The Best Personal Finance Summaries – 30 September 2019

There are a lot of exciting things happening at MMM. From new partnerships to help break down the complexities of insurance, to us working on a project that will be able to map out your whole financial life for you.

More on that in the future!

From Us

Have you ever wondered if you are on track to reach your financial goals? Well, now you can find out with the new goal app we created. Simply answer a few basic questions and you will find out if you will be able to reach your goal or not!

Try it out completely free!

And let us know what you think. We're working on improving it so any feedback on what you'd like to see is possible to make happen!


New Video

Never be Taken Advantage of Again by Insurance Agents (5 Ways to Reduce Your Medical Premiums by 50%+)
As part of our goal of making personal finance easier to understand, we created a video with one of our partners to break down everything you need to know about buying a medical card.

We're proud to have over 1000 people view the video and so we'd like to share it with you as well.

What other videos would you like to see from us in the future?

More Money Malaysia Facebook Group

Money in Daily Life

3 Ways to Get A High Salary in Malaysia

… they seemed to think that the way to earn a high salary is to basically:
..
Be good at the job
Be loyal to the company
Get rewarded with promotions in due time

I'm so sorry if I'm the one who has to break this to you, but it doesn't usually work that way.

Suraya from Ringgit Oh Ringgit recently shares her thoughts on what are the common misconceptions people have in their minds about pay raise. In the same mindful article, she also talks about what are the 3 actual ways to get a high salary in Malaysia!

#1: Negotiate a good salary from the beginning

Suraya discusses a particular step-by-step method formulated by Ramit Sethi. The exciting video sheds light on procedures, namely:

  • Iterating your interest
  • Highlighting your prowess
  • Accept flexibility options

It is ideal for negotiating a high starting salary because annual increment will secure you higher net raise. For women, however, it is advisable to take advantage of your femininity as research has shown that ‘when women bargain like men, they can be perceived as pushy…'.

#2: Do some job-hopping

Update your CV regularly and drop it to any job-openings you could find. Job-hopping in average can net you 10-25% salary increase, albeit it differs amongst industries.

#3: Consider working remotely

It is undeniable that jobs in Malaysia pay lesser when compared to similar counterparts in developed countries. For graduates, the situation is worse – they face both unemployment and underemployment crisis! Do what's best for your future, if you can accept working overseas!


7 Types of Car Insurance: Which Ones Do You Really Need?

The cost of even a small repair makes car insurance pleasant to have. When we start adding in the medical expenses that can go in a car accident, insurance becomes downright necessary.

Among the wide variety of options, here are the 7 different types of car insurance you should know if you are a motorist or motorcyclist summarised in a table!

Types of Car Insurance Description
Liability Insurance Covers the cost of repairing and potential medical bills in accidents. A must-have in most of the states.
Collision Insurance Covers repairs to your car in accidents. Not a must-have. If you have a new car, consider getting one.
Comprehensive Insurance Covers weather damage, theft and animal collision. Pricey but nice to have.
Uninsured Motorist Protection Not mandatory. Covers your damages in rare cases where the person in responsibility has financial constraints.
Medical/ Personal-Injury Protection Covers medical bills for your passengers. A good health insurance plan can easily replace this plan.
No-Fault Insurance Covers injuries and property damage – no matter who is responsible. Expensive.
Gap Insurance Worthwhile if you owe more on the car than you could get for it if you sold it now.

The Psychology of Status Purchases [Infographic]

Human beings, your customers, included, are concerned about their status in society—and have been for as long as civilizations have existed. That's because much of status-seeking is instinctual: It's hard-coded in us because status improves our chances of survival.

A special blog post and infographic by Lexington Law shows the esteem need of consumers in modern societies according to Maslow's Hierarchy of Needs:

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Ascending the Maslow's Hierarchy of Needs, people change their habits, diets and status. To find out more, check out the infographic below:

30 September 2019 2


This Is Your Middle-Class Relationship With Money

You didn't grow up poor. But neither were you rich.

There was always food on the table. Sometimes it was better, and sometimes it was worse, but you never went to bed hungry. When there was something to celebrate, there was always KFC.

mr-stingy in his recent piece of article dissects the constant struggle of middle-class in terms of money. The author uses a story-telling methodology to explain how the life of the middle-class will be entangled with cash.

The author uses the anecdotes of unable to buy luxury toys, having an average Toyota car and leading an ordinary life. Ultimately, he tries to paint an illustration of how a middle-class family would survive in this era. The things are the same for the middle-class during their time in or after university.

The key to changing your financial destiny is discipline. You start to track your spending and reduce your expenses as much as possible. You are smart to start planning your expenditures to get the best deal out of your money.

Apart from reducing your expenses, you start to realize the importance of growing your income as well. You learn about all the side jobs and self-development courses which would be able to let you grab some quick bucks.

Finally, you made it. However, you now have more responsibilities under your belt. But then you realize you'll probably continue to struggle with money for the rest of your life anyway. The most important thing is – when you have something worth striving for, that's okay.


Malaysians Share Where Their Interest in Personal Finance Came From[2]

How do members of the Malaysian personal finance community first get interested in personal finance? What sparked this fascination for money management?

According to mini-forum organized Suraya from Ringgit Oh Ringgit, most Malaysians got interested in personal finance due to the following reasons:

#1: From the school of life

Growing up, many Malaysians have their interests grow in personal finance because they experienced the financial struggle themselves. They learned about it because they just had to, it's part and parcel of adult life!

#2: From parents

Most Malaysians are also guided by their parents in managing their finance. Some of the parents might mismanage their cash, while some of them handle their money well. End of the day, Malaysians credited their parents for teaching them about personal finance.

#3: From spouse/ family members

Similar to parents, family members also play a significant role in imparting financial knowledge to many Malaysians.

#4: From studies/ work

Sometimes, formal training or teaching is what it takes to open your eyes about the importance of managing your wealth. Therefore, most Malaysians are thankful to have the opportunities to learn about it formally.

#5: From books and personal finance websites

Books like Rich Dad, Poor Dad, and financial websites such as Ringgit oh Ringgit serve as a tremendous financial learning tool for many Malaysians too.

#6: From a personal desire*

Some groups of Malaysians claimed their desire sparked their interests in personal finance. The determination of wanting to achieve something they wanted motivates them to spend time and effort to learn about financial management.


Why Affluent Singaporeans are not on Track for Desired Retirement?

Majority of the affluent looking to retire are not financially on track yet.

This is according to a recent Standard Chartered Survey.

In this particular article posted by Kyith from Investment Moats, the reasons why affluent Singaporeans are not financially on track towards their retirement are dissected by the author. By definition, those who earn $10,500 monthly and have investable assets of $408,200 are considered affluent in Singapore.

Affluent Singaporeans have Similar Problems As Well

Kyith shares that even the affluent ones are struggling with their life. Higher monthly income does not translate directly to more free cash flow. As he points out, one would have to spend more time working to earn a higher salary – but then, the expenditures would increase simply due to less time are left to tend his/ her own life. In short, earnings per hour and savings rate will be low. The capital does not grow, and wealth is not sustainable for your retirement.

Desired Retirement Scenario May Proved Too Lofty

Most Singaporeans have found someone to plan their retirement for them. Sometimes, the target sum is too high and difficult to be achieved as the savings rate is low.

They Have a Plan but Not Highly Prioritizing Them

Many think that it is better to have some money in hand for emergency sake and they often do not measure it. Kyith argues that one should prioritise his/ her retirement and contribute towards the plan after deducting the exact required sum for an emergency. One should trust his/ her financial instruments toward retirement.

Conclusion

In conclusion, many struggles with their retirement plan because:

  • They do not know the exact expectations of retirement life they want.
  • Often the amount of wealth needed to retire is so large that there is a lack of motivation.
  • Rate of return is too low.
  • Not having enough personal cash flow to sustain their lifestyle.
  • Not funding their retirement plan to the full potential.
  • Lack of trust in the retirement plan.

Therefore, we should right-size our expectations and avoid these reasons in our pursuit of desired retirement life.

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Grow Your Wealth

13 Malaysians Share How They Diversify Investments

What did you pick as your first investment? Your second? Third? And so on?

Here are some of the replies. Thank you to everyone who agreed to have your answers compiled and posted here.

RinggitOhRinggit’s author, Suraya recently asked her fellow followers on how they diversify investments. While priorities might vary from one to another, some Malaysians do choose similar investment tools based on several reasons as summarised below:

Investment Instruments Reasons
ASB Low-risk. Alternative to EPF. Serve as an emergency fund. Consistent dividend. No risk of capital loss.
Cryptocurrency Easy to get started.
Currencies Protect the value of weakening Ringgit.
EPF High and stable CAGR. Better than an average savings account. Company contribute part of it.
ETF Robo-advisory platforms. Easy to set up.
Fixed Deposit Buffer for emergency funds. Better than a normal savings account.
Gold Easy to buy and sell. Sturdy against inflation.
Human capital Invest in ourselves.
KPF (Koperasi Permodalan Felda) ROI of 7-10%.
Passive business Does not occupy a lot of time.
Property Rental income. Medium risk. High CA/CF – but needs a lot of cash.
Stock market Capital gains and dividend returns. Best returns in terms of passive income. Good returns for short or long term. Not exposed to market risk compared to unit trust.
Tabung Haji Safe investment.
Unit trust Alternative to ASB – simpler to buy.

Several observations are being made by Suraya as well:

  • Some investments are more popular because they have history and solid reputation.
  • Women are more conservative, men tend to make riskier investments.
  • ‘Investment’ can be unique and different, such as investing in ourselves!
  • Personal interest in a specific investment makes it fun.

Pay Interests to Earn Interest. What the Rich Knows about Debt that the Rest Do Not Know About It.

Many people are advocates of being debt-free.

They opine that being debt-free frees them from paying interest costs.

That opinion is excellent if you wish to remain in a middle-class society.

In this article, KC Lau, the writer of the financial blog under the same name discusses the basic knowledge about debt.

There are two parties in a loan agreement: the Lender and the Borrower. Lender lends money to borrower and will be repaid with interest; in return, borrower has a choice to use the money as he deems fit.

Most of us would like to be lender as compared to borrower. However, for the writer, he is both a lender and a borrower. He owns real estate – collects rental as lender and services his mortgages as a borrower. This is the core for paying interest to earn interest. As an example, banks make money by doing the exact same thing. They collect money from us – in the form of deposit, and lend money to borrowers to spend on things they wanted. The margin between the two is what makes the banks wealthy!

Thus, KC concludes by saying the following:

  • Most of us are both lenders and borrowers.
  • The rich have more interest income than interest expenses – earn interests.
  • The rest has more interest expenses than interest income – pay interests.

Also, he answers several questions about managing our interests and investments. To summarise:

  • Do not cash out EPF to pay off the mortgage. EPF gives 6+% per annum, while the mortgage has a 4+% interest rate.
  • Cash-out your property to pay off credit card debt. Credit card debt has an 18% interest rate compared to 4+% for a mortgage.
  • Consider well before borrowing to invest in stocks. The stock market is about capital appreciation – which is not guaranteed; however, interest payments are guaranteed.
  • Before getting a short-term loan to run business, calculate your profit margin well.
  • Property flipping might be profitable, but it is still capital appreciation.

Conclusion

The rich have profited billions from the knowledge about debt. They do not have plans to be ‘debt-free’ for debt is money and friend.

Cool Opportunities

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.

Check it out here!

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.