There is a popular phrase, "IT IS SAFEST TO PUT MONEY IN BANK FD (Fixed Deposit)"
Is that true?
Answer: Yes and no.
Yes if the world is in deflation and Cash is King
No if we are living in a world where things continue to get more expensive
Let's look back 50 years ago to 1970
In year 1970 these are the prices
A red bean bun is 10 sen
A glass of pure coconut juice (from roadside hawker stall) also 10 sen
A red bean bun is 10 sen
A cup of coffee or teh tarik also 10 sen
Today a red been bun is Rm1.70
Coffee anywhere from Rm1.70 to Rm2.00
It was 10 sen for coffee in 1970. Today Rm1.70
So it has gone up by Rm1.60 or 1,600%
Divide 1,600% by 50 years = 32%
THAT IS AN ASTOUDING INCREASE OF 32% A YEAR FOR FOOD & DRINK
But wait a minute!
You live in the Kampung so coffee only Rm1.00 not Rm1.70 in the City
OK then we use Rm1.00 as the benchmark
So coffee price has gone up from 10 sen to Rm1.00 in 50 years
So it has gone up by 90 sen a cup or 900%
So divides 900% by 50 years = 18% inflation per year for 50 years
Now see how much it will go up if you put money in Bank FD
At 1.75% = 100/1.75 = 57,14 (P/E)
That means that in the next 57 years your One Ringgit will double to Rm2.00 (Up 100%) in 57 years or by 2077 AD
Do you think you can get coffee at Rm2.00 or Rm3.40 by then?
That is the reason why we MUST INVEST TO PROTECT MONETORY VALUE FROM THE RAVAGES OF INFLATION
AND NAIM AT 22% (18 SEN DIVIDEND FOR PRICE OF 81.5 SEN) WILL DOUBLE YOUR MONEY IN JUST 3.7 YEARS
Latest briefing on Dividend
1. Naim's yesterday Egm has approved all the proposals by voting
2. Sale of lands to Sarawak Economic Dev Board will now go smoothly as Sarawak Economic Dev belongs to Sarawak Govt investment arm.
Since they already received Rm2.95 Billions from Petronas the cash is already in. Can expect speedy payment
3. After payment is received will Company announce Dividend payment
4. It will be Rm90 million or 18 sen (Rm180) unchanged from proposal
5. At 81.5 sen that means 22% yield as compared to Bank FD rate at 1.75%
6. This 18 sen payment will be given within 12 months or earlier
7. You can chose to put money in Bank FD at 1.75% interest rate or keep Naim for 22% dividend yield
8. Investing in FD at 1.75 sen has a P/E of 57.14
Or it will take 57 years to double your money
At 22% Naim P/E is only 3.7
So it will double your money in only 3.7 years
Calvin Tan Research
All information provided here should be treated for informational purposes only. It is solely reflecting author's personal views and the author should not be held liable for any actions taken in reliance on information contained herein.