Sunday, July 28, 2013

Saving for children education

Just want to start off with two paragraphs of some vital statistics
Of the 41,573 public university enrolments this year, only 7,913 were Chinese Malaysians. Last year Chinese students made up 8,985 of a total enrolment of 38,549 and in 2011 around 9,457 of a total enrolment of 41,267, according to the Malaysian Chinese Association, or MCA, which is part of the Barisan coalition.
Datuk Dr. Mohd Nor Dalimin, Malaysian Examinations Council chairman announced that a total 46,712 or 92.19 per cent had full passes for at least one subject in the Sijil Tinggi Persekolahan (STPM) 2011 compared to 46,795 (92.5 per cent) in 2010, 0.31 per cent drop. 12 candidates received the excellent A grade in five subjects taken compared to eight candidates in 2010. A total of 50,669 candidates had sat for the STPM last year.

If you are a Chinese Malaysian, you should know that the chance of your child or children getting into public university is less than 20%. You should also know that you should get ready at least about RM 120 k per child down the road if you wish them to be able to study in a reputable local private college.

Tuition fees will cost you around RM 70 k for a 3 years course. The cost of living includes lodging, food, transportation, telecommunication, etc will easily cost you another RM 50 k/3 years.

For those of you who are young, let's say you have 19 years to prepare the RM 120 k How much do you need to put aside if you can generate 5% return per year? I use lower % return partly just to offset the inflation. To get 5% inflation adjusted return in a new normal investing environment, I must say you must be above average investors as well. But never mind, let's move on to the calculation.

If you start with RM 1 k in year 1, CAGR return of 5%, to save RM 120 k - you will need to set aside RM 3.58 k per year or roughly about RM 320/month per child.

For Chinese Malaysian parents, you should know that 80% chance of not able to secure a place in public university is not a good odd. Procrastinating will make matter worse unless you want to burden your child/children with loans hanging on their neck before they can earn. Basing on Malaysia per capita income of USD 10 k or roughly RM 31 k, you will need to set aside about 13% of income for future a child education.

Putting uncontrollable factors such as unfairness or free education for every child debates aside, let's get realistic and pragmatic -- control your destiny or someone will. It is this kind of spirit that makes the minority ethnic of this country to seek economic independence. It forces them to be far sighted and working a lot harder.

This is also precisely why the society disparity is getting wider - willingness to prepare financially will ensure their child/children get better education quality or better still if they are bright - Singapore and many other foreign countries will take them as their citizens.

Thursday, July 18, 2013

Contrarian warnings

Thought you might want to take notice that iCapital assessment has been more and more cautious. iCapital is now holding almost 50% cash compared to one year earlier which was 34%. All I can say is they have been very cautious. 

It has been sometime we have not heard people quoting Marc Faber. This is what he said recently.

The only game in town in the last 12 to 18 months has been the US. So you have most markets in the world going down and the US going up. It is very likely that the US market has already peaked out at 1687 on May 22nd on the S&P and if the market makes a new high it would be only with a few stocks making new highs. The majority of stocks will not make new highs.

The similar trend is also can be observed in KLSE. Only a few stocks dominate the gains such as Tenaga and Maybank............In the small cap space, it is also seems to be dominated by a few narrow sectors like oil and gas.

I have been doing some tactical play in the recent months(earning some handsome returns) but now is really turning very cautious. In the past, before the market roll over, retail investors will usually jump in with both feet. But I am just not sure this time assuming they are a lot more wiser now.  And I don't really care because the risk of correction is very high.

Sunday, July 7, 2013

Why so quiet?

The last time I visited my own blog was probably about 1.5 months ago. Don't worry, it's not the time for this blog to be folded yet. I made a promise and I will keep it. Worst case scenario I may go into coma and make a last entry on the day I promise to end it. Let me assure you again that it's not the time to be folded. I was extremely busy with my job. A big change for me actually doing a couple of things that are new to me.

Market commentary? Real quick.

The trend following of U.S. 10 Year Treasury Note suggest the momentum will keep going. Money got out from the money market will have to go somewhere........equity is the most probably place.

Recession? I have been on and off taking at a look at the crude oil chart. It is now breaking USD 100, going any higher than USD 130 will put the real pressure the economy.

What am I saying? Take a look at plantation stocks and cyclical sector. I suspect it has more legs to run.

Take care.