Questions for the Financial Advisor

We have partnered with a financial advisor and one of the things we’re doing is we’re going to record us going in depth on questions or experiences that you have. The goal here is to give you useful information that’s tailored as close to you as possible but not have you pay anything for it. Be sure to ask the question or share your experience in our Facebook group That said, here’s the topic for this week:

What type of insurance do you currently have? Do you think it takes care of all your foundational needs so you never have to worry about it again?

Share your thoughts in the facebook group

From Our Own Site

We’re still in the process of creating some crazy opportunities for you. You’ll have a sneak peak at it next week 🙂

Money in Daily Life

When the Money Itself Becomes a Priority, Watch Out

You’ve got $15,000 in your emergency fund, but it’s tempting for some of us to be tightfisted. You might think, “If we cut here, here, here and here … scrimp, save … and cut back on everything else, then we can pay this thing off without needing to dip into the emergency fund.”

This short post is for the extreme people out there – who have successfully saved 3-6 months of emergency money, but once you’re there, and you do have an emergency, you try to cut down your monthly spending to take care of it. The emergency money has somehow stopped becoming meant for emergencies, and has now become a status symbol.

If that’s you, the question this blog is posing is have you suddenly made money the priority above all else? In MMM terms, are you limiting your life based off money, or will you allow money to be the fuel to get you to that ideal life?

What is middle class?
middle class
From pew research – middle income for the US

Besides money, there is one other thing to think about middle class. And that is the purchasing power of the money they make. A RM 100,000 salary is more than enough to buy a home and support a family if you were in the kampangs, but if you were in the heart of KL, it might just be enough for a small one bedroom flat.

The Cost of Raising A Child In Malaysia
Did you know if you delivered a baby via a government hospital, it would cost up to RM1000 or so. But if you deliver in a private hospital, it would cost RM15,000 – RM25,0000.

That’s a huge difference… But it doesn’t end there.

The blog continues breaking down other types of expenses.

From Financial Dependence to Financial Independence in Stages
Stage 1: Complete Financial Dependence on Others

This is a situation where your day to day life really only works through the direct financial assistance of people in your life. Without someone providing some of your basic needs for you (with no money or very little money in return), you would find it extremely difficult to survive.

Stage 2: Financial Dependence on Debt

This is a situation where your day to day life really only works if there’s a constant availability of debt in your life.

Stage 3: Financial Dependence on the Paycheck

A lot of Americans find themselves here. This is “paycheck to paycheck” living, a state that a great many Americans find themselves in. According to some studies, somewhere around three quarters of Americans find themselves at this level.

Stage 4: Short-Term Financial Independence

At this level, you can survive for a while, up to a year or so, without income, but you’ll eventually need to return to work.

Stage 5: Medium-Term Financial Independence

At this stage, you can survive for an indefinite period of time without work, but you can’t survive for the rest of your life without returning to a solid salary.

Stage 6: Partial Financial Independence

At this point, you can survive for the rest of your life by doing something that seems enjoyable that earns at least some income at least some of the time, and you can probably make it for the rest of your life if you cut back on your current spending.

Stage 7: Full Financial Independence or Early Retirement

At this stage, you never have to work for income again, though you may choose to work for non-financial reasons.

How Much Money Should You Keep in Checking?

If you have money that can sit around for a while, it’s a good candidate for your interest-bearing savings account. If you’ll need to spend it, leave those dollars in your checking account.

A checking account is similar to what we in Malaysia call our savings account. Their savings account does not really exist in Malaysia.

The idea of this question is to understand how much money you should keep liquid (that is, can instantly be accessed) vs being kept in a higher rate account where it can earn you higher interest, but is harder to take out.

There is no perfect answer for anyone, but in general, I would suggest to leave your money for daily expenses and fun liquid and have the rest of it in a seperate account (such as OCBC 360) so you can earn a higher interest rate.

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Grow Your Wealth

How to Save Money in Just 6 Simple Steps

You probably already know you need to save more money — but where do you start? The thought of stockpiling away funds isn’t glamorous, but learning some simple tricks for how to save money as early as possible will be beneficial in the long run by establishing good habits. And it’s easier than you may think to save money.

  • Set Yourself Up With the Right Type of Account
    A basic savings account at your national or local bank, while being convenient, will likely have a relatively low interest rate, meaning less return on your savings.
  • Make a Budget — and Stick to It
    They talk about a 50/30/20 rule. 50% goes into daily expenses, 30% goes to fun and 20% goes to your retirement. However, if you have gone through Money 101, you know that break it down even further. 50% for daily expenses, 10-15% for fun, 10-15% for checking off your life goals, 10% for accelerating your earning capabilities, and 10% for buying back time to discover what you truly enjoy doing.
  • Make Friends with Automation
    The less you have to do, the more likely it is to get done.
  • Improve Your Credit Score
    This is super important if you ever need to get a loan.
  • Consider Refinancing Your Home or Auto Loan
    If your credit score is better today than it was when you first got the loan, the interest rate might be lower. If so, it might be worth refinancing.
  • Get Healthy
    There's this study that showed that the average women who is exersicing regularly tends to earn 10% more, whereas for men it is 6%.

Q&A: What to do when you lose $113,000 in the market

Out of sheer curiosity, I decided (stupidly) to check how it impacted me. And … well, It didn’t look pretty.
Damn. That’s more than $113,000 lost because of a single bad day in the market! If anyone should be worried about this, it should be me … right?

Although I had also seen my portfolio drop in October, it was nowhere as crazy as his (granted, my entire portfolio is about 5% of his losses). However, given my own experiences, I do know what it can be like to see drops like that.

The author writes about a bunch of different concepts, however the main ones for not panicking are:

  • Don't log into your account to see how it's doing. If you've built a solid asset allocation, then you will be okay. Instead, create a regular schedule (once a month, once every 6 months, once every year) to log in to rebalance.
  • That said, build an asset allocation that you are comfortable with. If you're wondering where to start, I'd suggest reading Tony Robbin's Money Master the Game.
  • Automate your investment. Automate the funding of your investment. Make it so you don't even think about it.
  • Remember there is a life outside of the computer, the charts and the numbers. Continue to do what you love. It's the best way to stay strong throughout the volatility.

How to Pick Your Investments: the Warren Buffett Way

In short, the rules Warren Buffet uses are that the company must:

  • Be stable and understandable.
  • Display favorable long-term prospects.
  • Be managed by honest and capable leaders.
  • Be undervalued with market price less than its intrinsic or true value.

Cool Opportunities

I have decided to show these opportunities to you because I believe that they are some of the best ones out there and in many cases, are ones that I am personally involved with or am looking to get involved with.

Accelerate your money goals by joining accountability groups
Did you know that studies have shown that more than 70 percent of people who have accountability buddies / groups reported completely accomplishing their goals or being more than halfway there compared to 35 percent of those who kept goals to themselves and didn’t even write them down.

That said, we are looking to create accountability groups for you to find people who are in a similar walk of life or have similar money goals so that you can increase the chances that you are successful with your goals. If you’re interested, click here to tell us what you’re interested in!

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 plan on only using this when I go to Toronto in December.

Anyway, if you don’t have one yet, you can sign up for free and get RM10 free when you use referral code B7D3YNZPGO.

Talking to an Independent Financial Adviser
A big issue when you work with someone who calls themselves 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.