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Issue No.54

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Putting Your Money to Work in 1998

This article is reproduced with permission from
Normandy Advisory Services Sdn. Bhd (Licensed Investment Advisor)
15th Floor Menara Multi-Purpose, No 8 Jalan Munshi Abdullah, 50100 Kuala Lumpur
Tel : 03 - 469 5560 Fax : 03 - 294 5561


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Putting Your Money to Work in 1998

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Email:nassb@po.jaring.my

Preparing for tough challenges ahead

It is 1998, time for new year resolutions and financial planning. 1997 has been a disaster for some. Many investors will likely be more cautious and prudent in managing their hard-earned money this year. People will be saving more and spending less in line with the government's call to tighten belts. 1998 will be tough for many after slumping stocks and currency in 1997.

Nevertheless, there is little reason to worry as opportunities are still aplenty and there are many ways to grow your money. Proper financial planning will make the money work for you and allow you to secure financial security through numerous investing strategies even during rough periods. Read on if you want to learn how to chart and secure your financial security.


Start immediately

Whether you are investing for your new house, children's education, early retirement, or simply hoping for the sky, depending on your own risk profile, it is time to sit down and chart your financial future. Nevertheless, before you attempt to do anything, ensure you have all the basic financial necessities, 3 to 6 months of cash reserves in a safe and liquid medium and adequate insurance coverage for emergencies in the event of death, disability, etc.

Realize the benefits of early planning and investing. The earlier you plan and invest, the easier the burden next time and the higher the likelihood you will achieve your goal. Einstein said that the eighth wonder of the world is "compound interest". In other words, time will grow your money. If you are in your 20s or 30s and have not started anything, it is never too late to start. The cost of reaching your goal increases everyday. Just remember that time is money.

For those who have already invested, perhaps it is time to take a look at the portfolios and review them if necessary. Your original portfolio(s) may not suit the current investment environment anymore. Most professionals recommend investors to review their portfolios every 3-6 months.


Your goal in 1998?

Firstly, identify your goals. Just as you should know your destination when you get into a car, you must have a target to head towards when you invest. You cannot get anywhere without knowing what you want to first accomplish. Once you have established your destination, you then chart out your route. You take different routes for different destinations. Likewise different goals require different investment planning. Knowing what you want will help determine how much money you will need.

Write down your goal(s). Ask yourself what you want to accomplish in the short, medium and long term. What are short, medium, and long term goals? Table 1 shows what Mr. Wong has planned to achieve over different periods. Note that his goals may not apply for other investors as needs for individuals vary greatly.

Table 1

Short-term
(6 months)

Medium-term
(2-5 years)

Long-term
(5 years & above)

Daily expenses Buying a new car Buying a house
Buying Gifts Buying a computer Children's college
Going for vacations Getting a Master Degree Retirement

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