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Knowing Your Financial Ratio
Sometimes people tend to wonder what we can do with the surplus cash that we have at hand. Well, as a start, it is good that there is a surplus in cash, but if we are not careful this surplus may be gone before we even realize and by then it could be too late to think about “what-ifs” and “I-should-haves”.

In financial management, there are parameters that can be used to gauge if one is “financially healthy”. Here are few basic financial ratios one can use to gain better understanding of their state of personal finance:
- Liquidity Ratio: This measures one’s ability to cover unforeseen expenses such as emergencies, car repairs, job loss, etc.
- Debt to Asset Ratio: If there is an solvency issue, you must have assets to cover your debt obligations. If your debt value is too high compared to asset values, then even if you sold off all assets, it may still lead to  bankruptcy.
- Liquid Asset to Net Worth Ratio: Consider how much of your assets are liquid or “moveable”?
- Savings Ratio: You should be able to save at least 10% of your income each month to go towards your retirement.
Liquidity Ratio

Should a person have a very low liquidity ratio, the first thing he or she needs to do is to start saving money for a rainy day (the amount of which is measured by one’s liquidity ratio). Don’t think about paying off debts (except to service scheduled repayment), and investing at this point should be the last thing on this person’s mind.

Debt to Asset Ratio

If you have a good liquidity ratio (healthy savings) but also have high debt to asset ratio, then you are advised to pare down some of your debts. For instance, a person may have a huge positive net worth, but most of this comes from immovable assets such as real properties. If this is the case, this person should consider increasing the proportion of movable assets by investing in other paper assets such as stocks or fixed incomes to diversify and also to provide some liquidity to the balance sheet.

Savings Ratio

Savings ratio is quite easy to measure, but if you cannot save any money you bring home, then obviously you have a lifestyle or income problem. You need to tackle that first before thinking about putting your money to work hard for you.

See the Big Picture

What I advocate as a financial planner is that no matter what we decide, we must see the bigger picture, the bigger picture being a person’s life, and what he wants out of it. It is important that our decision correlates and supports our aspirations, and if a decision does not derail our goals and dreams but brings us nearer to them, then this is the right thing to do.

In financial terminology, financial planning is described as a systematic process to organize our finance to help achieve our life goals. That being said, any amount on top of the threshold a person feels comfortable treating as their rainy-day fund should be put to work via investments.

Depending on your marital status, income sensitivity or fragility, health condition, and so on, it is rather advisable to have emergency funds worth at least six months of your take-home income (some will say six months of monthly expenses but I would strongly suggest you look to your take-home income as it is more conservative).

If you would like to strengthen your foundation, you may even create an emergency fund that is worth six months or more of your take-home income plus your loan repayment commitment for an additional 12 months. This will help make sure you avoid defaulting or failing to repay your loan obligations.

Of course, it is rather impossible to save enough to help cover emergencies such as serious diseases and so on. This is why you need to be aware of risks and potential losses and take up insurance. After saving enough to feel comfortable and at peace, you must then invest the surplus and let it work for you. Be a master of your cash; not a servant to it.

About the author

Kevin Neoh is a NextGen Money Coach who works with people to help them transform their relationship with money to improve their lives with the money they have. Kevin can be contacted at kevin@nextgenadvisors.my and www.kevinneoh.my.
June 15, 2022
5 Best Thing To Do When Your Retirement Funds Are Insufficient
Most working-age Malaysians have certain ideas of how they want to live their retirement years, but more often than not, the stark reality of retirement paints a picture that is far from rosy.

Challenges such as the lack of adequate savings and rising medical costs are knocking well-made retirement plans off kilter, and thus reducing the value of one’s nest egg. Throw the Covid-19 pandemic into the fray and Malaysians are suddenly discovering that their retirement funds are insufficient.

For context, according to Employees’ Provident Fund (EPF), current EPF savings for most Malaysians are barely enough for a decent life after retirement. In fact, statistics indicate that 70% of Malaysians outlive their retirement savings – those who withdrew their funds at age 55 use up their savings less than a decade after retiring.

Equally troubling is the fact that more than two-thirds (68%) of EPF members aged 54 had less than RM50,000 in EPF savings, and with the household poverty line income at RM930 monthly, the RM50,000 in savings will only last approximately 4½ years. The bottom fifth of EPF members, meanwhile, have average savings of only RM6,909.

Read : Retirement Planning, Why It Is Important From An Islamic Point Of View

This begs the question: is having insufficient retirement funds beyond one’s control given the worsening global crisis, or could this be due to poor financial management?

Managing Priorities And Habits

Retirement planning can be daunting, but the beauty of the process is that it allows you to think about your retirement goals, how long you have to meet them, and most importantly, it allows you to work out how much you would need to comfortably enjoy your golden years.

“Retirement planning can be planned, but at the end of the day, it all comes down to one’s priorities and habits,” opines Harveston Wealth Management financial advisor Annie Hor.

“If you are in your 50s and have nothing prepared for retirement, you are in a lot of trouble. You may not be able to stop working immediately and would need to start relooking at your expenses and trim as much as possible while saving most of your nett income,” she says.

Hor goes on to share that she once advised a client in his late 50s to immediately cut back on his lifestyle and spend no more than half of his income.

“The client is single, has a house that has been paid up, and other loans. However, he has no one to depend on and has less than RM150,000 in his savings and EPF account. While he has a medical insurance, he also has a medical condition that requires regular treatment which is not covered by his medical insurance.

“At the moment, he can still claim employee benefits, but because of his age and low resources, he is unable to maximise his investments and would need to be mindful about his money management,” Hor recalls.

Hor cautions that despite not being in a similar situation, one should not make the mistake of thinking that time is on his side and that he still has many more years ahead of him to plan for his retirement.

“We don’t have much time to plan for retirement as there will always be distractions and setbacks in life, chief among them being getting married and starting a family, worrying about your children’s school fees, having to take care of your ageing parents, and even the Covid-19 pandemic,” she reveals, adding the earlier one sets his retirement plan in motion, the better.

Ensuring you have medical insurance is the basic foundation of financial planning. If you do not have one, falling ill can potentially affect your wealth, she adds.

“Medical insurance can secure your coverage for today and for the future. This is because when you are much older and possibly less healthy, it would be difficult to get adequate insurance coverage even if you are willing to pay for it.”

Bridging The Growing Gap In One’s Retirement fund

While EPF does its best to support one’s post-retirement life, simply relying on it alone is not enough, as indicated in the revision of the minimum savings target in 2017, which saw the EPF raising the minimum savings target by age 55 from RM196,800 to RM228,000.

Suffice to say, active contribution to one’s EPF account alone may be insufficient for achieving one’s retirement goals, and Malaysians would need to explore other avenues to give their nest eggs a boost. And a useful tool that one can consider is private retirement schemes (PRS).

“PRS was introduced especially for Malaysians to save for their retirement in a structured and regulated scheme. It complements the mandatory contribution scheme to bridge the retirement savings gap.

“If you are self-employed and do not contribute into a mandatory scheme, PRS is a great avenue to start building your savings as it provides diversification into various asset classes in multiple regions to grow your retirement nest,” Private Pension Administrator (PPA) Malaysia CEO Husaini Hussin tells Smart Investor.

According to PPA’s survey last year, 67% of the respondents want to save more for their retirement.

“However, as we go about our lives balancing various commitments, perhaps at one point it became inconvenient to find the time to set up an account. Or maybe we procrastinated a little in another instance and forgot to follow up later on. One way or another, this intention of wanting to save did not translate into action.”

As such, with the PRS Online service developed by PPA, the user experience of opening a PRS account is now made easy, convenient and secure. A seamless process, Husaini stresses, will be one less barrier for Malaysians to enrol and continually top up their PRS accounts.

“It is never too late to start. In fact, the government encourages you to save with a PRS Tax Relief of up to RM3,000 each year. This means that when you start saving in PRS, not only are you saving for your future, you also get to enjoy immediate benefits through the tax incentive.

“For example, if your tax bracket is 24%, then just by setting aside RM250 per month into your PRS account each month for one year will earn you a tax savings of RM720. Reinvesting the tax savings on a yearly basis will further compound the growth of your retirement fund,” he explains.

Husaini urges those who just entered the workforce should start saving too. “It’s a myth when people tell you that it’s too early to plan for retirement. Young Malaysians aged 30 and below get to enjoy 0% sales charge when they enrol for a PRS account with PPA’s PRS Online service.

“Get into the habit of setting aside a fixed sum into a retirement fund each month as saving regularly is more important than how much you actually put away, because even small amounts add up over time,” he advises.

Weathering Unexpected Setbacks

Unexpected setbacks like the Covid-19 pandemic are oftentimes inevitable and can put a glitch in one’s retirement plans, and temporary as they are, they can negatively affect your existing retirement plans.

“You may need to tap into your savings meant for retirement in such situations, but if you have done proper planning, your retirement planning is in fact not even your savings. You should have emergency funds at hand to weather these unexpected setbacks, and this will ensure that your retirement planning will still be untouched and intact,” Harveston Wealth Management’s Hor explains.

While the pandemic is unavoidable, she believes the situation can be rectified with proper planning. “Make sure that you have sufficient emergency funds to last you about three to six months should something like this happen again.

“On top of that, review your household expenses and try to use less than what you are currently earning. If you keep your lifestyle just within your average means and do not maximise your borrowings, you would have less to be worried about,” Hor suggests.

Worth a read : Saving Up For Our Retirement, Is It Possible To Do It Post-Pandemic?

On what Malaysians can do if their retirement funds are insufficient, here’s her advice: “First, find out what kind of retirement you would like to have. Then, look at your current resources and identify which basket of assets is meant for your retirement. Your next step is to identify the shortfalls and gaps, and ways that you can fulfil these realistically.”

“Start trimming down unnecessary wants and expenses and start investing for the future. You don’t only work to spend today. You work to spend today and save – or invest – for tomorrow.”

Doing The Math For Your Golden Years

If you are a young adult today (say, in your late 20s or early 30s) and taking into account the fluctuating global markets, how much would you need to retire comfortably?

How much one needs for retirement will depend on their current lifestyle. Studies have indicated that we will need 2/3 of our last drawn salary as replacement income to maintain our current lifestyle in retirement.

This is because work-related expenses such as commuting would no longer be incurred and long-term loans such as mortgages would most likely have been settled. In order to achieve this, we should aim to save 1/3 of our salary today.

The good news is, if you are currently employed, you are probably already contributing 11% of your salary into a mandatory scheme each month. Your employer also contributes at least a further 12%, which brings the total contribution to 23%.

Therefore, you just need to top up an additional 10% to achieve the 1/3 minimum. I say ‘minimum’ because one should first aim for 10%, and then plan to save more as our earnings increase.

As the amount each person needs for retirement differs, we have created a retirement calculator on PPA’s website for those interested to simulate different projections and scenarios. You can use it as a guide to design an accumulation plan to reach your retirement savings goal.

Handy Tips For Retirement Planning

When it comes to ensuring sufficient retirement funds, good financial planning is paramount. Here are some important tips on saving and investing for one’s retirement.
1. Never underestimate the importance of having your own personal medical insurance. That way, in the event of a medical emergency, you can rest assured knowing that you can file a claim with the insurance company rather than tapping into your retirement funds;
2. It is not too early to plan for your retirement. You can always start early, and even if you do not have children, you can always start investing early for your children’s education. The sooner that you start, the better;
3. Take a bit of risk when it comes to retirement planning. You need to look at investing to grow your monies to beat inflation and not depend only on your savings to retire. Have a licensed financial adviser review your investments and help make sure that your investments grow according to your desired returns;
4. If your resources are limited, do not try to look at settling your mortgage and car loans and forgo investing. You might be asset rich but cash poor when you retire.
5. Always make sure that your children’s education plan and your retirement planning are done separately. If you do not plan for your children’s education, you might end up using your EPF to fund your children’s education. If you cannot afford to do both education and retirement planning, remember that you can borrow money for education but not for retirement so make a wise decision.
June 13, 2022
Getting Financially Organised Is Your First Step Towards A Better Financial Future

This is a story about Andy and Amy (not their real names). Andy is an enthusiastic entrepreneur with a reputable position
in his industry. A successful man and earning a good income, however, his expenses were high as well.

After marrying Amy, he became stressed with his finances, which worsened with the birth of their first child. The pressure of the monthly deficit of approximately RM2,000 and worrying about the future expenses triggered the couple to engage our services. I was then able to we help them through with our holistic financial planning service.

Andy and Amy have different attitudes towards managing their personal finances. Andy is a very positive person who anticipates that good things will happen in life as long as he strives for it. “Tell me what I need to do and I’ll make it happen!” is his
favourite motto.

He applied this attitude to his finances, which often resulted in him committing to things he cannot afford today, but with the conviction that he will be able to grow his income and pay for it in the future.

Amy is almost the polar opposite when it comes to money. She’s cautious and prefers to plan ahead and be prepared for the worst situation. Indeed, the desire for a more secure future was amplified after having a child. A clear visual reality of their current
family’s financial situation was provided to them through our holistic financial planning process.

The hard facts and numbers seemed ruthless but it showed them the gap between their goals (purchasing a bigger home, tertiary education funding, retirement security, etc.) and their available resources.

In addition to the risk of not being able to achieve their desired goals, as a single income family with a child, there were other potential risks that needed to be addressed, such as Andy’s insufficient insurance coverage for the family’s income needs (should something untoward happen to him) and the lack of estate planning tools in place to safeguard his family.

We helped Andy and Amy tidy up their cashflow, focusing on their expenses as there were many loopholes and excesses that could be avoided or minimised with good budgeting. For example, we noticed the huge amount spent on dining out and impulse purchases. During the financial planning process, there were some unavoidable differences of opinions between the couple, but fortunately we were able to help them manage their expectations and bring them to work together towards their common goals.

The role of a financial planner is unique. We not only provide clients with relevant and timely financial advice, but we also take on the responsibility of educating them to cultivate good financial habits. In this case, tracking their monthly family budget and inculcating a habit of saving before spending were their immediate priorities.

Trust me when I say that financial planning is a long journey. We help clients understand their current financial situation and plan for their fi nancial future. But as circumstances change over the years, we also need to accompany them as they make major
financial decisions in their life, and keep them updated on the latest happenings along the way.

Although Andy and Amy are still striving to be more financially stable after their first year of engagement with our service, their progress have been remarkable as their finances are now more organised. They were able to address their immediate gaps and
started adopting good fi nancial habits.

These new habits will help them form a strong and healthy foundation as they work towards their goal of achieving financial freedom.

About the Author

Ocean Pon is a Licensed Financial Planner with Finwealth Management Sdn Bhd.

We at Smart Investor and Finwealth is committed to help you better manage your financials. Get a free consultation from an expert by filling in your details here: https://www.smartinvestor.com.my/SIxFinwealth

June 13, 2022
How to Build your Online Presence as a Financial Services Representative

If the pandemic has taught us anything, it is to be prepared for everything. Many of us in the financial services sector rely heavily on physical meetings, physical workshops, and physical consultations. However, in less than three months of Movement Control Order (MCO), it has forced everyone to communicate through the internet.

Despite the limitations to video conferencing, the quick adoption of technology has allowed us as financial practitioners to reach out to our clients and prospects in a way that has never been done before.

Don’t get me wrong, I am not saying that we should ditch all our offline efforts and focus 100% online. We are still required to meet our clients offline for the physical connection and trust because it is harder to build trust among advisors and clients over the internet.

Having an online presence is very important especially during this time and age as we humans spend more and more time online. Therefore, it is important to start building your online profile, just like how you would do building your reputation through word of mouth.

Here, I am going to share my experience building my online presence.

Step 1: Building Your e-Office – The Website

I believe that the website is the most important element if you want to build your online presence for your business because this is the place where your clients will come to understand more about you.

Although the company I work with already has one, I created my own website to better control the description and provide more in-depth information about myself and the services that I offer in order to be more personal and approachable to my clients.

When I first started out, I thought that building a website is going to be very expensive. However, the more I researched, the more I realised that the cost of a simple website is only about RM300 a year (that’s less than RM1 a day). This includes the cost for the domain, hosting and also simple designs.

As you grow your online presence, you may want to add more advanced feature like an appointment system to automate your workload. However, as a start, a simple website is more than enough.

Step 2: (Optional) Create an Email Address with Your Domain

This is an optional step. If you are using your company’s email, that is great. However, if you are using free email address domains such as @gmail.com, @hotmail.com or @yahoo.com, you probably should start thinking about having your own email address.

Having your own email address gives the impression that you mean business. You can get this for free if you have your own domain, but personally, I am using Gsuite for business which cost me around RM25 a month.

Step 3: Creating Content

I started by setting up a blog as I feel more comfortable writing. However, you can replace articles with pictures, infographics, or videos. Contents are basically an opportunity for your potential clients to get a glimpse of your services and get to know you better.

Make sure that you are providing a fresh experience for your clients every time they visit your website by creating content regularly.

Step 4: Open the Doors of Social Media

As they say, go where your customers are. If you provide service to businesses, you may want to use LinkedIn. Meanwhile, retail customers usually hang out on Facebook, Instagram, or probably TikTok.

I used to believe that having a social media page is enough, but the downside of having a social media page without a website is that you need to be constantly creating contents in a very fast pace as you are competing with other content creators.

However, if you have your own website, it is easier for your visitors to search for a certain article/content. You can also set your own routine as no one else is competing with you on your website. Having a website is also like a repository system where you can repost old articles on social media during your downtime.

Step 5: Engage, Interact and Nurture Relationships

This is arguably the most important step. The good news is, this is no different than what you are already doing offline. Just like building trust between you and your clients, you also want to nurture the relationship with your audience.

You can do this by asking questions and running polls. You should also be answering your audience’s questions or responding to their comments. Make sure to toggle the right settings that will allow you to receive notifications if someone leaves you a message or comment on social media.

To Sum Up

Like it or not, building an online presence is more important now than ever. But it doesn’t have to be very complicated.

The setup of what is needed for your online presence is actually more affordable than what you would think. However, the tough part is actually Step 5, but hey, isn’t that part of your daily activity already?

The only difference is that you do not have waste one to two hours of your time to get dressed up, drive out and go around in circles look for a parking spot just to meet up with one client.

About the Author

Marshall Wong is a financial planner holding licenses from the Securities Commission Malaysia and Bank Negara Malaysia. He can be contacted via email at Marshall@plannerd.io

June 13, 2022
Fired Up: A Look At Southeast Asians Pursuing The Financial Independence, Retire Early (FIRE) Movement
Having an early, secure retirement is a dream of many, and a small, but growing number of people are striving to turn this dream into reality. The FIRE movement, acronym for Financial Independence, Retire Early, is essentially about aggressively tightening belts, and finding multiple sources of income in order to achieve early financial freedom.

Milieu Insight released the results of their ‘Financial Independent, Retire Early’ study, which aimed to find out how common the FIRE movement is among Southeast Asians, and the steps they are taking to achieve their goal. The survey was conducted in May 2022 with N=1500 employed respondents, aged 18-49 years old, each from Thailand, Singapore, Malaysia, Indonesia, and the Philippines.

Do Southeast Asians want early retirement?
- The bulk of respondents expect to retire in their 50s or 60s (62%); Indonesians tend to expect earlier retirement, with only 52% expecting to retire in their 50s or 60s
- Retiring early (defined as retiring before 50s) is a possibility for 60% of respondents, but only 14% think that they are on track for early retirement – Singaporeans seem most pessimistic about being able to do so, with only 9% indicating that they are on track
Steps towards early retirement
- Most common strategy towards early retirement is regular saving (71%), followed by ‘being careful with how I spend my money’ (63%) and ‘investing’ (63%).
- Finding additional employment is much less common (37%) as part of strategy to retire early, but tends to skew towards Thais (54%)
- Insurance – one way of investing – is also more common among Singaporeans (56%) and Filipinos (53%)
- Perhaps due to vast amount of resources on the Internet, most people are hands-on for retirement planning, with only 31% of those who plan to retire early saying that they have a financial consultant to help plan for retirement
A look at the most common strategies for early retirement: Saving and investing
- Among those who save regularly for early retirement, 43% save more than 20% of their incomes
- Among those who invest, 36% indicated that more than 20% of their incomes go towards investments
- The most common investment types are:
- Investment funds (56%)
- Stocks (53%)
- Real estate (52%)
- Cryptocurrency and NFTs, which are gaining momentum but have yet to enter mainstream investing due to their volatility, registers at 41%, and seem to be more popular in Thailand (57%) and the Philippines (54%)
How do people feel about FIRE?
- 57% feel very or somewhat positive about their journey towards achieving early retirement
- Comparing those who are on track to early retirement, and those who are planning to retire early but don’t think they are able to, the former tends to feel more positive about it (83% vs 49% who selected very/somewhat positive)
Methodology

Based on Milieu Insight surveys with N=1500 employed respondents, aged 18-49 years old, each from Thailand, Singapore, Malaysia, Indonesia, and the Philippines, conducted in May 2022.

About Milieu Insight

Milieu Insight is a consumer data and analytics company that connects businesses directly with their target audience. Milieu’s platform offers businesses a wide range of tools for accessing, analyzing, and visualizing high-value and timely consumer opinion data to help power better decision-making and strategy. For more information about Milieu Insight visit: www.mili.eu
June 13, 2022
From Almost Being Murdered To Setting Up A Digital Marketing Agency, To Branding And NFT

The story that we are about to share with you is truly an interesting one. It is about an individual who bounces back after a tragic event to reach greater heights.

Let’s meet Mr. Sanz Teoh, Chief Executive Officer and Founder of Jumix and his inspiring story below.

Smart Investor: Thanks for taking the time to talk to Smart Investor. Can you tell us a little bit about yourself, about Jumix, and what makes you started the company?

Sanz Teoh: Hi, I’m founder and CEO of Jumix. In 2014, I was almost murdered by a local gangster group. That inexperienced me was trying to work a side hustle while having a full-time digital marketing job.

It was at that moment, I decided that I have to fully commit my time, effort, and energy to my own business. I promised myself that no one else in this world should go through the same experience as I did, and I set out to make this my business mission.

Combining my educational knowledge in marketing and my personal passion in creating digital products, I founded Jumix. It started off as a web design & digital marketing agency, now we also do Branding and NFTs for businesses.

Smart Investor: We heard about your recent foray into the NFT scene with BeU, care to elaborate on that?

Sanz Teoh: Yes, and I’m very excited about this. There’s a story behind why we are doing NFT. Previously during the MCO, we have a long discussion with a creative agency to come out with a ‘Virtual Influencer’ that is set for a launch in late 2020.

My entire team put a lot of effort and commitment into that project. But due to some contractual dispute, the plan didn’t work out. It is then we decide to take things into our own hands, and is determined that we are going to create something new all by our own instead of working with another agency.

This is why we decided to dive into the NFT scene. Being a seasonal cryptocurrency investor and familiar with blockchain technology myself, I proposed to my team that we can use utilize our creativity to create characters, which will then be a set of collectibles on the blockchain.

Starting from scratch, my team brainstorm, sketch, draw, produce and code the entire BeU NFT project. Throughout the entire journey, we learnt a lot more about NFTs and how NFTs can really help brands and creators to bring a lot more to the table.

People who are interested in an NFT project can ‘own’ it and enjoy the benefits or utilities that the NFT project gives.

For example, people who own BeU NFT will get another NFT for free, which is the ‘egg’ of the original character, which will ‘hatch’ and revealed later on. It would remain a mystery for now.

All owners will also get to involve in the roadmap of BeU project, which include deciding on which charity foundation that we will donate our money to, getting access to exclusive BeU merchandise, stand a chance to win life-size BeU figurine, and ultimately, be the first to access the virtual world that BeU created – BeUtopia.

Smart Investor: How big is the NFT industry in Malaysia and are Malaysians ready to get on board the NFT phenomena?

Sanz Teoh: I would say that the NFT industry in Malaysia is still pretty new. But so far I’ve already seen quite a number of artists, creators and brands that have dived into NFTs.

Things are just going to get more interesting for Malaysians, but just like any other market, there’s always a stigma when it comes to adopting or investing into something new.

I believe with more brands and creators embracing NFT with more following suit, this is why Jumix is going to bring more both brands and creators into this industry, and drive the growth of Malaysia’s market together.

Smart Investor: With the recent crash of the crypto market, does it have an effect on the NFT market?

Sanz Teoh: Crypto market has its ups and downs over the years. While I’m not talking about cryptocurrencies trading, the price crash of crypto does affect the NFT market as well.

When prices of crypto drops, it actually makes NFTs more appealing, as you can now purchase NFTs at a much lower price. This makes collecting or investing in NFTs much more approachable to the public.

Smart Investor: Can you share with us your plans for the future?

Sanz Teoh: BeU is only the first NFT project that Jumix pushes out, we’ll have more NFT projects in collaboration with other brands, which would include more utilities, features and more creative concepts.

For the next 6-12 months, other than growing the BeU community, I’m also looking to work with brands who are interested in NFT to build new projects with them.

Smart Investor: What is your advice to Malaysians out there who wants to get involved with NFT?

Sanz Teoh: There will be two groups of people here. The first ones are the brands and creators.

For brands and creators, my advice is to get involved as soon as possible, as the trend is rising rapidly and the attention in this space is high. But please do not take this opportunity as a money grab, NFT is still very community-driven and it should be created for the community, not for your own profit’s sake.

The second group of people are the owners and investors. For investors, don’t take this as a get-rich-quick investment, but something more like a long-term investment. But before putting in your hard-earned money, make sure that you believe in a particular NFT project and do your own due diligence.

For smaller NFT owners, go ahead and support your favourite creators and brands while enjoying the benefits that the NFTs provides, experience how blockchain and cryptocurrency work, and have fun at the same time.

Smart Investor: Can we really make money from NFT, is NFT a good investment to venture into?

Sanz Teoh: I’m not one to tell people that we can ‘earn money’ from NFT. I would tell them to first, truly understand as to what, why and how cryptocurrency, blockchain and NFT exists.

Once you fully understand the benefits of blockchain and NFT, then, like any venture or business, you have to be creative, committed, and create something that people want, or of interest, to be able to ‘make money’ from it.

For the general public, some NFTs project are really good, and has good utilities, visionary founders, responsible project team and for a good cause. These are NFT projects that you can invest into.

For brand and business owners, investing in creating NFTs is a good way to differentiate your brand and business, raise funds, or to offer additional utilities and benefits to your fans or loyal customers.

The potential of NFT is vast. With proper strategy and ethical purpose, NFT is definitely the way to go.

June 10, 2022
5 Reasons Why You Should Invest In REITs

Real Estate Investment Trusts (REITs) can be simply put as shares of commercial properties that are listed in Bursa Malaysia stock exchange.

REITs are being managed by property developers or professionals. There are many categories for REITs that will convert into a great profitable investment such as malls, residentials, factories, offices and many more.

You may want to read this : Best Reits In Malaysia. Which One Is Better? Is It Time To Invest Now?

Simply put, we can say that an amount of monies being pooled together from many other investors to invest in properties. This may be a good alternative rather than you have to buy physical properties which can cost you a fortune.

Investors who buy REITs’s shares entitled for dividend payments which will be distributed quarterly or semi annually. This is mostly contributed by the rental performance of the properties.

5 Advantages of REITs Investment

1. Invest in REITs With As Low As RM100

Whattt?? You don’t want to risk a lot of your money to your property investment?

No worries! By REITs investment, you don’t need a huge capital to start. With RM100, everyone give it a go in property investment via REITs.

Source : Bursa Malaysia

As from the list above, you can see the price per one unit of REITs shares which most of them are below RM1.00. You will need to buy at least one lot which equals to 100 units as fixed by Bursa Malaysia.

Still, it’s way much cheaper than buying a physical property for investment.

2. Tax Exemption

You don’t have to worry about tax. REITs investment in Malaysia are exempted from tax. If you own a physical property, you will have to pay for taxes, stamp duties and many more during your purchases or disposal.

You don’t have to pay for Real Properties Gains Tax (RPGT) which will affect your investment returns.

These taxes exemption are a huge savings where you can save a significant amount of money.

3. REITs Investment Is Easy

Don’t get yourself into property investment messes. REITs provides you peace of mind while investing.

REITs are traded on the Bursa Malaysia stock exchange. You’re not tied to a huge amount of mortgage. REITs are very liquid as they can be bought and sold easily.

You can have your CDS account, the transaction can be done via your platform. Easy, right?

4. REITs Being Managed By Professionals

Newbies in stock market? Worry no more with REITs investment. Why? Did you know that your REITs investment are managed by professionals?

Yeah. You heard it right! Managed by professionals unlike investing in physical or conventional property. You don’t have to deal with tenants, local authorities or many other things out there.

Sit back, relax and enjoy your dividend! (Still, you need to study stocks potentials before deciding to invest)

5. Higher Dividend Payouts

Did you know that REITs will distribute at least 90% of their earnings to investors in order for them to qualify for tax reliefs?

The investors may enjoy 5% to 7% of dividends every 3 months or twice a year depending on the company.

Well, we can say that the dividends rate is higher that most of the rental properties return.

In a recent survey of Malaysians carried out by Palindrome Communications, 14 percent of respondents said they thought that REITs were good investments and 29 percent thought they weren’t. The majority of respondents (57 percent) were unsure and opted to ‘sit on the fence’. This could signify a lack of education regarding REITs in Malaysia and mean that members of the public are more familiar with other investment options. Respondents included professionals in technical fields such as engineering, and solar.

June 10, 2022
3 Alternative Ways To Teach Teenagers About Money Management
Are you worried about your teenage children’s safety, health, social life, future, and education? In addition, they are constantly bombarded by advertisements, online shopping, peer pressure and “Instagram culture”.

Various surveys have shown that Malaysian millennials (aged from mid-20s to 40) have a tough time when it comes to money management:
- 70% of Malaysian millennials do not live within their means – Asian Institute of Finance, 2015
- 74% of millennials in Malaysia are struggling to meet day-to-day expenses during the Covid-19 pandemic
- 53% of Malaysian millennials cannot survive with their savings beyond three months
- Lower income millennials spend 48% on food, 27% on entertainment
Looking at the situation above, we should plan forward and ensure that the next generation – our teenagers – will have a better start in money management. Here are three alternative ways parents can teach their teenagers about money management.

1. Joining Them Instead Of Stopping Them

Online shopping has enabled spending like never before, especially during the pandemic. Most teenagers will want to buy and own things if they have the means, although more often than not, such purchases are due to peer influences.

Being the financial provider for teenage children, it is important that as parents, we instill the importance of self-control and wisdom about leisure shopping. Yet, this is the phase where teenagers become more rebellious, it is simply not enough to just tell or nag them. The old saying has never been truer – “If you cannot beat them, join them”.

Go on Shopee or Lazada with them. Teach them about vouchers, free shipping and sales. Or maybe it will be them teaching you instead! Shopping online with them has its benefits, such as:
- Bonding time and relationship building with your child
- Slotting in some advice about quality vs quantity, self-control and impulsive buying behaviour
- Monitor your teenagers’ shopping behaviour, what is in their shopping cart, wishlist and their shopping history
- Share your experience and mistakes about shopping and spending
2. Give Praise And Advice

It is so true, that it must be repeated again. Teenagers are rebellious creatures!

Nagging and telling them what to do just will not cut it. It did not work for teenagers during the 80s, 90s, and 2,000s and it certainly will not work today. However, they do seek your approval and appreciation, especially on things of importance to them. We often hear “my parents do not understand me” or “my parents are just not cool”. One way to avoid such comments are to acknowledge and sometimes praise what they are doing right (or vaguely right) financially.

“Boy, it looks like you did not spend too much money at the mall today. Good job!”

“Girl, you really found a real bargain with the dress you bought online. You certainly know how to shop.”

After praise is given, teenagers will be more receptive towards advice. The acknowledgement that they did something right, gives them a sense of pride, and the urge to do it better.

3. Let Them Make Mistakes

If you recall how you sharpened your money management skills, more often than not, it was not taught or told by your own parents. You learnt them either by experience, hardships, or through mistakes that you have made. Depending on your generation, we grew up in a different time and culture than the teenagers of today.

One way that we can teach our teenage children about money management is not by teaching or telling, but by letting them experience mistakes of their own. Here are ways you can set the stage for your teenagers to learn some money management:

The salary and lending method

The delayed gratification lesson

We are spoilt with instant gratification. What we want, we can get it very fast, if not, almost instantly. Think Netflix (movies), Grab (food/transport), Shopee/Lazada (shopping) and WhatsApp (communication). The Generation-Z of today are born into a life of instant gratification. However, the culture of savings and investments are more often than not, a slow and disciplined process.

Thus, it is even more crucial that parents practice delayed gratification with teenagers and resist buying things they want versus what they really need. For example, if they ask you to buy something they want (big or small), try and ask them to wait for a few weeks or months. Suggest that if they want it sooner, they have to contribute part of the cost too. You may even notice a change that as time passes, they will realise that the purchase is not worth their allowance, and their desire may even fade.

The compounding interest lesson

Open a bank account for your teenager with some sort of interest element and allocate your teenager’s allowance in it. Alternatively, some e-wallets currently have an interest element as well. This allows them to learn about the compounding effect of interest on interest.

With this method, you can teach them about saving their allowances, and watch their savings grow every month. Take this opportunity to teach them about inflation and other forms of investments that can make their savings grow even faster, such as fixed deposit or a bond fund. Although they are too young to invest into unit trusts themselves as a primary applicant, you can create a joint unit trust account with your teenager being the secondary account holder.

As parents, we do our best to teach our child the important elements in life. Early money management is something that is important and should be deeply rooted into their young minds. However, this is easier said than done as there is only so much we can do as parents.

Their personalities and spending patterns are an amalgamation of a variety of influences, from friends, to TV, to the internet and also by observing their parents’ money behaviour. That said, as parents, we should learn and practice what we preach about healthy money management.

About the Author

Alvin Kwan, CFP ^{CERT TM} is the executive director and head of financial planning at Redvest Wealth & Asset Management. He has over 12 years industrial experience in the financial industry, specifically in wealth advisory, private banking and stock broking. He was also a lecturer in areas of investment management, derivatives, and financial markets.

We at Smart Investor and Redvest is committed to help you better manage your financials. Get a free consultation from an expert by filling in your details here: https://www.smartinvestor.com.my/SIxRedvest
June 10, 2022
Vital Role Of Insurance In Wealth Preservation
Wealth preservation is about managing your assets in such a way to make sure that it does not decrease in value. And after a lifetime of hard work, you want to ensure that as much of your wealth is protected.

Of course, optimising and growing your existing wealth is also a key task unless you plan to work for money all the time.

Wealth, just like your health, must be carefully preserved, and successful planning will help make your wealth last for you and your future generations – in case the unexpected happens.

One of the means that we can ensure our wealth is preserved in case something happens to us is insurance.

Demand for insurance as a low risk wealth management tool has seen a spike in recent years. The approach to insurance is also changing, with people from the middle-income group to wealthy families shifting perceptions on the need to protect their potential future income, as well as preserving their wealth for their next of kin.

When you read that insurance is a good instrument to preserve wealth, what exactly can it help you preserve?

Preserving Your Current And Future Income

The Covid-19 pandemic has made a strong case on the notion that nobody really knows what is coming around the corner.

Just imagine that if you pass away during your good earning years, your family could suffer a severe economic loss as a result of losing your current and future income to support them. In this unfortunate ‘fictional scenario’, your family would still have to pay their regular bills, including mortgage(s) and your outstanding debts.

They will also still have to continue accumulate funds for your family life goals, such as children’s education and retirement funds for your spouse. If you did not insure against this, you may leave your spouse or children in a very tight spot.

Preserving Your Dreams / Life Goals

For some people, this is also as good as preserving your family dreams. In this instance, insurance acts as a financial safety net that helps you financially protect your loved ones.

It also enables them to continue living with minimal worry, especially when large financial burdens like medical bills, mortgage, debts and others would easily change the financial status of your family.

Preserve Lifestyle During Difficult Times

We never know what life has in store for us especially while we are still feeling fit and healthy. No one likes to think that something bad will happen to us, and when something bad does happen, the first thing we usually say is “Oh no, he / she is so young”.

Illnesses and accidents are not age-specific. These are random events that could affect anyone.

But if you could not work due to a serious illness or accident, how would you manage financially? If the worst does happen, insurance helps you to minimise the financial impact on you and your family.

For example, if you need to give up work to recover from illness or if you are permanent disabled, the insurance could be used to help pay the household bills, mortgage, or even supplements, giving you and your family a peace of mind when you need it the most.

Recovery Takes Time

In a good ending, a person who is seriously ill may triumph in the fight against the illness, but, this person may not able to return to work immediately. All of these could incur many costs.

It is kind of heart-breaking to contemplate a situation where you survive a serious illness but fail to survive the financial hardship. This may be a time this person might have hoped he or she did not conquer the illness.

Obviously, you do not want an unexpected event that could easily change the financial status of you and your family. Preparing for the worst is not something we want to think about when we are feeling fit and healthy.

However, you will not suffer for thinking about it and preparing for it first. It is much better to be prepared, than to be in despair.

Preserve Your Legacy And Wealth

People are also promoting insurance as a tool to ‘create’ wealth, not just preserving it. Having adequate insurance that can help to repay your debt the moment you kick the bucket, can help ensure your assets get to pass down to the rightful beneficiaries.

Your family do not have to lose the assets such as your house due to their inability to redeem the loan from the financier. In time when the estate of the deceased is frozen pending the estate administration procedure, the proceed from insurance can help ensure life goes on for the surviving family.

If you are concerned your family may mis-handled the insurance claim, you can also have a proper legal structure to preserve this wealth. Through an insurance trust, you can decide the way how and when you distribute your wealth without actually physically transferring to your next of kin in a lump sum payment.

The trust assets are actually placed under trust to avoid your next of kin spending all of your wealth in few years when it took a lifetime to accumulate it.

Insurance And Your Life Stage

As you move on to different stages or wealth status in your life, the need for insurance will inevitably change.

One of the common questions people usually ask is “How much insurance I need?”

It really depends on your circumstances. There is no one size fits all solution and the amount of cover and how long it lasts for, all these will vary from person to person.

There are some events when you should consider reviewing your insurance needs:
- Buying new house with your partner;
- Building a family;
- Having children;
- Change of lifestyle i.e. salary increases;
- Covering loans;
- Reaching retirement;
- Starting a new business;
- Entering into a civil partnership;
- Changes in business ownership;
- Creating wealth to next generation;
- Transferring wealth; and
- Others
Clarify What Insurance You Need

Safeguard and preserve your wealth and then look at what types of insurance that you need to preserve your financial status.

It is important to manage your wealth and ensure you set aside a portion of your income to buy insurance, but don’t overcommit too.

It is advisable to seek for advice on how to optimally insure yourself and preserve your wealth against all the possible events that could disrupt your life.

About the Author

Keah EeWen is a licensed financial planner with VKA Wealth Planners Sdn Bhd
June 10, 2022
How Do We Safeguard Digital Assets?

Digital technology is now an integral part of our lives and, with the advent of fintech, more people are investing in digital currencies and cryptocurrencies.

Currently, digital assets and planning legacy for such assets tend to be overlooked by many Malaysians in their estate plans. The result is a potential loss of valuable assets and data, some of which are of immense emotional meaning to family members, with money and time spent to track them down.

While data protection and digital security are important when we are alive, how do we make sure that our digital assets can be accessed by our loved ones when we pass on? The answer is to include them in our inheritance plan. As digitalisation and its adoption continues, planning will become more important.

What are Digital Assets?

Digital assets are a collection of binary data online rather than actual physical objects where it is created, stored, recorded in digital devices and/or online services, for example, websites, social media sites, emails, cloud services, mobile phones, laptops, hard drives and computers.

The most well-known digital asset is digital currency. Other popular digital assets of monetary value are e-wallets, e-commerce accounts, internet domain names, online business platforms and even online storage such as google drive and dropbox as it may contain valuable data.

These days for creative professionals, their photography and works of art are often found in various online platforms such as shutterstock.com and istock.com. Such platforms allow their work to be sold or used for a limited period. Their work product stored in such platforms are digital assets which generates income and the royalty payments to the account holder.

In order to gain access to any digital asset stored online, it requires the username and password. If there are multiple accounts for different types of digital assets, the account owner should have an inventory of usernames and passwords for each account. Unfortunately, many people do not bother have such an inventory to organise their digital assets meticulously.

If an estate plan did not account for digital assets properly and without an inventory list, the executor would not be able to access them. They may not even be aware of the existence of such digital assets. These assets will be lost forever and the heirs might not receive all the money and/or the precious memories that the deceased have wanted to leave for them.

Digital Assets Inventory

How then do we safeguard our digital assets?

First and foremost, prepare a list of your digital assets using a digital assets memorandum (DAM), including cryptocurrency accounts, social media accounts, e-wallets, online securities trading accounts and e-commerce account such as Lazada and Shopee.

As you would only want a trusted person to have access to your digital assets’ user and password details, you would need to appoint a Digital Facilitator in your Will.

In your Will, you should state the type of digital assets you own and the beneficiaries who will be entitled to them. You may include the user details, but the passwords must not be included in the Will.

Your passwords should be stored separately from the DAM and your Will. It may be kept in an encrypted thumb drive in your home safe or safe deposit box or in some secure manner. However, it must be made known to your Digital Facilitator where it is kept and how to gain access to it.

As you may change passwords from time to time, it is important to update the list of passwords. Otherwise, your Digital Facilitator will not be able to gain access to your digital assets.

Accessing Digital Assets

Gaining access to digital assets is difficult. Each online service has its privacy or end-of-life policy and a court order will not count.

Even if the local court where the owner of the Will resides grants the families access to the digital assets, the laws where the company resides could prevent the families from getting access to them.

The laws that govern digital assets vary from country to country, and online sites have widely different terms and conditions that sometimes lock out executors. There may even be difficulty to determine which jurisdiction to apply for the court order to let the company allow your heirs to gain access.

Therefore, it is best to make sure that your estate plans are prepared and executed by lawyers or professional trust companies because it is a specialised area.

Malaysians aged 18 and above who reside in Peninsular Malaysia and Sarawak are eligible to set up a Will, while people in Sabah are required to be 21 and above.

This article is contributed by Azhar Iskandar Hew, Group CEO, Rockwills International Bhd.

June 10, 2022