蛇年行大运

Funny thing. The horoscope man on the Channel 8 CNY show cautioned Rabbits to be wary of the stock market and investing in this 蛇年。Now this is not too great shakes for someone like yours truly who has it amongst her 2013 goals to grow my yield stocks portfolio. And it got me thinking to how it all started….

                                  

Nevertheless, this constant zeal for yield (Z4Y) is necessitated by this low interest rate environs we are in (thank you QE), coupled with a rather high inflation rate of 4% (avg out over 2012). What started my whole Z4Y in Mar 2012 was a simple conversation over lunch which went something like this…

Friend: “Did you know banks’ interest rate per year is like 0.1%”

Me (busy eating): “Uh huh..”

Friend: “And like inflation is 5% this quarter”

Me (message sinking in): “wert…”

Friend: “yeah it means like money in the bank is just depleting and rotting by itself”.

Something like a fire alarm went off in my insides. Prior to this, I had never given much thought about my financial health. Money sort of appeared in my bank account every month, I would bid adios to about $700 (yeah I bought a car at 23 just before the crazy COE price spikes), $100+ off to insurance, odds and ends for credit card bills etc. I just left it to accumulate (very slowly though!), narry a care that while accumulating, it was also “depreciating” in real terms. Then came this epiphany over an ordinary lunch hour. I was shocked and scared into action.

Let’s illustrate the loss in real terms per year using $50 000 as an example.

Cash: $50 000

Bank Interest: 0.10% pa

Total Amt in bank after 1 year = $50 050

Cash (real terms after inflation of 5%) = $47 550

Net loss = $2450!

Well imagine that. So here I was, a year ago, in inflation crazy world, without an iota of financial knowledge at all but armed with that which is most precious: the realization that I had to do something. And Quick.

I started researching unit trusts and insurance products first – something I felt was more mass market and I didn’t have to take investing into my own noobish hands. It was a travesty. I have to admit, perhaps it is my less than desirable comprehension skills, but till today I have no idea what insurance products are selling (yes, even if you may have that Crystal Clear mark or whatever). I have no idea what I am entitled to and the factors that affect the payout. Seriously, no idea. Unit trusts, yeah I do understand how they work but the whole “you are totally diversified into a whole basket of thingys” didn’t really appeal to me. Nor did the manager’s fees still payable even when the fund is totally chui part. So it was then I decided I had to take a leapt of faith and take investing into my own hands.

So off I went to set up a UOB Kay Hian account – whole process of linking up with my CDP account and bank acct took a little over a month. It was really exciting times. In the meantime, I read up voraciously on REITs, dividend stocks and safe pillow stocks that I wanted to put my money in. I schooled myself from scratch in the basic stock analysis  - such as P/E ratios, P/Nav, payout ratios etc,  through helpful websites like www.investopedia.com. It was painstaking at first, for remember, I was going at it blind literally, with completely zilch financial knowledge – didn’t even know what last closing price was. But the more you read, the easier it got; the easier the understanding, the more you wanted to read to expose yourself to a whole range of analysis. I basically guided myself through the whole stock buying and selling process – reading the KH manual on how to put in order price, what’s a market order/limit order, what’s buy volume, sell volume. Ah, fun times. Navigating the Techanalyser on KH was what got me started in technical analysis. Stochastics, CMF, MACD divergence convergence, you name it – I have read it. And still learning so much more by the day.

Still remember my first transaction ever, like it was just yesterday. CMT at $1.745, order put in at 4.58pm and order filled during market close matching. Ah… I remember my direct debit link to my account wasn’t even ready then and my ever obliging hubs issued a cheque for it!!! (He owns a majority stake in our combined portfolio currently haha) Many buys and sells later, I feel each transaction yielded more than just profits. Experience, these transactions gave, experience to tackle and brave the protean stock market years ahead.

So what’s ahead for this 蛇年, during which I, as a Rabbit, am advised not to speculate in shares and invest? I will certainly err on the side of caution and not let GREED overrule rational thinking. Go for smaller gains and not try to pick market tops. Life is not always about money and it is important not to let stock market trading be the be all end all. Take time off to smell the flowers, spend quality time with loved ones and trade cautiously.

祝大家蛇年行大运，身体健康，心想事成！