IPO vs Savings

Hi folks, have you ever ask yourself, is there anything else that you could do instead of letting all your money grow in your saving accounts?

Do you know that you could gain more from your savings instead of leaving them all in your account?

One of the options that you may want to consider is investing the money in Bursa Malaysia. In general, investing in Bursa can be categorized as below:

1. Buying IPO ( Initial Public Offering )
1. IPO refers to new company that is to be listed in Bursa Malaysia
2. Buying IPO is proven to be a safer way to invest as compared to buying shares direct from the Board
3. Application is simple. You may apply either through ATM/Online Banking/Send application form to Securities Commission
4. After that, it will go through balloting process, and you will be informed if your application is successful. If it is not, no worries, you will get your money back. Believe me, we experience that before..
   
2. Buying stocks directly from Board

          There are 2 ways you could buy stocks directly from the Board:

1. Online stocks     –  Buying stocks online either via M2U, CIMBClicks etc means you got to enjoy lower brokerage fees but it may be a bit hassle to those who are mobile since it requires internet connection for buy/sell activities.
2. Remiser               –  Buying stocks through remiser means you got to pay higher brokerage fees but then it provides mobility since the communication medium is via phone

Let’s now do some investment study. Say you have 100K in saving account; you could actually let half of the money remain as the savings while another half invest into IPO.

Now, lets calculate

• 50% of RM100,000 = RM 50,000 – remain in the saving

o   Average interest for saving in Malaysian Bank should be around 5%-7%

o   In a year, we can have the interest of RM 50,000 x 6% (just take the average)

=RM 3,000

•  50% of RM100,000 = RM 50,000 – apply for IPO . Let us take one of previous IPO example so you could see the results clearly, PCHEM in year 2010.

o   PCHEM IPO prices was fixed at RM5.04 per unit

o   With RM 50,000, you can apply for approximately 9,920 units. Note that the application closing date was Nov-2010

o   Let say after going through balloting period, you have successfully obtained  5,000 units

o   PCHEM was then listed at RM5.71 on 26-Nov-10

o   It hit the peak of RM7.61 on 7-Apr-11

o   Now, its current price is RM 7.00 on 13-May-11

o   You see, you are gaining around RM 1.97 per unit with the current stock price

o   Simple calculation shows the gain are RM 1.97 x 5000 units

= RM 9,850

So, in just 6 months, you could gain easily RM 9,850 compare to RM 3,000 in 1 year from  your saving account.

Please bear in mind ya..not all stocks provide us this kind of return. Therefore, you need to pick the ‘good’ stocks based on their sectors, prices offered & company fundamental.

Am sharing with you below summary of IPO listed year 2011 that you want to consider from now on :D

*Last price quotes on 13 May 2011.
** Source Bursamalaysia & TheStaronline