How do you classify your investments?

Nowadays many people have investments in one way or another. Stocks, properties, REITs, ETFs, mutual funds and bonds are the most popular choices. Of course there are some other "investments" like warrant, CBBC and option. Even bank saving could be considered as investment as well despite of the miserable return.

I don't know how other people classify their investments but I do it in my way according to the possibility of value appreciation (depreciation on the otherwise direction) and whether there is income generation by the investments. The classification falls into category 1, 2, 3 and 4 in the below matrix.

		Value Appreciation
		Yes	No
Income Generation	Yes	1	2
	No	3	4

Cat. 1 investment can generate income while possibly enjoys value appreciation (depreciation as well). This is the ideal class of investment. At certain time frame, rental properties and certain types of stocks are good examples.

Cat. 2 investment just earns income only but does not see value appreciation over times. Holding bonds till maturity falls exactly into this category.

Cat.3 investment is the opposite of Cat. 2 so no income is received during the investment period. All one hopes is the price hike followed by a sell off for profit. Most, if not all, growth stocks that pay out close to zero dividend are the examples.

Cat. 4 is basically not an investment because it neither generate income nor will it appreciate over times. Cash or saving bank account deposit match exactly this criteria.

So one may ask why classify the investments in the first place as long as they make money in one way or another. This is about the objectives of our investment. That is to say why we invest in the first place. The objective of investment largely associates with our life cycle. Understanding in what stage of life cycle one is in then he/she can develop an investment strategy to best meet his/her needs by holding the corresponding categories of investment items.

Of course these four categories are not mutually exclusive. One can hold all four at the same time but putting an appropriate percentage among them is important and adjusting the percentages along the life cycle is even more vital. So in the first place one must examine into what categories his/her investments fall into and check what percentages they are in. Holding an inappropriate category and particularly having too much could be harmful to one's financial well-being. Just imagine a 80 years old retiree holding 10% of Cat.4 but 90% in Cat. 3, ie., no income but hopefully price hike could be fatal in case of the market crash. On the other hand, a young person with majority of his/her assets in cash will not render him/her a fast track of wealth accumulation. Both of the scenarios are not desirable.

So classifying the investments is not the end but just the first step. The key point is to know what investments one is holding then to adjust the holding percentage in the four categories in the investment portfolio to achieve the optimal balance between cash income and value appreciation. Simply speaking, investments classification is the just means while the allocation of investments to achieve the goal of cash income and value appreciation is the end.

You are tagged!

In many countries pets like dogs are tagged with chips under statutory requirement. This is for the sake of strayed animals so that info of owner can be retrieved easily. Most of the people don't know they are also "tagged" in another way. So they are curious how they are tagged because they have not been implanted a chip into their bodies.

However, they forget they are holding a mobile phone almost every minute during their awakening time, some even when sleeping. So what do mobile phones relate to tagging then? And who tagged them at all and why?

Mobile phone not only stores many of the personal particulars and files. It is very useful and entertaining but indeed it is the backdoor that opens the access to parties not limited to hackers whom are interested in knowing everything of you. Hackers are interested in your money mostly but there are someone whom are more concerned about your activities. That is the big brother, ie., governments.

It is well known that the GPS function of mobile phones reveals the whereabout of the owners. Even it was switched off but the GSM signal still discloses the location. Very often there were scenarios in the films how police tracked a target as long as he/she is holding a mobile phone.

Except the whereabout of the owner, mobile phones provide a backdoor to check the owner's activities through viewing, secretly, on what apps used, websites browsed, photos taken, phone conversation made with whom...etc. As there are more and more functions feasible with a mobile phone, there is indeed an increasing level of disclosing our privacy. I sometimes suspect if there is any connection on the mobile phone product development with the government surveillance scheme. Naturally there is no official cooperation on such move but when governments put it at the level of national security then it makes thing reasonable and necessary.

So when mobile companies launch new models with fantastic functions, it is in one way for the sake of business purpose, on the other hand it lures more and more people to use them. This is what the governments want to see because that means more and more people are under surveillance as long as they are holding a mobile phone.

This is a triple win situation. The mobile phone companies have more business, the users are fascinated with new features and the governments got people "tagged" willingly.