There are many offers that claim you that within a day or even a couple of hours you can get a start in stock trading. They make many promises and include things like the idea of being able to live the life you have always wanted to while doing less than a few hours of work a day. They are making claims that appear to be too good to be true and more than likely are! What many such sites are selling you are tools. With these tools you have the help and advantage you need to dominate the stock market, but unless you learn the ins and outs of trading, you will discover that you will not be able to compete.

Make no mistake, stock trading is a competitive game. Losing money based on decisions which turn out to be bad affects even those who spend much time working with them but when it comes down to it, you and only you are responsible for any such decision made. This is why you require education on the ins and outs of trading. You will almost be sure to lose money unless you are capable of understanding what you are getting into and where you are putting your hard earned cash.

If you want to make the most out of how to learn stock trading, or you even want to learn trading in general, there are many sources that can help you. For instance, you will learn more about how to invest your money or if you want to know what the best, low risk options out there are, you may find what your options are when it comes to books and video guides.

The Internet provides much information relating to how to learn trading so you have no excuse other than to educate yourself before you get started in the stock market. You owe it to yourself to make sure you know what your options are before you get started.

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When I watched the news last night, one woman admitted that it was greed that led her to put her money there. She was attracted by the 5% interest rate, instead of the less than 1% offered by Singapore fixed deposits. True, many were retirees and some were not highly educated. However, there is no such thing as free lunches in the world. The risks would have been considerably higher if the interest rate was higher.

Of course, it is sad to read about a cobbler in his 70s who had invested his life savings into the funds. I have heard of younger people who invested $100000. The positive thing is the younger professionals still have the ability to earn the amount again.

What DBS, Maybank and Hong Leong are doing now is to look at the profile of the investors, to decide who should get help. Maybank is looking at retirees and those with primary education or less. Hong Leong will look at ‘vulnerable investors’ while DBS is not coming forward with their criteria.

One costly lesson I’ve learnt is that you should know what you are buying into, and not what other people tell you to. You have to take responsibility.

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Many people delay planning their financial future as they do not believe they have the funds but with investing, it can be started on a budget. Provided you know a few of the basics, investing can be a fun and safe way to make extra dollars whether in real estate or stocks and bonds. Any one of these can help assure the future financial needs of yourself or your family with the right attitude in place. In this article we will very briefly look at the concepts with stocks and mutual funds, with real estate and of course online.

The stock market is a great place to make money, and if you intend on doing this with stocks and mutual funds, it is highly recommended that you first carry out some research on the companies you wish to invest in. If you are looking for short term gains (long term too), then the stock market is the place to do this but it is also where everyone can end up with egg on their face from time to time! If you are after long term security with huge financial gains then you will most likely look at real estate as a way to ear money. For those who don’t mind getting their hands dirty, home remodeling is the way forward by purchasing a run down property and then selling it on at a profit where the money can be used for another property to make more money.

There can be many pitfalls involved with real estate investment but the next area is not as bad. The term ‘armchair investor’ is used for all those people that have dipped their toes into online trading; open to just about everyone it is currently the fastest growing sector. Using a computer, this group of people comes from all walks of life and this allows them to be a trader who performs his or her own company research before they decide to buy or sell. While many people make a decent profit doing this you must be disciplined in your approach as it is easy to let it start ruling your life and wallet.

Learn about the markets and investing generally to see how they work as this information is crucial if you do not want to start losing money as soon as you start. Do not turn trading into a something akin to the spin of a roulette wheel because if you do, you will surely fail when all that was required was some investigation into the markets. This is not an area short of information so it won’t take much effort to find a number of quality resource sites that can help you with this venture. Always be aware that investing can be fun but it is easy to get caught up in the excitement and forget exactly how much money you are, in effect – gambling with.

Put your money to work for you by learning where to invest it for the best returns

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Many people have been shocked by the fragility of many ‘safe’ financial areas during recent times and it has shown that we must often take our financial future into our own hands. When a person no longer has the ability to earn a steady income, investing is the best answer to the unknowns of the future.

You may be fortunate enough to have some money in short term, low interest savings but this will not be enough on its own so this money should be invested more wisely. There are also other reasons to invest that might not be relate to retirement like paying to educate your offspring, buying a home abroad or an expensive car for example.

It is also possible when money is needed quickly to invest it in areas that are considered higher risk, but large sums can be accumulated in a short space of time this way. While this may be a way to accumulate cash in the short term, if the money you intend to invest is for your future retirement then you will not want to put this in a high risk account.

Long term financial freedom and security requires time and remember that you will not always be able to work so the earlier you start this the better. A great deal of faith has been lost in retirement funds, and those companies that manage them in recent years and Enron is a prime example of this but nor can anyone rely on social security benefits either so this really only leaves investing as a real alternative.

That is not to say that investment is without risk either and is considered to be a game by man, one you will not know whether you have won or not until the very end. All games have rules and strategies; investments are no different and knowing these too will enhance your chances. If you know just how much money you will require when you retire, it is just a matter of planning where to invest to meet that need.

Every type of fund has different areas that can be used to suit the needs of the investor and as such makes each fund highly individual. The stock market is one of these types but it contains different types of stocks, which all contain many companies that you may speculate in.

Before making any decisions, do as much research about the whole subject of investing as well as the companies that are available as you would be very foolish to risk your money without carrying out this basic task. While if approached sensibly a good strategy will win the day, there is no point even attempting this if in the present your financial situation is not in a healthy condition.

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As investors, they should not predict the economic cycle. Rather, they should focus on evaluating individual businesses, or buy index funds managed by reputable companies.

For smaller investors, they could buy specialized bonds that are being offered at a low rate, or small caps.

His company was still looking at buying entire private businesses in India and China. This showed that he still feel that these two Asian giants still had prospects. I would not jump at saying all the companies are doing well.

What does he exactly do for his fund?
He buys over businesses where they are turning in profits. The managers will still be working there. They are already capable and they have a passion for what they do. Warren Buffet does not need to micromanage these firms and can continue to ride on the profits.

What does this mean for normal investors who cannot afford to buy private firms?
They need to check the CEOs’ philosophies and management styles. Read up about them in publications such as Pulses, The Edge and The Business Times, especially when there are interviews about them. Go to the showrooms or offices, like what one of my trader friend does (thought an investor and a trader are different).

For more of Warren Buffet’s insights, take a look at Buffet Goes To Wharton.

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Some of the risks for such projects should be mentioned. First of all, currency risk is very strong. Nobody ever expected the Canadian dollar to be stronger than the US dollar, but it happened. The US dollar is declining, and the Singapore government had mentioned that they would continue to let the Singapore dollar appreciate against the US dollar to combat inflation.

When I put my deposit, the exchange rate was S$1.39. When I paid the rest, the exchange rate was $1.37. The sales consultant was overly excited about the exchange rate, though I told her coolly that it would fall further. True enough, it fell another $0.02. In the short term, the currency risk is very strong.

However, if you look at it long term, if the company promises to double your investment, the gains should outweigh the risks. With the economy in downturn now, it should recover in 4-7 years time, and it should emerge stronger. Promises of doubling also are dependent on the length of time. An investment that is worth $20000 now compared to the original $10000 may sound good. However, if it takes 7 years, then the annualised returns are definitely much lower than a 4-year turn.

One reason for the quick launch of the new project was in part related to the crisis in US. The homeowner needed cash urgently, and the land banking firm had the cash as it is cash rich, so it was able to depress the prices even lower. The original project costs US$40000 per acre, while the new project costs US$30000 per acre and it was even closer to suburban areas instead of rural areas. This means that the speed of development could be shorter, but again, this is dependent on the plans and in my opinion, the US economy.

Actually, I think Canada will make a better investment choice as it is rather constant in terms of development and they are not facing any crisis.

Another risk involved in land banking is the length of time. For other investments, the liquidity level is quite high. For land banking, you must be prepared to wait. It is possible to sell back to the developer before the land is sold, but there would be other hidden costs. Some people may require the sum of money urgently, and this is a problem as they cannot liquidate the holdings quickly. It would take quite some time even if you sell the unsold land share. Hence, this form of investment is not encouraged for those who require cash urgently. This should be additional money you do not require.

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Land banking used to be reserved for large institutions or corporations, but now, it is made available to smaller investors. The minimum amount to get in is US$10000. When I saw one of the projects, Her Majesty the Queen is one of the investors. Of course, she is not the actual person doing the investment, but the portfolio is managed by the experts.

First of all, a land banking company will do a thorough research on various plots of land. They will send their teams in for 2 to 3 years before going through with the deal. The acquisition team will only end up with 2 to 3 possible plots out of 50 that they initially looked into.

They will look at various categories, such as the politics and economy, the growth statistics and other legislation. Then they will look at the official plan and the approval process. If there are no plans for the state to expand, then it’s not viable. Then, they will start looking at the ownership of these lands. The areas should be near major transportation infrastructures and booming towns. The cost of entry should be low as well. They will tend find the receptive sellers and check their title deeds. After everything is done, they will swoop in and give them little time to consider.

What the company will do next is to come up with a master plan to propose to the state government and then ask for rezoning of land. The land will be subdivided for commercial, housing, parks, and schools and other needs. The land banking investor does not need to worry about the particular lot that he or she receives, because each investor holds equal weightage.

When developers come into the picture, the company will look at the prices and the process becomes similar to enbloc. They need more than 60% agreement. By then, the prices should have doubled. Some properties may earn more than others. According to the sales consultant I met with, her company’s worst project received only 8% per annum. The best projects received 45% or more per annum, but the usual projection is 12-15% p.a.

Of course, there are risks and other considerations to land banking. I’ll address them again. 
 

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Anyway, I feel when you have negative views all the time, you will attract negative results. Hence, I decided to think positively, and I got the answer I wanted. I’ll give the go ahead to my father, who was originally very keen just like me, until I did some googling. If he invests in this, he will have a steady source of income until 75 or more. That’s better than the CPF annuities which he will miss getting.

So, what I’m doing here is just to share my research. You should still weigh your own options.  

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First of all, on one hand, there is a currency risk. You invest US$10000. Currently, with the weakening of the US currency, you don’t need to fork out that much money compared to 4 years ago. Having said that, if the US currency continues to fall further, which until recently, it was unthinkable that it would breach the US$1=S$1.4 barrier, the returns you get will be lower when it is converted to SGD. If there is a huge drop, then your investment gains will be negated by the losses through foreign exchange.

On the other hand, if the US dollar continues to weaken, then the price of oil will continue to climb, since the value of oil is somewhat stable. Hence, the losses in currency exchange may be covered by the increases in oil prices. The higher the oil prices, the faster you get back your original investment.

Second, there is an environmental risk. If a hurricane strikes your oil field you have a share in, production will be halted. If an earthquake happens, I’m not sure how they can resolve the problem easily. According to the sales rep, payments may stop for a few months, before production continues. This is because the oil company has a 75% share in this, so they cannot afford not to resume production quickly. In addition, since oil is underground, the structures that may be destroyed in a natural disaster will be quickly rebuilt. For other physical risks, such as fires, insurance will cover that.

Third, even though this company has been marketing such oil and gas investments since 2002, little else is known about them. I always have this fear that companies will fail and my money will be gone. That is why whenever I purchase packages for all sorts of beauty-related sessions, I wonder whether my money is safe. Perhaps this risk is always there, and we have to weigh the risks carefully. One good thing is the main company, Powder River, is traded on OTCBB in the US under the symbol PWDR. The only thing I know about OTCBB is that it is for microcaps.

Forth, oil and gas production has its own risks. It might not be that easy to continue production for a long period of time as it may be commercially unviable. If the oil well dries up, then income will fall. Hopefully with 25 fields spread out at different locations, the chances of all of them failing in the short term will be negligible.

Fifth, I can’t find much information from people who have invested with them. The sales rep at the fair showed me his earnings because he also invested with them. However, he has vested interest, so it is hard to say. At least two people with some authority, Mr Tan Kin Lian, and Mr Dennis Wee, had come out to say they will not invest in such schemes. Other people at forums think it might be the making of a Ponzi scheme. When I was listening to the sales rep, he mentioned right from the start that it was not a Ponzi scheme. That means this must have been a concern raised by many would-be investors for him to say that. Basically, it means that money from later subscribers is used to pay the earlier subscribers, instead of real money that is made. This point cannot be substantiated though. There are other threads that discuss Oilpods.

By googling Oilpods, I only come across some consultants that mention similar things that I had mentioned in my earlier posts, but they do not mention the risks. When some consultants who post in forums were questioned by other forum members, they were unable to fully explain. Some people mentioned that there was insider selling, but when I checked, somebody from the company bought the shares twice.

For more news, you can check the press releases over at Yahoo Finance.

Hence, I am still thinking hard whether I should invest in this. Whatever it is, caveat emptor – buyers beware.

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First of all, they offer a cash flow (business model) investment. After investing a sum of money (minimum US$10000) to buy assets, you wait for six months before you recover your capital over a span of 3-4 years. You will be paid monthly, and every three months, they will pay you another sum of money.

After the breakeven point in a few years, you get to generate a cash flow which may fluctuate depending on how the business is doing or how the oil prices are. This is being compared to a capital gain investment, where you get a one-time profit when you sell and not get any more money.

Once you get your money back, you can choose to invest in subsequent projects, and repeat the process. Then you will have multiple streams of passive income. According to the sales rep, the oil fields in US are estimated to last another 12 years after you have recovered your capital. Based on a conservative estimate by them, you will get 10-14 percent Internal Rate of Return p.a. The oil and gas fields that are chosen are known to be producing. That means these fields are not at the exploratory stage or at the final stage.

You get to own part of the lease. It will be registered at the U.S. State’s County Office.  This is known as Working Interest. This is supposed to work as a hedge against inflation. What Oilpods does is to market the shares of projects to people. Currently, they are at the 8th project, and they started since 2002. The company collaborates with Powder River Petroleum International Inc, which is involved in the production, acquisition and marketing of crude oil development of crude oil and natural gas properties in US.

With oil and gas prices remaining high, the demand should be there. Unlike stocks which require constant monitoring, you will get a sum of money monthly. The cash flow is derived from daily production.

It sounds rather exciting to have such a high return scheme. Of course, any investment carries risk. I’ll discuss some of the risks in my next posting. In addition, some forum goers have expressed concern regarding the company’s operations, so you can find out more before jumping onto this bandwagon. Since I’m doing research on this company, please let me know if you have heard of the company or invested with it.

Sarah Tan

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