Stock market

Why invest?

Making your money work for u because inflation is working against you
Etc: GST, Petrol pricing increase
-Minimum wage: RM900
-Starting graduate pay: RM2000-3000
-Expenses will increase etc: education, car instalment, marriage, vacation,
house instalment, family expenses
-RM1,000000 invest in a child when they grow up
- Invest in stock market, put some money in savings to have some security
for present and future usages

Inflation reduce disposable income

- Implementation of GST and rising cost of import due to depreciation in
value of Ringgit
- Prices of products increase till the money considered huge in the past is
considered little in the present stage

Overcome the gap between income and affordability

- Wages are increasing an average of 6% per annum
- Implementation of 6% GST and 3.4% of inflation per yr, the increasing
wage may not be enough to cover amount of expenses on daily basis or
additional savings
-Prices of residential property increase 10% annually.
- Cost of insurance and education will increase every year

Achieve financial security

-Disposable income will become smaller, savings only sufficient
- Approx 70K active 54 yr old using EPF have average savings of <RM167K
in 2013, with 69% having <RM50K in their account which merely sustain
their basic lifestyle for another 5yrs

Fulfil aspirations with financial freedom

- From additional money of savings

Share market
A unit of ownership that represents equal proportion of a company capital.
Etc: A company issue RM100 for each share,
Types of share;
Common and preferred share
Common: Ordinary share (Stake of the public listed company) Vote for the
proposal whether it will bring benefit or not to the future of the company, can
earn dividend depending on the profitability of the company.
Preferred: No voting rights, can claim earnings of the company. Get the first and
best treatment than common share, get paid first b4 the common shareholder.
Prices can be appreciated or depreciated.

Bonds
- Debt security, carry a fixed interest, does not appreciate as much as shares cuz
risk lvl is much lower. Ppl wont pay high premium for low risks. Etc, economy is
not doing well, ppl will invest in less risky such as bonds. Raise money for
investors.
Maturity date
- pay back in full amount with interest and the money u invested (borrowed). Can
also buy back earlier from maturity date.
Warrant
- If company share price increase, as well as warrant. Proportional to company
share price.
- No voting rights.
- Profits gained= Price increased in future (sold) Price when u first bought
Price u get to buy the warrant
- Last for one or two years. When close to expiry date, the price will fall
ICULS
- Conversion ratio
- Like a bond in one aspect, also function like a warrant
- Can also appreciated and depreciated by time
Reits/ Distribution
- Mst pay minimum 90% of net income
- Wide ranging, etc, shopping, hospitality (hotels)
- Income derived from rental incomes
ETS
- Commodities, basket of shares, traded on stock exchange
Why invest in shares
-Achieve financial goals
-Prepare for retirement
- Savings can be short-termed and gives security, trading is also considered as
short-termed. Investing is more long-termed (dividend payment)
- High liquidity, less hassle than properties investment
-Passive Income for stocks
What are ur returns:
- Capital gains
-Dividend
Why share prices go up and down:
- If a company performance exceed expectations:
Buyers of shares increase, sellers decrease (wont sell unless buyer will sell at a
higher price cuz the seller also want to enjoy the dividend received by earning of
the company), demand increase, share price will increase
- If a company performance fall below expectations:
Buyers decrease, Sellers increase, Demand decrease, Share prices decrease

News which can boost share price:

-Quarterly earning which exceed expectation
-Increase in dividend payment
-Financial deals which reduce a companys borrowing
-An asset sale at a profit
-News of business expansion which result in better revenue n profit growth
-Acquisition of another company/ competitor (buying out the competitor) if it
helps to improve the competitiveness n earnings of the company (Larger tie of
the market)
-Announcement of share buy-back
News which can lower share price:
-Quarterly earning fall short of expectation
-Decrease in dividend pay-out (some considered to put in fixed deposit)
-Huge write-off of an asset or sale of property below its original purchase price,
the company to sell off its asset at bargain prices to raise cash desperately
needed to find its operations
-Tagging capital from debt market which will increase the companys borrowing
cost or leverage to unsustainable levels.
Federal reserve- Raise interest rate