The report is found here. They have reported a 49% increase in revenue but i am a little cautious. So yea.

Despite the increase in revenue, they made a loss of $29mil compared to last year’s profit of $7mil. Much of it is due to increase in the cost of goods, admin and selling expenses – all of which increased significantly. Their UK business does not seem to be doing very well and they have made aggressive expansion into other regions like Japan recently. Thus while losing market share and revenue in their ‘old areas’, they are increasing expenditure in new unchartered territory.

I’d suppose the most frightening thing is that their allowances for doubtful debts and inventory obsolescence have increased over 2000% and 700% respectively. This casts doubts on their business model on selling jewelery via their current channels now. Collection of payment seems problematic and gosh, they have problems clearing their stock which gets obsolete fast. Television revenue accounts for most of their income.

With the current inflation problem, cost of goods will continue to rise especially those of precious metals. The 2nd part of the double whammy will come from the economy slowdown. With the credit crisis spreading especially with the contagion in UK now, demand for luxury goods like jewelery will fall. Facing such a squeeze, Gems TV might have to struggle. Moreover, I would still prefer to go to a shop to buy jewelery.

Other financial ratios can be found here. They are not particularly sparkling as well.

SIA is in a trading band since January between 14 and 16.5. Current price is 15.15.

STI last strong support of 2772 was broken last week and is now at 2750. Might see drop till 2500 levels if not retaken soon.

Basically, insurance products are generally divided into 2 categories: policies with death coverage and policies without death coverage.

Policies with Death Coverage
1. Whole Life
2. Term
3. Investment Linked Products (ILP)
4. Endowment
5. Personal Accident (PA)

Policies without Death Coverage *Do not have cash value/bonuses
1. Hospitalisation and Surgical (H&S)
2. Disability Income (DI)
3. Long Term Care (LTC)

The following tables summarises the 2 categories.

*Data and information taken from the Invest Magazine, Jun 08. Article written by Eng Tiang Chuan

Without financial planning holistically, protection planning can be done wrongly or less effectively. The common mistakes of protection planning are as follows:

Mistake 1: No claim = “wasted premiums” paid
The idea of buying an insurance policy is to protect oneself and not to be seen as profit making. Premiums are paid for a peace of mind and a good payout lest anything happens. Though it does not make sense to pay for something that you don’t want happening, it’s the possibility of it happening that you want to guard against.

Mistake 2: It gives me better returns if i buy this for protection
Many are lured by returns hence often opt for endowment policies to protect themselves. It has to be understood that endowment plans serve for wealth accumulation and not protection. Their payout can be good in the long term if nothing happens but their coverage is poor compared to a whole life or term policy. If you want to protect, buy protection. If you want to earn, buy investment vehicles.

Mistake 3: Switching endowment plans would give me better returns
Do note that there is a cost in changing plans often, just like how sales charges erode returns in fund switching. You have to read the terms and conditions properly between the 2 policies you would like to switch from and to.

Mistake 4: Investment-Link Products (ILP) are guaranteed
One has to understand that ILPs have 2 components to them: the insurance premiums and the investment portion. ILP takes the returns from the latter to fund the former. As one age, the premiums get higher. The investment portion is dependent on market conditions and the underlying unit trusts’ performances. In a way, you are funding a certainty with an uncertainty. It is a possibility that at an old age where premiums are very high, the returns might not be able to fund the insurance component, resulting in the policy to lapse and leaving the policy holder with no protection. This is one reason why the financial savvy separate the investment and insurances portions buy buying unit trusts and term policies separately themselves.

Mistake 5: Guaranteed returns of participating plans
Do note that the Total Returns (the one most consultants highlight) comprises of the guaranteed and non guaranteed returns. The latter is merely a projection by the insurer but is actually dependent on market conditions. Returns can be actually very low in downturns.

Mistake 6: Insufficient coverage
The sad thing is to see people buying several policies covering the exact same thing but leaving other parts unprotected. I would term this “mal-insurance”. It’s like having an unhealthy diet. You consume too much of one thing (fat or sugar) but lack other nutrients. Overall, you have poor financial health in terms of protection. So do your research and have a good coverage in all areas in terms of life, disability, hospitalisation and accident.

Mistake 7: I can get insured anytime I want
Most people would think the reasons to get insured as early as possible is to get covered early at a lower cost. But the main issue is more of insurability. Here’s a personal experience. At the age of 16, I suffered a shoulder dislocation which has been recurrent ever since. This has resulted in me not being able to be covered for my left shoulder and arm for the insurance policies i have taken after. The idea of getting insured early is to ensure that you can get covered for any pre-existing conditions that might occur in the future. Not many people see this.

Mistake 8: Covering my children is more important than covering myself
Just like in the flight safety videos that are screened when you sit on any plane during take-off, it is always played that you ought to put on the oxygen mask for yourself before putting them on for your child. The reason is because only you have the capability to take care of you and your child; your child cannot do the same. The same concept applies here. Only you can afford to pay premiums on both your policies.

Mistake 9: Taking an Automatic Premium Loan (APL)
There are 2 disadvantages to this. First, the interest rate charged on the loan will eatup the cash value that you have build up over the years. Secondly, inflation has also a eroding effect on the coverage. Both factors in APL will compound their effects in making your policy worth less.

Mistake 10: Thinking that Disability Income is Total Disability Coverage
Simply stated, you don’t have to be TOTALLY disabled to claim for disability income. This is dependent on the policy you have taken up.

Mistake 11: My financial consultant can do everything for me
Ah HA! Gotcha. Mistakes in protection planning goes beyond these 1o mistakes above. The most important thing one can do for oneself in financial planning is to know your stuff. Besides, only you know yourself best, not your financial consultant. Your consultant ought to be seen as a person who can add value to your process of financial planning and perhaps to cover the holes you might not have covered. He should not been seen as a total outsource. Though some financial consultants are altrusitic, they also have a profit motive as well.

*This post is adapted and further explored upon from the Invest Magazine, an article by Eng Tiang Chuan, Jun 2008

It’s very natural to read the statement above in the subject of the post and seem to understand it well. It’s pretty obvious to anyone in trying not to lose any money at all in the first place. duh. Intuitive right? But it’s a lot harder in practice to appreciate it.

The statement applies not only to the stock market but in other types of investment. But it’s easiest to relate too when talking about equities and stuff.

My key emphasis from the above statement is this: Once you lose money, it is harder to make it back.

Why? Because your capital is eroded when you have lost a certain percentage of it. And a smaller capital makes it more difficult to reach a certain target amount. Let me illustrate.

Since August last year, SSE and STI has corrected over 30%. Say you have invested $1,000 in ETFs that follows both index well, your value will be at $700. 30% loss right? And it seems very natural for any investor to console himself saying that “it’s ok”, “The market will recover”.

It will. But it will take longer for it to reach your original level of investment of $1000. Why? Because a 30% drop does not translate to a 30% increase in order to recover back to the same level. A 30% increase will only make your remaining $700 increase back to $910. In fact, you need exactly 42.8571% to reach $1,000 again.

Imagine those people who were stuck in the tech boom in 2001 where some prices fell more than 80%. To recover to the same level, they have to shift their eroded capital to another stock or wait for the same stock to rise more than 400% in order to go back to the same level where they started out.

I have put a picture below (click to enlarge) of a table to show the percentage increase needed to make up for a certain percentage loss.

This is a reason why a cut-loss strategy is crucial for any type of investment. We just have to get in our heads that by letting our investments drop more, we are incurring a larger loss than it actually looks like.

I will be putting up relevant and useful articles for reference, hoping that it helps in any reader’s education.

Topics will include and will not be limited to: insurance, general financial planning, equity investments, unit trusts and mindset development for building wealth over time.

I figure that this will be a more sustainable way to grow one’s wealth and to lead a more fulfilling life.

My problem is linking the domain to my free webhosting, Oxyhostsfree.com. This is a trial site I am going to do my tests on before going full fledge into the whole thing.

Managed to find some stuff. Apparently the procedure to get the domain up is:

1. get a domain from a registrar
2. update the nameservers to what is given by the webhosting company. (use the IPs if needed)
3. Update the domain name in your webhosting account settings.

I’ll post up my site link once successful.

This blog will be a charting journey of how i am going to learn affiliate marketing.

I hope that tmr it will rebounce because if it does not, i will liquidate my positions and officially take an overall loss over the 4 months i have been trading.

It’s a worthy experience to feel this feeling and to think that i am always so suay during this period of time. When my Banjoo managed to breakout today, the market just had to correct after i have averaged up.

I am sitting on huge losses from CSC as well. We will see how it goes tmr.