With only four years behind their belt, they have attracted a lot of interest thanks to their high yields, moderate risk position, and being traded on the BURSA Malaysia exchange directly. Investors who are saving for the long run – ex: retirement or child education – are starting to pay attention and BFM recently did a podcast on the subject.

My friend Y.J. Lim was the guest speaker. Way to go YJ !

Want to know more? You can check the following links:

• Hektar’s FAQ – very comprehensive and well informed
• Real estate investment trust wikipedia page
• Understanding REITs in Malaysia and criteria of a good REIT for investment by Financial Planning Malaysia

• Ideas To Weather The Storms
• Solutions To Weather The Storms
• A Captain To Weather The Storms

You’ll find here under the first post introduction as a teaser. I hope you’ll take time to go read the originals in full, and share your point of view with us !

Central banks are practically giving money away (almost for free), in order to get liquidity into the global economies. See here  for current central bank rates. However, once global economies do stabilise, we shift from this illiquid cycle into an inflationary cycle that will give us an altogether different set of challenges – and at the same time we are still reeling from the massive GDP debts we are incurring right now. I say ‘we’ because that debt is yours and mine, no matter our nationality or country of residence. You and I may not have personally signed the release letters for TARP or the HBOS, AIG etc bail-outs, but for sure the ‘interest’ payments will be passed to us by national Governments for you and me to pay in the coming years.

Certainly, this spells difficult times ahead for depositors; with the prospect of inflation rates becoming higher than deposit rates, and the consequent physical loss of purchasing power for our cash. What should you do about it?

In my opinion, you have two choices, and both need urgent action if you are going to pass through the coming storms and reach port: a) safely, and b) in good condition; or c) in a better condition

Click here to read the rest…

Is it a good move?

It is a very common idea that equities and markets are very good if you don’t try to time them. Many studies have shown their effectiveness creating value over long term cycles. Buttonwood tries to answer the question and shares his insight in the following article: A Cambridge college’s Investment Gambit.

Good read !

1- Market

As you already know – unless you’ve just come back from a 2-years-desert-retreat – the markets are volatile lately. The word recession is in the air, and nobody can really predict how the markets are going to react tomorrow. The risks may be seen as high on the short term, but markets provides steady returns in the long run. A return of 8% to 10% over 10 year is quite common in developed markets. Hence the best way to protect your investment is to invest on a regular basis money that you allocate for the long term.

2- Company

You may buy some company shares, and see them decrease for different reasons. Or bet on the Japanese market & see it go south while the global markets go north. You may invest through a fund & see its investment company close its doors. Those are risks tied to the company – or group of companies – you bet on. The best way to reduce those risks is have a diversified investment portfolio. As the saying goes: “Don’t put all your eggs in the same basket!” You should work towards having several banks, many different brokers, a salad bowl of companies you invest in, across different markets, sectors, and geo-location – and which are not inter-related !

3- Interest

Should you hold fixed interest-bearing asset, such as a loan or a bond, you may consider yourself secured – especially in the type of markets we are currently experiencing. But should the interest rates rise, the price of your fixed rate bond will fall – and vice-versa. As you do not control the interest rates (unless you are Mr. Bernanke), your only way to reduce your risk is to follow the news & be reactive.

4- Inflation

Should prices go up, as they are for commodities lately, your purchasing power go down. With the same amount of money, you can now buy less than before. Should you saved some money, you need to invest in so that it beats inflation in order to achieve Real Growth. Historically, the best way to beat inflation is to invest in stocks & markets.

5- Currency

If you are working outside of your country of birth – or traveled internationally – you will certainly have experienced the pain of currency exchange. The currency risk arise when there are change in price of one currency against another. There basically are two risks here. Transaction risk – where you bet on a currency & suffer the exchange rates moves; and translation risk – which is when you hold assets in foreign currencies & your return are affected by both the change in the price of the stocks and the change in its currency. One of the best way to protect yourself against currency risk is to invest in the currency you are holding.

6- Liquidity

If you are specializing in with small markets, this risk may have occurred before. It arise when you want to trade an asset, but can not do it because nobody wants to sell / buy. Your main risk is to invest in an asset which you can not later sell – whatever the price. Many expats in Malaysia experienced this risk during the 1997 financial crisis. The best way to protect yourself is to invest in international trading funds, which are traded daily.

7- Political

As experienced today in Malaysia, some political or policy changes in a country can trigger market corrections. This risk is especially true in non-politically-stable countries or regions. Your best course of action here is to diversify your investments. Try to allocate your money across different geo-localization and markets.

8- Oneself

Finally, and certainly most importantly to your investment, is the risk yourself. Will you have the patience and nerves to stick to your investments strategy should the fundamentals be strong? Maybe even go cost-averaging should the opportunity arise? On the other side of the fence, do you have the guts to cut your sunken cost & realize you invested in the wrong stock? The difficult part of investing is not to get the theory right – Remember the 2 rules of W. Buffett: “Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.”. The difficult part is to do it steadily & consciously for years & years. The best way to protect yourself against yourself, is to automatize your processes. If you invest for the long term, you only need to review your investment on a trimester basis, and maybe re-balance it if needed.

So what?

What you may have already realize is that not all of those risks are on the same time-frame. Inflation risks are not really short-term, while market ones are. Over the long term, the opposite is true.

At the end of the day, no investment is 100% bulletproof. You never know what tomorrow may bring. But should you have precise goals, and a strategy in place, you already are preparing yourself for success. It will certainly take time and hard work, but everybody can be a Paul Navone!