The Best Personal Finance Summaries – 5 August 2019

We were gone for the summer holidays for awhile but now we're back with a whole list of things that you will not want to miss! Some of them include a much better layout of the website and another big one will be making it easier to read some of our most popular blog posts (such as 7 Things That The Best Medical Cards in Malaysia Have and 25 Types of Investment in Malaysia.

From Us

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?

More Money Malaysia Facebook Group

Money in Daily Life

You Can Now Buy Property Even if PTPTN Unpaid.

Good news, graduates! You can now buy property even if you were previously “blacklisted” as behind on your PTPTN loan repayment.

Starting 18th October 2019, graduates who are also Perbadanan Tabung Pendidikan Tinggi Nasional (PTPTN) a.k.a. National Higher Education Fund borrower would be able to buy their first home under a new initiative for youth housing in collaboration with the Ministry of Youth and Sports.

Currently, with Central Credit Reference Information System (CCRIS), if your existing loan payments have been overdue 2 to 3 times in the last 12 months, financial institutions deem you as a low creditworthy person. Consequently, you may face difficulties getting your loan approved. But Housing and Local Government Minister, Zuraida Kamaruddin said in a property conference,

"Just to buy a home they will be removed from the CCRIS list."

In the same occasion, it was announced that 3,000 affordable homes in (30% of 10,000 built) in Bandar Malaysia would be allocated to youths.

Identity economics: Who are you? And how does it affect your spending?

Who am I? That's a great question.
I'm a guy who writes about money and frugality, but I'm also a man who is willing to — once in a lifetime — spend $267.41 to experience a Michelin-star restaurant in rural France.

Have you ever ask yourself this one question – who are you? In the article, the author, J.D. Roth pondered on this particular question from the conversation with his cousin, Duane. The questioning leads to several author's self-discovery of his bizarrely different traits – writing about frugality yet spending $200 on a fancy dinner, paying $1900 for a used pickup but did not care to clean it and doing more speaking gigs despite hating the attention garnered.

In the effort to explain the discrepancies, the author mentioned the novel 'Les Miserables' by Victor Hugo. It was then revealed that Victor Hugo based both Valjean and Javert (the protagonist as well as the antagonist of the novel) on a single person – Eugène François Vidocq (a French criminal turned criminalist). The author then conjectured that humans are inconsistent yet complex – which we all have dual natures and can be both good or bad.

So what does it have to do with personal finance? The author argued that we all make our purchasing decisions based on who we are. Mindful spending should be practised – we should be clear on who we are so that we would not be tempted by spontaneous desire.

One last thing we should be mindful of is that we should realise our identities shape our work, wages and well-being as noted by the book 'Identity Economics'. As time goes by, we will adapt and grow at the same time too – our values, as well as spending pattern, will change. Yes, there might be internal conflicts – just like those faced by the author currently.

7 Tips to Achieve Financial Security.

The 2019 Planning & Progress Study by Northwestern Mutual found that 71% of Americans feel financially secure today versus 47% when the study was first conducted a decade ago.

Here are 7 tips to help you establish financial security!

Tip 1: Put a Practical Budget in Place.

  • Establish a monthly budget.
  • The 50/30/20 rule – 50% on essential expenses, 30% on discretionary expenses and 20% on savings.

Tip 2: Create an Emergency Fund.

  • 3 – 6 months of living expenses as an emergency fund.
  • Start with at least 1-month worth of costs.
  • Allocate 10% from monthly income.
  • Set up a high-interest account for an emergency fund.

Tip 3: Consolidate Debt.

  • Lock in a lower fixed interest rate.
  • Sell unused belongings or items.

Tip 4: Eliminate Emotional Spending.

  • Reduce spending on 'wants'.
  • Allocate a specific amount for limited discretionary spending.

Tip 5: Find Ways to Increase Your Income.

  • Take a second job.
  • Identify your skills and pick up freelance gigs.

Tip 6: Start Your Retirement Planning.

  • Contribute to a retirement savings account.

Tip 7: Stay on Track by Setting Goals.

  • Identify annual financial goals and savings targets.

Finances Are Taking a Toll on Mental and Physical Health.

A study from Merrill Edge revealed that a shocking 73% of Gen Z, 69% of millennials and 58% of Gen X say financial concerns impact their mental health. Baby boomers appear to be the least troubled by such concerns, at 40%, but even that number is not insignificant. Also, 56% of Americans feel their physical health is affected by their finances as well.

The unfortunate reality is that financial stress is a part of everyday life. Fret not, check out the tips below to address the challenge.

Tip 1: Decide You Want to Take Action.

Take small but significant steps that will act as favourable reinforcement. If you've decided to change, you'll have a sense of hope. Each completed step can allow you to gain more confidence and momentum.

Tip 2: Balance Short-Term and Long-Term Planning.

Determine short-term costs and long-term financial milestones. Short-term expenses include entertainment, travel and utilities; while long-term expenses might consist of saving for retirement or education fund.

Tip 3: More Simple, Attainable Steps.

Lay out a clear, coherent plan and stick to it. Prioritize paying off debt – start with those with the highest interest rate.

Tip 4: Stop Comparing Yourself to Other People.

The financial comparison will cause more anxiety, stress and fear. Avoid the mistake, albeit it's human nature to want what we can't have.

Tip 5: Seek Professional Guidance.

Sit down with a financial adviser and identify specific goals as well as a roadmap. Examine and understand yourself thoroughly. If a financial adviser is not within your budget, consider asking a friend or family member with financial literacy.

Guide: How and Where to Invest in ETFs in Malaysia.

Some questions I get with surprising regularity nowadays are (1) is ETFs a good investment, (2) is ETFs in Malaysia suitable, and (3) do I have an investment in ETFs.

And the answer to that is, so far, (1) yes, (2) depends, and (3) not yet.

Is ETFs a good investment?

As quoted by Ellevest, ETFs (acronyms for Exchange-Traded Funds) are the baskets of investments which resemble mutual funds, but trade on an exchange like a stock.

While mutual funds may have a management fee between 1-2% (not including the payable 7% sales charge), ETFs' management fee hovers around 0.2-0.8% per annum only. The sole downside of purchasing ETFs in Malaysia is the relatively low level of liquidity. However, as ETFs are becoming more and more popular, in the foreseeable future, the situation will surely improve.

How to Invest in ETFs in Malaysia?

In short, there are two methods to invest in ETFs in Malaysia: (1) Through robo-advisory platforms, and (2) through Bursa Malaysia.

First option: through robo-advisory platforms.

Two platforms are operating in the Malaysian market, namely Stashaway (from Singapore) and MyTheo (from Japan). The pros and cons of investing in ETFs through robo-advisory platforms are summarised below.

Pros Cons
Millennial-friendly interface. No Shariah-compliant ETFs offered.
Customised ETFs suggestions.
Automated monthly top-up.

Second option: through Bursa Malaysia.

Naturally, Bursa Malaysia offers opportunities for the public to invest in ETFs. Similar to robo-advisory counterpart, it has its pros and cons as well.

Pros Cons
If you are already a stock investor, buy ETFs with your CDS account. Manual top-up of funds only.
Shariah-compliant ETFs are available. Not as friendly as robo-advisory platforms.
Automated monthly top-up. No customised ETF suggestions.

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How to Spend Money to Become Richer?

I believe ‘spending money’ is a faster approach to richness than ‘saving money’, especially if your income is below RM 5,000 a month.

Thought #1: It Takes More than Saving Money to become Rich.

  • KC reckons us to save at least 30% of our monthly income if we wish to fund a comfortable retirement.

  • But, if your yearly income is RM60,000, would saving RM 18,000 a year be enough for you to retire rich in 10, 20 or even 30 years’ time?

  • The answer is ‘Nope’ and today, most people are aware of that.

Thought #2: Is Investing the Answer to Retiring Young and Rich?

  • There are three asset classes which you can get into to increase your wealth: Stocks, Real Estates, and Businesses.

    1. Stock to me is a reliable way of earning passive income on a quarterly / semi-annually basis while waiting for their share prices to rise in the future. It would be better for you to first acquire accounting and investing skills before investing in stocks.

    2. Presently, I believe, the better real estate deals are not in the primary market but in the secondary (subsale) and the auction market. If you don’t have RM 100,000 in cash-in-hand, I think, it is better for you to temporarily refrain yourself from property investments.

    3. Business is a good asset class to begin with because you can start a business with small amount of capital, with low risk and be creative with it. But, entrepreneurship, I believe, can be challenging and not suitable for all.

Thought #3: You May First Aim to be Financial Secure

  • The first good expenses that all of us should have is: ‘Insurance, both life and medical insurance.’ Do you have them and is your coverage sufficient?

  • I’m not going to write another 1000+ word article on the virtues of buying life insurance. Thus, I’ll leave you with: ‘Do not be Penny Wise and Pound Foolish. Get Sufficient Coverage.’

Thought #4: Expenses that Could Double or Triple Your Income

  • If you earn RM 5,000 per month, I believe it would be helpful for you to aim for an increment in income to RM 10,000 per month.

  • Your income, to some extent, is not dependent on your labour, time and physical effort placed on your job or business. Instead, it can be ideas, insights, technical know-how, network and influence that could actually double, triple or even quadruple one’s income.

  • There are courses and certifications to enhance your knowledge and abilities in your field or expertise and thus, positioning yourself towards higher income.

Thought #5: Proper Financial Education

  • Investing involves a lot of study, research, and homework. Investors who put in more preparation would have a better chance to attain better ROI figures.

  • If this deters you, it is best for you not to invest in anything and just put your money in fixed deposit.

  • if you wish to be a profitable investor, I suggest you to start by getting true financial education.

So, How You Can Spend Money to Become Richer?

  1. Recognise that there are ‘Good Expenses’ and ‘Bad Expenses’.
  2. The Rich spends more on good expenses and thus, become richer.
  3. Good expenses are expenses that make you financially richer.
  4. They are expenses either to protect your wealth or to build them.

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.