Free Educational Talks

This is a series of one hour talk which is free and is open to members of the public with the purpose of education about Personal Finance and the Benefits of Financial Planning. These talks are being repeated regularly each month as part of continuing education. If you have benefited from these talks, please share them with your friends and encourage them to attend. Those interested are required to register with our office at telephone: 03-7806 1422 or call Elizabeth at 019-2329 388, Alice at 012-3717 375 or email us at ctla@tm.net.my. Attendance is on a first-come first-basis.

This series of talks about personal finance and financial planning have been endorsed by the Malaysian Financial Planning Council (MFPC) for CPD hours. Each -hour talk qualifies for 1 CPD hour for RFP designees.


FREE EDUCATIONAL TALKS FOR NOVEMBER 2008:

Date	Time	Series No.	Topic
03 Nov	7-8 pm	8	How To Prepare a Budget & Managed Your Cash Flow
10 Nov	7-8 pm	9	How Good Are Unit Trust as Investments?
17 Nov	7-8 pm	10	What are Asset Allocations?
24 Nov	7-8 pm	11	Have You Invested in the Right Unit Trusts

Other series of talks (on a rotation basis) are as follows:

Series 1 - An overview of The Benefits of Financial Planning
Series 2 - Investment Strategies for Child Education
Series 3 - Investment Strategies for Retirement
Series 4 - The Importance of Writing a Will
Series 5 - Don't Rent your money; Invest for more!
Series 6 - Why Do You Need To Invest?
Series 7 - Understanding Risk
Series 8 - How To Prepare a Budget & Managed Your Cash Flow
Series 9 - How Good Are Unit Trust as Investments?
Series 10 - What are Asset Allocations?
Series 11 - Have You Invested in the Right Unit Trusts
Series 12 - When Do You Re-balance Your Unit Trust Portfolio?
Series 13 - The Decision Making Process - Make Good Decisions
Series 14 - Dollar Cost Averaging - Are They Always Beneficial?
Series 15 - Distributions and Unit Splits


Series 1 - An overview of The Benefits of Financial Planning

Financial Planning is relatively new and barely understood by many people. The benefits are numerous if only more people are made aware of them. The three most common aspects of financial planning are insurance planning, investment planning and estate and trust planning which are comparatively important in an individual’s lifetime. Yet, many people buy insurance without understanding the coverage and protection; buy investment products without a specific purpose and understanding the risks; and never consider writing a Will because they never believe that death would come so soon.

Mike Lee will help explain why FINANCIAL PLANNING is important; why people should buy insurance and investment products on a need basis and not what agents have to sell; and how estate and trust planning can help protect one’s family and dependents against financial difficulties in time of need. Mike Lee will further explain why you need a financial plan to help you monitor your financial progress in your life time and why it is important for you to learn how to manage your own financial affairs to stay on track.


Series 2 - Investment Strategies for Child Education

There are many reasons why many parents do not plan for child education. Some of the main reasons are:

1) there is plenty of time, the child is still young
2) I can always use my EPF funds (which is meant for retirement)
3) I do not know whether my child is that smart
4) I can borrow an education loan
5) I think I cannot afford, it is too expensive
6) I cross the bridge when I come to it

However, the main reason I think why parents feel this way is because they fail to understand how future costs can escalate to a level which is beyond their ability to finance child education.

Mike Lee will help explain why CHILD EDUCATION planning is important, and that parents should embark on a regular savings program as early as possible in order to achieve the required child education fund. Mike Lee will further explain how inflation can erode the value of money over time and why your money should be put to work harder for you in order to compensate for the depreciation in value caused by inflation. Equally important is the need to map out a strategy for both investments and risk management to play its role in the child education plan.


Series 3 - Investment Strategies for Retirement

There are many reasons why many people do not plan for retirement. Some of the main reasons are:

1) there is plenty of time, I am still young
2) I am already contributing to my EPF fund
3) I will make use of my insurance fund
4) my children will support me
5) I live a simple life, I don’t need that much money to retire
6) I am too old to make savings now

However, the main reason I think why many people feel this way is because they fail to understand how future costs can escalate to a level which is beyond their ability to retire for the next 20 to 30 years.

Mike Lee will help explain why RETIREMENT planning is important, and that people should embark on a regular savings program as early as possible in order to achieve the required retirement fund. Mike Lee will further explain the major factors affecting retirement and also how inflation can erode the value of money over time and why your money should be put to work harder for you now in order to compensate for the depreciation in value caused by inflation. Equally important is the need to map out a strategy for both investments and risk management to play its role (before and after) in the retirement plan.


Series 4 – The Importance of writing a Will

There are many reasons why many people do not consider writing a Will as early as possible. Some of the main reasons are:

1) there is plenty of time, I will not die tomorrow
2) I am not wealthy, there is not much to give away
3) I cannot afford the expensive costs of writing a Will
4) I am not prepared to share my secrets
5) I have not decided who my beneficiaries are
6) I have no dependents, what is the hurry?
7) I can always transfer my assets in advance

However, the main reason I think why many people feel this way is because they fail to realize the difficulties faced by their families or dependents when they are no longer around, or if they have already transferred their assets, they may be left poor and alone.

Mike Lee will help explain why writing a Will is important, and that people should do it as early as possible to avoid any unforeseen possibilities. The 911 Terrorist Attacks and the Asian Tsunami which killed thousands of people are just two examples of unforeseen possibilities. Mike Lee will further explain why assets are frozen and your family or dependents may suffer prolonged difficulties pending the issuance of a Letter of Administration should you die without a Will. Also, how young children may suffer if you have not make provisions for their education or appoint a guardian to look after them until they reach majority.


Series 5 – Don’t Rent your money; Invest for More!

Many people do not understand the difference between ‘renting’ and ‘investing’. When you deposit your money in a bank for a fixed income per year – you are ‘renting’. On the other hand, when you place your money in other instruments which are not paying a fixed income per year such as equities or unit trust, you are ‘investing’. However, ‘renting’ has less risk, and hence the lower return. ‘Investing’ carries higher risk, therefore the higher return. One must learn to take some risk if there is a need to earn a higher return. But, this does not mean that one should rent or invest all of one’s money all the time. Whether one should rent or invest depends on many factors such as interest rate, stock market conditions, level of risk, and so forth. Knowing when to rent or invest is therefore critical to enable one to benefit from the better returns.

Mike Lee will explain the pros and cons of renting versus investing. He will show you there are many investment instruments available for you to select and there is no need to put all your money in the bank. There are times when investing is better and other times when renting become attractive. Therefore, there is a need to use a mix of different investment instruments to balance risk and returns to benefit from the investment environment.


Series 6 – Why Do You Need to Invest

"Money is what money does". Unfortunately, not many people understand that money depreciates over time due to inflation. A Ringgit today is worth less than a Ringgit in the future. This means that money put into fixed income instruments (such as capital guaranteed funds or fixed deposits) at returns or interest rates lower than inflation will depreciate over time or loses its purchasing power. Yet, many people still rent their money to the bank for a fixed rental (fixed deposit interests) per year. The belief is that the money in the bank is safer than elsewhere. Sir Richard Branson said "Money should not be left in a bank or idle; Money will depreciate over time if not invested."

Mike Lee will explain what “asset allocation” is and how you could use asset allocation to balance risk and returns. That is to say “don’t put all your money in one basket” This way, you could consider other investment options instead of investing only in fixed deposits or capital guaranteed funds. Even though you may be risk averse in relation to investing, you should try to accept a little bit more risk for better returns, otherwise there would not be enough money to meet your future needs including important objectives such as child education or retirement!


Series 7 – Understanding Risk

What is risk? Many people take some form of risk all the time without being aware of it. And yet, they claim that they are risk-averse when it comes to investing their money. Why do they behave this way? Psychologists believe that people generally are not risk-averse. However, they tend to take risk at their convenience and do not realize the consequences until too late. Therefore, it is important to understand what risk is about, and be able to accept some risk in investments. There are different types of risk attached to different investment instruments. You must understand them in order to make wise decisions.

Mike Lee will explain the common risks that people take in their daily lives. Yet, they are not prepared to take simple risks when it comes to investing. He will explain further what risk tolerance and capacity is about, and why some people have risk tolerance but not capacity. This being the case, it is better to invest using a dollar-cost-averaging program instead of investing one’s money in one lump sum. A DCA program will enable you to ride out rough times and eventually benefit from a market upturn. Another strategy is to use asset allocation to balance your risk and return.


Series 8 – How to Prepare a Budget and Manage Your Cash Flow

What is a budget? Why is it important to prepare a budget? Many people have not been able to make ends meet because they were not able to manage their expenses well. As a result, they tend to over spend each month. Worse, they are not able to save some money for a rainy day. What about saving towards children’s education or retirement? Unless one prepares a budget, there is no way of telling how expenses will be spent. Therefore, people tend to lose direction and purpose, and hence spend whatever comes first regardless of whether they are important to their welfare. There is no prioritization to pay for items in terms of importance. This means that money have not been spent wisely according to needs.

Mike Lee will explain how a budget will serve its purpose to help you plan your expenses in terms of ‘musts’, ‘essentials’ and ‘wants’. One has to prioritize expenses so that the more important ones are paid first and the less important last. More important is the need to save first for specific purposes such as children’s education and retirement before one spends the rest of one’s income on other items. A budget therefore helps you to stay on track to match your income with expenses, and avoid the habit of over-spending.


Series 9 – How Good Are Unit Trusts as Investments?

Most people think they understand what a unit trust investment is – a form of investment that can make them good profits. However, they do not realise that they can also make losses if they are not careful investing in unit trusts. As an investment instrument, unit trusts are subject to many types of risk such as market risk, stock risk, interest rate risk, inflation risk, management risk and so on. Many people also do not understand that different types of unit trust are associated with different types of risk and market conditions. As and when market conditions change or the risk of investing gets higher, there is a need to re-balance the investment portfolio to match the risk-return position.

Mike Lee will explain why unit trusts are viable investment instruments if the investor follows a discipline approach such as:

• Identify the objectives of investing.
• Set aside some money (not all) for unit trust investment.
• Set a time-frame for the investment to make money.
• Ascertain the level of risk you can take.
• Seek out a good advisor and work with him and take his advice.
• Work with your advisor about some strategies, and lastly but not least,
• Review and Re-balance your investment portfolio periodically.

• What are your investment objectives?
• Identify which is more important – distribution or growth.
• Is capital preservation preferred over appreciation?
• How much risk can you take – tolerance and capacity?
• Are you constrained by time and funding for your investments?
• Seek out a good advisor and work with him and take his advice.

• When the market risk becomes higher
• When the investor’s own risk profile has changed
• When the fundamentals about investing has changed
• When there is a change in the funds and fund management

• Be clear about what you want – investment objectives, etc.
• What is so important to you that you will not say ‘yes’ unless it is there.
• What else are there as a ‘trade-off’ if my most important element is not there?