From Our Own Site
Nothing new this week as we’re working on some really cool opportunities for you to get professional advice for free. Check out the facebook group for more information.
From traditional media
Buy and sell stocks online
It looks like trading stocks has just become a little easier with Rakuten Trade Malaysia. According to this press release, you can open one of these accounts online in less than 2 hours.
Also, they claim to have the lowest commissions which is always nice.
Maybe it’s time for us here at MMM to test it out ourselves and let you know our thoughts.
From local Malaysian bloggers
How to Overcome Credit Card Addiction
Signs that you might have an addiction to credit cards
- ‘Swipe first, later only check my budget.’
- ‘Aiyah who cares, let’s just buy it already.’
- ‘I have to get that new credit card, have you seen the promo on that?
- ‘Haven’t you heard about cashless? Nobody uses cash anymore.’
- ‘But there is a 20% discount! It’ll never be this cheap again.’
- ‘It got rejected? Wait, try this one.’
- ‘Not going to meet the monthly repayment this month, maybe next time.’
- ‘I love my credit card, I can just use it anywhere these days.’
- ‘Maybe I overspend a little.’
- ‘Why save money for later, I’m alive today right?’
But according to a recent MIT study, credit card addictions might not be your fault.
According to a recent MIT study, it might not be entirely your fault. During a social experiment, people were asked to place bids on NBA tickets while using either cash or their credit card. The people who used credit cards were found bidding twice as high as the people who were bidding with cash.
But that doesn’t help you if you’re stuck in a never ending cycle of debt. Instead, try some of these:
- Assess your financial situation
- Stop using your credit cards
- Take control of your debt
- Establish and emergency fund
- Create shopping lists every time you go out shopping
- Leave your wallet at home
- Face your demons
If you’d like to dig into any of these, read the rest of the article.
Based on Malaysian benchmarks, here’s how much your household (e.g. you + your spouse) needs to earn to be in either the Bottom 40% (B40), Medium 40% (M40), or Top 20% (T20):
Malaysia Benchmarks (earnings for households)
B40: below RM 3,860 / month
M40: between RM 3,860 to RM 8,319 / month
T20: above RM 8,319 / month
Top 1%: around RM 25,000 / month
Other highlights include:
- To become rich, make sure your net worth is always growing (assets – liabilities)
- The process of getting rich is actually quite boring because you’re always trying to make sure you spend less than you make
- What’s marketed as being rich is actually going to make you poor because all those things they show lose value (are not assets)
- You should reduce your spending on things that you don’t care about so that you can spend a lot more money on the things that you do
Ideas From Around the World
- Understand your experience level: if you’re just starting to learn how to budget, then you’ll have more unexpected expenses (think car repair, christmas spending, birthdays etc).
- How steady is your income: if you can safely rely on it then you won’t need as much money in your emergency fund
- What’s Your Price for Peace of Mind
Only you are the expert on your life. Taking into account your cost of living, income, job stability, health and your tolerance for risk, how much money do you need in the bank in order to sleep well at night? You don’t have to stress about getting things perfect, either. The most important thing is that you’re aware and saving!
Is It Smarter to Use a Debit Card or Credit Card?
Some reasons to use credit cards include fraud protection and credit building. With fraud protection, if someone were to somehow get access to your credit card and start spending on it, the credit card company will not ask you to pay for it (provided that you tell them promptly of the fraud).
Credit building means that you’re showing lenders that you are a responsible person that they should consider lending money to at a good rate in the future (think home loan or car loans, or even personal loans). Of course, the only way to be responsible is to use your credit card responsibility and never miss a payment (ideally paying off the whole thing).
A big reason to use debit cards is to make overspending impossible. Since every time you use your debit card, they take the money right away from your account so if you don’t have enough, they won’t let you take it.
Another way to make overspending impossible is to get a credit card with a very low limit so that you cannot spend more than that amount, thus helping you get the fraud protection and credit building at the same time.
The Average Household Net Worth In America Is Huge!
I’m putting this article up to show you how dangerous statistics can be to paint a picture.
In this article, the person talks about how the average American’s income has gone from $551,300 in 2013 to $692,100 in 2016. (He actually then starts to talk about a different statistic which I go into here)
That is technically true (assuming the data they collected was true). However, that’s not really a cause for celebration.
Let’s use this example to understand why. Let’s say we have 99 people in a room, with net worth of RM 10,000 a year. Then all of a sudden, we have Jho Low walk in with all the money he’s stolen from Malaysia. We’ll just say RM 1 billion. What is the average of the room? 10 million. Does that mean that everyone is doing well for themselves, that the average malaysian in that room is filthy rich?
A better number to use in this type of scenario is to look at the median. The median is literally lining up all the numbers in order and then taking the middle number. In this case, we see that the median number is $97,300. Still better than the median of 83,700 in 2013 but very different than the ~700,000 that was being reported.
Anyway, the point is be careful around the way people present the data.
How to Invest for Medium-Term Goals
Understand what your investment options are:
- Savings account
- Certified deposits (think of GICs or fixed deposits)
- Bond index funds
- Stock index funds
- All in one mutual funds (or unit trusts)
Things to consider to determine the right balance
- How soon is the deadline: the sooner you need the money, the more conservative you should be
- How certain is your deadline: if you have some flexibility with either the timeline or the amount of money you need then you can take on a bit more risk as the downside isn’t as bad.
- What returns do you need: If you’re saving enough money to reach your goal with only a modest return, it’s probably not worth the risk of reaching for a better return. The downside will almost always be more significant than the upside.
- Are you comfortable with the ups and downs of the market (especially the downs)
And how should you find your personal balance? You could start with this questionaire.
Truth is, travel in today’s age is incredibly inexpensive. With rewards programs, discount airlines and cheap accommodations – not to mention endless possibilities for remote work – you don’t need a lot of money to travel the world.
If you’re putting off a trip or the urge to live abroad, take a read of what this person has done. He was actually able to save 20% more by living abroad than by being at home.
Or you can do it like me and follow this guide to make the travel possible.
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.
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 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.