Wednesday, 5 December 2018

My 3 weapons in shares market


You are recommended to read this:
Why did I use SMF for my investment
before reading today's article.

 This article was originally written at between year 2014 and 2015,
and published at Investalks forum.

 The original title was different,
because I was intended to calculate how much time I need to re-accumulate the wealth I was having if out of a sudden I lost everything.

 After publishing the article,
I was reminded that actually if I try not to repeat doing the same thing,
it might be faster for me to re-accumulate my wealth.

 Since the original title was not suitable anymore,
of course I need to think a new title.

 After reading my article again,
I decided to title it as "The three weapons that boosted my speed of accumulating wealth at shares market",
to share with everyone how did I accumulate my wealth at shares market for the first 3 years of my investment life.

 Of course,
it was all based on my personal experience,
I am not God,
so it doesn't mean my experience was the best.

 As for the numbers used in the article,
just a reference,
doesn't mean it is real.

 So...........
Let's begin:
In order to accumulate wealth faster,
the 1st weapon is high income.

 At the start of my investment life,
I kept on searching for customers to increase my income,
so that I was able to save RM3500 every month.

 The 2nd weapon is reasonable return of investment,
around 15% every year.
1st year,
if every month save RM3500,
after 12 months,
I will have 12xRM3500 = RM42,000.

 This year even though I got shares investment,
but since my capital was still low,
so even a 15% return also not much,
can be ignored.

 By having RM42,000 capital,
I can use the 3rd weapon which is SMF.
(SMF = Share Margin Financing)

 SMF don't have to use so much,
just 30% is enough,
so around RM18,000.

 As a result,
Asset=RM60,000.
Which RM42,000 is equity, RM18,000 is debt.
2nd year,
every month save RM3500 again,
so by adding another RM42,000...........

 Asset = RM102,000.
Which RM84,000 is equity, RM18,000 is debt.

 Then return of investment of RM60,000 from last year is 15%,
so is 0.15x60k = 9k, earned RM9000 from investment.

 Thus,
Asset = RM111,000.
Which RM93,000 is equity, RM18,000 is debt.

 By having more equity,
more SMF can be used,
but still maintain at 30% ratio,
so around RM22,000 from SMF.

 As a result,
Asset = RM133,000.
Which RM93,000 is equity, RM40,000 is debt.
3rd year,
continue to save RM3500 every month,
so will have another RM42,000 capital, net worth 6 figures.

 Asset = RM175,000.
Which RM135,000 is equity, RM40,000 is debt.

 Then return of investment of RM133,000 from last year is 15%,
so 0.15x133k = 20k, earned RM20,000 from investment.

 Thus,
Asset = RM195,000.
Which RM155,000 is equity, RM40,000 is debt.

 Since already have RM195,000,
so another RM5000 from SMF,
it will become RM200,000.

 If want to continue to accumulate more wealth,
SMF 30%,
another RM25,000 can be used from SMF.

 As a result,
Asset = RM220,000.
Which RM155,000 is equity, RM65,000 is debt.
During the early days of my investment,
I used high income, reasonable shares investment and SMF these 3 weapons to accumulate my wealth.

 Of course,
this was my method,
it might not be suitable for other people.

 Every month save RM3500??
A lot of people like to hypnotize themselves for not being able to do it.

 SMF 30%??
A lot of people reject and scared of debt.

 Investment return 15% ??
I guess a lot of people will accept this,
since there wasn't any bearish market lately,
and most of the people earned more than 15%~

 That's all about my 3 weapons.

 How many weapons are you holding to face the shares market?
Are those weapons really suitable for you?

 Investment is about doing own thinking, making own decision.

 Thanks for reading.


I don't provide any buying/selling suggestion above,
please make your own investment decision and be responsible with it.
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