Analysis of Investment Vehicle

There is various type of investment tools in the Market. Before we go into some investment, we need to analyse whether the investment is suitable for us or not.

Here we analyse the investment tools using SWOT analysis.

S – Strenght
W – Weakness
O – Opportunity
T – Treats

We run this SWOT analysis for a few common investment tools – Stocks, Unit Trust, Gold, Forex and Properties.

We combine the Opportunity and Treats in here. Because a Treats can be an Opportunity for another party, it depends on which side are you in. You can also turn the Treats to an Opportunity. Eg. H1N1 is a Treats for company A because a lot of staff affected and cause the production load down. But this become Opportunity for Company B which producing mask, glove or vaccine for H1N1.

STOCKS

Strength
- Proven successful business (listing requirement)
- Small starting capital
- Easy and simple to enter & quit
- Having wide range of stocks to pick / choose
- Low trading fee (as low as 0.1%)
- Can choose as short, medium, long term investment
- Can get income in capital gain and cash flow (eg. dividen)

Weakness
- Price fluctuate fast (volatile)
- Cannot control company activity / decision
- Less liquid, need buyer
- High risk. Can be total capital lost
- Need to monitor closely

Opportunity / Treats
- Very sensitive to Major & Minor issue
- Very focus on company performance / change of Director


UNIT TRUST

Strength
- More stable price
- Small starting capital (depends on type of fund)
- More liquid, sell back to fund house any time. Easy to enter and quit (1 day processing)
- Lower risk. Safety through the spreading of risk: diversification (fund invest in local & overseas market, loaded and non loaded fund)
- Need less monitoring

Weakness
- Higher service charge (0.25% for bond and money market funds; 3-7% for equity funds)
- Less flexibility (fund come in package – focus in certain industry, country)
- Limited choice (number of funds < number of stock counters) - Normally consider as middle to long term investment tools - Capital appreciation, where distribution of units are not guaranteed Opportunity / Treats - Sensitive to Major issue, not so much effect on news happen on company - Re balance financial portfolio can be done with ease by performing fund switching GOLD (DEPOSIT TYPE) Strength - More Stable price - Easy to enter and quit - Need less monitoring - Can choose as medium, long term investment Weakness - High initial commission (>5%)
- Medium starting capital (starting in 10 or 100gram)
- Limited choice (Normally trade back with the same bank / institute; if sell to others will having higher sell back commission)
- Only can get income on capital gain

Opportunity / Treats
- Less sensitive with minor issues
- Price increase in unstable / economy down situation
- Always contain value


FOREX TRADING

Strength
- Low initial commission (~1%)
- Low initial start up capital
- Easy to enter and quit

Weakness
- Might lost more then capital (depends on type of account)
- Need very close monitor
- Very short term investment tools
- Very high volatile
- Income in capital gain type

Opportunity / Treats
- Potential gain high return / lost in short period of time
- Legal in Forex trading
- Only be sensitive to issues regarding to the country


PROPERTIES

Strength
- More Stable price
- Need less monitoring
- Can choose as medium, long term investment
- Can get income in capital gain and cash flow (eg. rental)
- Can have full control to operate (renovate, sell,..)

Weakness
- Need to get buyer / seller to enter or quit
- Low cash liquidity
- Need high initial capital
- Usually loan will involve in this kind of investment

Opportunity / Treats
- Less sensitive with minor issues