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Saturday, September 20, 2014

How young people make money from stock market?

Recently while we were having lunch, one of them mentioned that she heard of one insurance savings plan.

Brief features:
Pay X amount for 6 years. That’s all.
2nd year onwards every year will get Y amount and end of 20th year will get one big lump sum.


I have a family member who is interested to start investing in stock market, but his interest is at boarder line. I can see that after a while he may stop.

Stock market is a patience game, we need to be patient. Depending on the timing also, the first two years may be losing money.

Especially young people, the fund invested is small so the profit also small. Sooner may stop investing.

If he starts to lose money after few months, he may stop.
Because of his age and lack of money, even if he make profit the profit will be small and he may lose interest.


So I got an idea. Rather than tell him to start investing long term, we start a saving plan. Just like what I heard from the insurance plan.

His savings plan:
RM1000 per month for the next 3 years.

He managed to get minimum RM8 brokerage.

Buy every month based on fundamental stock, RM1000 per trade (Dollar Cost Averaging) 


After 3 years he would have saved RM36,000. If the timing is right, then may worth much more, but if the timing is wrong then may worth less. No worry, because sooner the stock will start to go up.


Forget about the profit or loss, treat this as a savings plan. With RM36,000 after 3 years, then 10% will see some RM3600 profit. 20% will be RM7,200 profit. After another 3 years, total is 6 years of profit and if with additional savings, quite a big sum for him to manage. Then it will be very excited because he will be managing a big fund.



Of course, those who from rich family can just ask their father to give them RM500,000 to start with. But I’m talking about an average working class family.


Therefore, for him to get involve in stock market, to prevent half way stop investing due to loss of interest, then start think of savings rather than profit and loss. With that in mind, he will stop think of profit and loss for the first 3 years, just save and invest. That will make him overcome the patience problem for the first few years. After few years, as he will be managing a big portfolio, that will not be so boring and by that time he would have experience of managing his portfolio years and seeing result.


This year has been a good year for me also.
Thong Guan, MKH, Scientex, Matrix up.


I think my Thong Guan made more than 100% already. The current price is after Rights Issue,


Think savings.





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Dollar Cost Averaging and PEGGY Method. Sharing info on cheap (low PE) company with high growth, low Gearing or Net Cash and High Dividend Yield.

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