The Best Personal Finance Summaries – 19 August 2019
We're exploring other ways for you to learn besides reading a blog. The first one we're doing is holding a live webinar with one of our partners. Did you know that there were new legislation that came into effect starting 1 July 2019? If you didn't have medical insurance before then, your premiums are going to be higher going forward. We found out that a premium that may have cost you 2490 now costs 4270!
However, our partner was sharing with us ways to actually reduce your premium by over 50%. Many of these things aren't widely known so we invited him to hold a webinar to share that information with you.
If you're interested in the free webinar, sign up here!
The different types of investment options in Malaysia
Ever wondered what investment options you have here in Malaysia? Well, here is the most comprehensive list available for you!
We've finished adding all the content but it's still a little messy.
Which one do you want to learn more about?
Money in Daily Life
Low interest rates pose both costs and benefits. Whether you win or lose depends on who you
What low rates mean?
In short, low rates are great if you owe money because borrowing costs fall.
- Mortgages are cheaper.
- Student debts could be refinanced.
- Businesses take more risks to grow.
- Investments are stimulated; hence projected cash flows rise.
- Share prices rise.
If you are lending money (buy bonds or save in bank account), you will get a lower return.
- Pension funds are more expensive.
Boomers own more bonds and have more savings.
So, what low rates meant for both boomers and millennials?
|Own risky assets (stocks).||Own less risky assets (bonds and savings).|
|Cost of retirement increases.|
Check out the link above to read more on this interesting topic!
Money, the conventional wisdom says, doesn't buy happiness. Modern psychology seems to
back this up, with studies suggesting that beyond an income of $75,000, money doesn't make you any happier.
Does income over $75,000 make us happier? And if not, why not?
The article from Michael Laurence explored on how money affects happiness in both good and bad way.
When Money Makes You Happier
The author acknowledged that *" money won't solve every problem. But just because money doesn't solve every problem doesn't mean that money won't solve any issues." He then listed many things that could make you happy, which is achievable if you have money.
When Money Makes You Miserable
In this case, the author explained three reasons why people could use money in ways that make
them less happy.
- Their Job Makes Them Miserable.
People earn a lot of money because they've accepted a challenging, demanding job. Long hours, lots of stress, lots of travel and time away from family is the thing that makes them unhappy.
- They Spend Money on Things That Bring Them No Happiness.
People succumb to keeping up with the Joneses and use money not because they enjoy it, but because they'd be embarrassed not to do so.
- They Take on More Debt.
When people begin to earn more money, they could leverage their higher-income to borrow more money to upgrade their lifestyle. As the author quoted, "extra money won't make you happy if it tethers you to a heavily indebted lifestyle."
The Bottom Line
The author concluded that money, in short, is neutral. It's a tool that can make you happier or less happy, depending on how you choose to spend it. As he said, "money will make you happier only if you choose to spend it in accordance with your values and your preferences."
Just because it's easy to spend money without thinking doesn't mean you have to fall victim to
it. The following mindful spending strategies can help you resist impulse buys long enough to help you remember what you truly value.
1. Calculate costs in hours spent.
While money is replaceable, time can only be spent, not earned. Start to think prices in terms of hours as popularised by Vicki Robin and Joe Dominguez in their book Your Money or Your Life. Calculate your hourly wage by dividing your salary with your working hours. Then, only evaluate if it is worth to spend your money.
2. Know why you're shopping.
Stop sometimes to check in with yourself to understand why you're consuming. Ask yourself:
- Why do you want to buy this?
- What problem do I expect this purchase to solve?
- How do I hope to feel after making this purchase?
- How long do I expect to own this item/ use this service?
- Do I already own something similar?
- Can I recreate the feeling of buying this without spending money?
- Can I recreate the excitement of purchasing this by spending less money?
3. Create a purchase wish list.
Forcing yourself to wait to decide if you want to spend money on an item can help mitigate the emotional element of spending decisions. Keep a wishlist, write down what you want to buy
and decide when to buy it. Revisit your list in the future; if you still want to buy, then purchase it!
By doing so, you create self-awareness and train yourself to resist impulse buys.
4. Keep your mind on your money.
In our increasingly cashless society, spending money is more comfortable. However, do spend some time to know yourself better. Once in a while, it is okay to honour your impulses as well!
What are we saving for? Are we saving for food and expenses? Or are we
saving for lifestyle?
This insightful article by Kyith shed light on the money hoarding mentality by many people nowadays.
How Knowledge of Capacity and Perish-ability Changes Things?
The author made an interesting comparison between hoarding food and hoarding money. Kyith
shared how he went on an experiment by gathering food that people do not want. He noticed he had developed a hoarding mentality and accumulated too much food. However, food is something that everybody knows the capacity limits, and they are perishable. Kyith concluded that it's his insecurity that causes he hoarded so much.
Do We Hoard Money As Well?
Hoarding is often described as an excessive acquisition of and inability or unwillingness to discard large quantities of objects that cover the living areas of the home and cause significant distress or impairment. The author deduced that insecurity towards money motivates accumulation of wealth.
We Do Not Know What We Want and An Uncertain Future.
For almost anything else apart from money, there is a specific limit to what
you can use an item for. With money, we could buy and do a lot of things. However, if you ask the folks what they saving for are, they do not have the most precise picture or how much they need.
How Could Financial Planning Solved This Problem?
A useful framework could show you different levels of security and independence. The same
structure also established various capacities – some are risk-averse, some would need more. You need a lot of money for this plan. But even then, there is still a numerical limit! A robust framework will give you what this very upper limit where we can soundly conclude you are somewhat secure is.
In A Nutshell.
According to the author, we all hoard money. But financial planning is vital to establish a
limit for accumulating to suit various capacities. Check out the article above!
Want To Have Your Money Accelerate Your Goals?
Grow Your Wealth (Investment Related)
No good articles this week. Let us know if you have a site you'd like us to look into for more summaries!
BigPay – The Best Travel Credit Card for Malaysians?
If you ever travel out of Malaysia and use your credit card, then this is BIG (pun intended). AirAsia has released BigPay, a prepaid mastercard that you can easily top up through the BigPay app and be able to use instantly.
But more importantly, BigPay charges you at the real exchange rate (which means they charge no fees). This is something you won’t get if you were to go to your bank or some exchange counter.
In fact, I've already saved over RM 10,000 using this card (you can read about it in our BigPay Review)
Anyway, if you don’t have one yet, you can sign up for free and get RM10 free when you use referral code B7D3YNZPGO.
A way for females to get free insurance
We were talking to our super humble financial advisor friend one day and she started talking about some insurance product for females that provides coverage for all these female related illnesses. But more importantly, the contract also states that all the premiums will be returned at the end of the contract.
Seriously something for all females to consider!
Building a financial roadmap
For those who are lost when it comes to tracking your net worth and using it as a way to create the ideal life, this is something you should check out.
We have worked with a financial advisor to lead you through building your own financial roadmap by yourself online.
And if you want them to do it for you (at a huge discount), you can make the request as well.
Talking to an Independent Financial Adviser
A big issue when you work with someone who calls themself a financial advisor is you do not know if they really have your best interest at heart. That’s one of the main reasons why I never work with any (the other one is that most of them get trained to say what the company wants and thus, do not know of all the other cool opportunities out there).
However, I’ve been talking to an independent financial adviser the last few months and I do believe that not only is she knowledgeable, but also super open to sharing her knowledge.
If you’re interested in talking to her, join our facebook group and ask your questions. She will definitely find time to pop by and answer them.