009 until now. This has caught many of people's attentions, also, caught many investors waiting for a drop for months.

Missed the V-shaped rebound?
Or, W-shaped recovery coming?

None of us know the exact answer of it. But, one thing is for sure -- market is recovering slowly.
As an investor, leaving the market is a sure WRONG strategy. Now is the consequences of it. Even Warren Buffet didn't exit his investment totally, instead, slowly increasing his equity exposure to those "jewels" he selected carefully.

Anyway, Inflation most probably will rose next year due to:

1. Weakening USD
US undeniably was recovering from "Illness" now, however, the treatment bills (budget deficit) can't settle overnight. This have been putting pressure on USD. And, bear in mind many commodities are trade in USD too.

2. Sudden surge of demand for commodities
Yes, demand is weak now. But, it doesn't mean that it will be the same when all the governments' projects started to take effect. This sudden demand may last for few months only, but, it could spike up the prices and have a say on inflation rate.

3. Speculation
Whenever we talk about resources, speculators would come into picture to take advantage of it. That's why it was so volatile each time. And, I believe this time will be the same too. Maybe the speculators is OURs this time. We can't change the herd-mentality all this while, right?