But irregardless of how easy and simple trading it can be, the sole question remains – should you switch (or trade) your mutual fund often? For me, it’s not recommended. But this is just my personal opinion. Don’t come after me if things end up differently for your case.

Anyway, here are the reasons why I do not switch my fund often.

• I’m lazy. Yes, I admit it. The amount of research needs to be done is hugeeee. It’s even worse than stock trading. Because for any single fund, you are practically looking at few stocks or an entire industry in general. In stock trading, you only need to look at few companies that you know about.
• The service charge is high especially if you are changing from equity fund to bond fund. But even for standard fund trading, the service charge is high. Do bear in mind that the amount you are trading is pretty huge too.
• Mutual fund investing is more like a savings account for me. And well, I don’t go changing my savings account from one bank to another. So it’s the same concept. I pump in money every month, and just leave it there. Once I need it, I will get it out.
• Mutual fund investing runs on the concept of dollar cost averaging. It means you buy the same unit at a lower price in order to average out the units you’ve bought at a higher price before this. So if you are going to switch it around….doesn’t that defeat the purpose? It’s just like buying the stocks of a single company at different pricing VS buying different stocks at different pricing. That’s not dollar cost averaging in my opinion.
• Last but not least, if I really want to switch fund often, I should just spend my time, efforts and money into stock investing since it’s a lot easier to monitor. The rewards are bigger too (so are the risks).

So yeah, those are the 5 reasons why I don’t like to switch fund often. Most people I know have the same reasons of not switching their funds often. And there are also those who don’t like to trade at all, be it stocks or funds. To them, it requires too much time. But either way, there are more people who do not like to switch their mutual funds often, as compared to those who always switch around. Yes, there’s no doubt that you might be able to earn more by switching around – it’s the same with short term selling in stocks. But the risk is also there.

At the end of the day, it depends on your objectives to invest in mutual fund. Are you looking to earn some quick cash and are willing to face some risks? Or are you just treating it as some sort of a savings account? The answers to these few questions will determine whether you should switch your mutual fund often.

Hope it helps.

Why? Well, it’s because it’s more rewarding than our Fixed Deposit and less risky than investing in stocks. For some, it is because they don’t really need to manage their portfolio. They normally just leave it to the fund managers to handle their money for them. The losses will be minimal, and same goes to the rewards.

But lately, things have changed a little on the mutual fund front. There are more and more funds to choose from now. Investors need to read up about the background, the industry, market segment, etc before deciding which to invest in (and choosing a proper mutual fund can be quite a daunting task now). Also, investors can start to trade their mutual fund units ONLINE.

As you can see, the mutual fund we have now is no longer the same as the one we used to know. Instead, it has become something similar to the stock investing that we all know (and some of us fear) - online trading, a lot of options and plenty of research works to be done.

So other than the high service charges, the minimal losses and profits…. there’s really not much difference from stock investing. If that is the case, why are people still interested in mutual fund investing and the same group of people remain fearful of stock investing? Aren’t these 2 becoming incredibly similar? Mmm perhaps most people still don’t know anything about these 2 and the mutual fund…being cheaper, definitely looks to be ‘safer’.

Not really. For your information, my losses in mutual fund in the year 2008 was about 60% while my stock losses was lesser than that. And to make things worse, I can’t simply change/sell the funds because it’ll incur further losses for me – service charges. I can only stop putting money in, cost averaging, or switch to bond (and incur service charges). Who says mutual fund is safer?

That is why I always suggest people to look into stock investing. There’s really not much difference between the 2 and for me, the pros of stock investing far outweighs the pros of mutual fund. Treat mutual fund as a form of saving, and stock investing as…well…a form of investment.

But either way, you should know what you are putting your money in BEFORE you actually do so. Putting money into something you have no idea off is equivalent of gambling….and not investing. So thread carefully.

I think one of the main reasons is fear (or uncertainty). After witnessing so many economy crashes (notably the one in 1997-98, early 2000 and the recent 2008 crash), most people are feeling fearful. Well, to be honest, it’s not easy to see thousands of your (or your friends’) hard-earned money burning and feel nothing about it.

But sad to tell these guys….investment is a must whether you like it or not. Saving up is good but if you don’t invest, your savings might end up as waste paper few years down the road due to our inflation rate. So unless you really want to see your money ends up that way…you should really consider investing your money.

So what are the investment types that you can consider?

Fixed deposit - this is the simplest and the one with the lowest risk. But it is also the one with the lowest return. If you keep your money here and here only, fear not, your money will still be waste paper after 10 years or so. My advice is, only keep your emergency fund here.

Mutual fund - this is the most common and popular option for many people especially those that do not dare to venture into stock market. It is relatively safe but with minimal return. But then again, do bear in mind that you are paying the fund managers a substantial amount of money per transaction. That alone will minimize your return. True, it’s safer than stock market but don’t expect too much out of this. My advice is, treat this as your saving account and pump in money every month. Invest in a mixture of equity and bond fund.

Stock market - this is the so-called high risk investment type. I’ve been investing in this for few years now…. a lot of ups and downs really. But one important lesson I’ve learned during the March-8 crash ….. never ever speculate because speculating = gambling and in stock market, gambling is suicidal. My advice to you is to read up more about stock investing and invest only in blue chips. Defensive stocks like Telekom Malaysia is a good option since they give pretty good dividends. And be ready to put there for few years. Remember that short term selling in stock market is equivalent to speculation/gambling.

There are other options such as gold investing, money market fund, etc but I’m not very well-versed in those. That is why I never talk about them. So that’s another lesson for you – don’t invest in things you don’t know.

At the end of the day, I believe stock investing is the best option if you know what you are doing and if you can control your emotions well (the ups and downs of a stock market are not for the faint-hearted). But no matter which option you choose, it is still better than no investment at all. So start taking your first step – invest 10% of your monthly income is always a good start.

All the best.

p/s…. property investing is out of scope because it requires a substantial amount of money as compared with the options above.

But I didn’t have the time to change since the Public Mutual office only opens during office hours (close on weekends). This makes the office inaccessible to working people like me. Maybe they do this on purpose? I’m not sure.

So during the Chinese New Year break, I finally managed to go to the Public Mutual office in my hometown and requested to change my agent. Here’s the conversation between me and the customer service officer.

Me : Hi, I would like to change my Public Mutual agent. Do you have a form or something which I can fill up?

Officer : Sorry sir, we don’t have such a form.

Me : Huh? Then how can I change?

Officer : I’m afraid you can’t do that sir. You need the agent to write in a formal letter to the head office.

Me : What?! But that person is not reachable!

Officer : I don’t think there’s anything you can do.

Me : What nonsense is this? I’m the customer, and I can’t do what I want? It seems like I’ve been held hostage by the agent!

Officer : That’s our policy…we are merely following the orders from HQ.

At that moment, another customer service officer stepped in.

Officer B : You can actually write in a formal letter by youself, sign it and write down your IC number, then post the letter to the HQ. They will change it for you.

Seriously speaking, I’m not happy at all with such policies. It seems like Public Mutual is trying to avoid such “transition” taking place and this is making things difficult for the investors especially when those agents are not reachable. And I really don’t like the feeling of being held hostage by the agents.

Anyway, I’m going to call up my friend to see if such a policy does exist.

So for those of you who are trying to go into Public Mutual, be sure to get a good agent who will never go disappear.

But how much should you have? Some experts said 3 to 6 months of monthly expenses, while some even said 9 months to 1 year of expenses. In the end, it depends on you and your living lifestyle. Calculate the amount of debts or fixed expenses you have to pay in each month. They can be mortgages, study loans, food, rental, etc. The total amount will be your fixed expenses for 1 month. Now,  take that amount and make it 3 months to 6 months. For example, if your fixed expenses for 1 month is RM 1k, your emergency fund should be at least RM 3k. This is to ensure you can last for 3 months without any pay.

I know it’s not easy to have that amount of money all of a sudden. That is why you should start small. Get another savings account and pump the money in regularly. Only pump the extra money you have, after paying off your monthly fixed expenses. It could be 5% of your monthly pay, or 10% of your pay, whatever is comfortable for you. Start doing this every month and build up that emergency fund of yours. Preferably, that emergency fund should be inside an account which you don’t touch. You’ll defeat the purpose if you put your “emergency fund” somewhere but end up using it to buy something you WANT. Discipline is the key word here.

Once the amount has reached your so-called “target”, then you can look for other goals such as investment. Try to avoid touching your emergency fund at all cost and keep it as liquid as possible. Because in case there’s an emergency, you will want to take the money out as soon as possible, with the least damage or penalty incurred. In other words, you want it to be there when you need it. That’s why putting it into savings account is better than Fixed Deposit, stocks or bonds.

If you are very confident that there will not be any emergency in the near future, then you can take some of the emergency fund and pump it into low risk investment types such as Fixed Deposit. Make your money grow, without taking too much risk because if you don’t make it grow, it might become worthless few years down the road due to inflation.

That’s it! Simple right? It’s easier said than done actually. Remember that the key word here is DISCIPLINE. If you don’t have that, no amount of emergency fund will be able to save you when there’s really an emergency.

To summarize, here are the things you need to remember:

• Set up a target. How much do you need to survive without pay for 3 – 6 months? Take into account all your fixed expenses such as food, rentals, mortgages, loans.
• Start small. Deposit a little bit of your extra money into the emergency fund every month. The amount should not be significant as not to change your lifestyle.
• Put the money somewhere safe, somewhere isolated and somewhere you will definitely not touch. However, make it as liquid as possible so that you can take the money out without incurring any penalty or losses.
• Discipline. Your emergency fund should only be used for emergencies and not for you to buy that cool gadget.

That’s all from me. Hope it helps. Here are some articles which might be helpful for you.

• Why you need an emergency fund?
• Emergency cash – how to prepare with an emergency cash?
• How and why to start an emergency fund?

As for Public Mutual agent, it is not about tips but commitment from the agent. Can your agent really commit his or her time? Is what your agent say relevant (more like advice than tips)? And is your agent efficient enough?

Those are few questions you need to ask yourselves before locking yourselves up with a particular agent.

As for me, I engaged my ex-supervisor who is a part-timer. She used to help me a lot in the past and I did not hesitate much then. But the end result is not really that pleasant.

• I told her I need to change my equity to bond. That was before the market crash. She told me not to do that because China funds are sustainable. I know China funds are better than some other equity, but I also know bond funds are better options when the economy is bad. To date, the bond funds which I was looking at have gone up quite a lot, but my equity funds have dropped nearly 30-40%
• I also told her to stop the auto debit in September. She said it will only take effect in October but until now, it is still the same. I was hoping to collect enough cash for myself to use and keep during this difficult period since I expect the equity funds to drop further in early 2009. Save up now, and use the money to buy more at lower price later.
• Also, I have no ways to know how much money I have invested after all this while and how much money I have left based on the current fund price. It’s important to keep track of the total loss or profit but I just don’t have the mean to do so since my agent doesn’t help me with that.
• It’s very hard to meet my agent since she no longer works in the same building as I do. There’s not much communication between my agent and I.

To some, these 2 might not be very big problems. But to me, I was hoping my agent will listen to me and do what I told her to do. If she is not free, then she can tell me and let me know how I can get it done by myself. In the end, I consulted my friend who is in Penang. Here are the solutions for point (2) and (3).

• I can call Public Mutual’s number if I want to stop the auto-debit or I can leave my bank account balance to be less than the auto-debit amount for 3 months, and the auto-debit feature will stop automatically. Or I can just go to the Public Mutual office (I know there’s one in Damansara Perdana) to fill in a form to stop the auto-debit.
• Go to the Public Mutual office and seek help from them to check your outstanding balance and how much you’ve earned or lost. They have the system to calculate that.
• If you want to change to another agent, you can go to the Public Mutual office and fill up a form.

As for my case, I will talk to my current agent first and will most probably change the agent to my stock broker uncle. At least he stays nearer to me and I do meet him quite often.

Hope my personal experience here can help you.

If you’re in the same situation as I am, fear not. There’s another option you can consider – Real Estate Investment Trust or REIT. It is just like investing in real estate but without owning the actual real estate properties. You own part of it and the properties are handled by a group of professional real estate investors. That’s the simple way to explain.

From Wikinvest

A real estate investment trust (REIT) is a corporation or trust that pools the capital of many investors to purchase income property (equity REITs) and/or mortgage loans (mortgage REITs). An equity REIT owns and manages property, as opposed to a mortgage REIT which purchases mortgages and may also borrow money from banks to lend again at higher interest rates.

REIT is traded publicly in our Kuala Lumpur Stock Exchange. You can find them in REIT under KLSE’s Main Board. Each REIT actually focuses on few types of real estate properties such as offices or shopping malls, etc. For more information, you can visit this link here which I find is quite helpful – Malaysia REITs: December 2008.

So if you’re a real estate investor wannabe but don’t have the money, you can start by investing in REIT. Hope it helps.

I told him there are pros and cons to each, just like there are pros and cons to all investment types.

If you put your money in the savings account, you get very low return but basically no risk. You do need to pay a certain amount of fees to the bank annually but it’s not much. The only risk you have is for you to actually spend the money away.

On the other hand, if you put your money into mutual fund (bond or equity), there IS a risk of getting negative return. Meaning, your total investment might depreciate over time. True, you might get higher return, but you might also end up losing more. And when you need money urgently, you will need to wait for about 2 weeks in order to get the money back.

If you ask me, I’ll say stick to fixed deposit or savings account for now. Our economy is pretty unstable right now and it seems like worse things will come soon. Stock market and mutual fund might drop further. Thus, it is wiser to save up now and to invest later once it has reached the bottom.

When will we know whether we’ve reached the bottom? The experts estimate middle of 2009. I believe it should be somewhere in the 3rd quarter of 2009.

So keep your cash close to you now. Put them in FD if you can or hold them in savings account if you prefer your cash to be easily accesible.

This kind of conversation happens a lot and some of my friends actually told me such things before too. My question to them is this – “I don’t know about XXX. Do you know what they do?”

Nearly all of them will either be clueless or will simply come out with a wild guess or something like this “Er..I think they provide offshore services to US clients”. And this kind of incident does not just happen to stock investment. There are also few friends of mine who asked me about gold investment offered by Public Bank and also foreign currency (FOREX) investment. To be honest, I don’t know about those and I told them so.

I also told them if they are interested, they should find out more information about those investment options as much as possible without getting influenced by some other people.

One of the most basic things an investor (especially beginner) should do is only to invest in something which you understand. If you don’t understand about gold, you can either find out more about it or don’t invest at all.

Company A doing very well? How sure are you? You better check out their annual financial report and company profile (and history, board of directors, bla bla bla) before you invest anything. Gold is a good investment? How sure are you that? And are you very sure investing in commodity suits your risk?

Foolishly throwing your money into something which you don’t know or don’t understand might make you lose a lot of your money. This is also called gambling and not investing. Invest only in things you know or understand.

About 2 months ago, I wanted to move my high-risk equity fund to bond fund but my uncle told me not to do so since China is still quite stable. Now, the bond fund which I was looking at has gone up and my equity fund has gone wayyyy down. Too late to sell or to convert to bond fund.

Then I decided to call up my agent and told her to help me stop the auto-debit. My plan is to stop the auto-debit, take the money and save it up, and then buy in again (with lump sum) once it drops further. I expect most equity funds to drop further in the months to come.

Just sharing with you my decision. I could be wrong and this might be a beginner’s mistake. I don’t know. But I feel it’s worth a try.