Is buying a house still the common way to build wealth? Nearly half of the people surveyed didn’t think so according to this article “Many say homeownership no longer a path to wealth“.

“The results released on Monday found that nearly one-third of those polled don’t think they will ever be able to afford to buy a home. Forty-two percent of people who have purchased a home — but no longer own it — don’t think they’ll ever be able to afford to buy another. And 31% of those who still own a home don’t think they’ll ever be able to buy another — whether it’s to upgrade their existing home or buy a vacation home.”

That’s alot of people saying they can no longer afford a home. What I can gather from the above paragraph is that houses are getting more expensive and that the income of the average working man isn’t catching up with the price of the houses. It’s another one of those “the rich are getting richer, the poor are getting poorer”.

If you can’t bring the prices of the houses down, then we need to improve our income. We need to improve our knowledge, skills, and earning capabilities to move ahead of the pack.

People need to have a roof over their heads, to protect them from rain or shine. If you’re renting your roof, then you need to seriously find ways to buy your own roof. The wealthy became wealthy because they stopped paying others and started paying themselves.

I was having this conversation with a friend and we were talking about the stock market. I had told him that I speculated on some counters, and in the end I lost money in the last bull run. He said it’s better to invest in fundamental stocks. Can sleep better at night.

Then I started to think, if a person invests ALL his money into one or a few companies with good fundamentals, could it be considered speculating? Will this person be able to sleep comfortably at night knowing that all his assets are tied to these few companies, and his wealth will rise or fall together with the stock prices of these companies?

I find this very fascinating. Because I have invested most of my money into the stock market. And I have started buying fundamental stocks instead of speculating. However, I still find that I often check the prices of my stocks every now and then. Why am I doing this? Is this a habit? Am I speculating with fundamental stocks? Or maybe I have invested more than I can afford to lose?

These are some questions I will ponder upon…. when I sleep tonight.

This week, I have opened a futures trading account. So far, I have longed a futures contract, and short a futures contract. From my experience so far, futures trading is more geared towards short-term. There are two reasons for this statement.

The futures contract are short term in nature. 1 month, 2 months, 3 months or 6 months contracts. Unlike company stock whereby you can hold long term for dividends and capital appreciation.

The tools used are mainly charts, like the candlestick chart. People track these weekly, daily or even hourly charts.

It seems to me futures is like a gambling tool. Betting on the direction of the index or prices. It’s different from investing, like buying stocks, which is actually buying a part of the business.

Stock Performance Guide Malaysia, is a must have book if you’re a stock investor, with an affinity towards numbers.

I bought this book about 2 weeks ago. I didn’t realize the potential of this book until last night, when it opened my eyes.

The stock market downturn in the last few days has presented a good timing to buy into new stocks. Well, at least I thought this downturn is only a correction and our stock market will head higher and now is a good time to buy some stocks.

I stared at my stock trading console. Not knowing where to begin. I couldn’t rely on my previous analysis techniques because quite frankly, my portfolio value was declining in a bull run. Go figure. Neither could I rely on rumors, because it was already too late by the time I knew about the rumors. I was at a lost.

Then I remembered this Stock Performance Guide I bought two weeks ago. I took it out. Flipped through some pages. And it suddenly dawned onto me that within the pages of this book, is an unbiased source of data and information that I could use. I could check out the performance of companies dating back to 10 years ago. I could see which companies are cash cows.

I wished I had bought this book at least one year ago, when the stock market was falling. Then I would have ample time to study the different companies, understand the types of businesses these companies are involved in, understand which companies consistently delivers to their shareholders and so on.

If you are a numbers person, you must get this book. With this book, you will have another unbiased tool to help you make better judgment.

Today I bought some unit trust by dipping into my EPF. The EPF allows its contributors to use some of their money in Account 1 to invest in approved unit trust funds.

I made this decision mainly is because of two reasons. The first reason is that the stock valuation is cheap due to the global recession and economic slowdown. What goes down must come up again. The economy will stabilize and pickup. New jobs will created. Demand will revive and companies will continue to make more profits.

The second reason is that the returns from the unit trust will be higher than the dividends given by EPF. Of course, the high returns from unit trust can only be obtained if I buy low and sell high. Which is why now is the best time to use my EPF money to buy unit trust. If I had bought my unit trust at high valuation, like two years ago, then I’d be making a loss now instead of profits.

Ideally we should take money from EPF and invest into unit trust funds when valuation is low. And when valuation is high, we sell the unit trusts and put the money back into EPF. Then wait for the next market crash. If this can be repeated over the many economic booms and busts, then we’d be able to enhance the size of our retirement fund substantially.