Author: admin

Wisdom Of Investing In Passive Environmental Design

Our KL Petronas Towers do not even feature in the top 10 tallest buildings in the world today (Well, maybe Merdeka 118 is on the list now). The Burj Khalifa, at 828m, which sits in the 2 sq km Downtown Dubai Development holds the current highest record.

Most of these ultra modern glistening towers comes with a massive urban township development. The Jeddah Tower, which is on hold currently, is threatening to be the next tallest surpassing 1km in height.

These large developments hundreds of acres in size involves high finances, entrepreneurship and high technology. All of it carries a heavy physical demand on the land it sits on to cater to the desired lifestyle. High technology is then sold as the solution to meet these modern lifestyles boasting of innovation where there is a control for everything from climate to commode.

This is a sign of the times we live in – where there is a headlong rush into this technological frenzy which is then touted as being green and environmentally friendly. There are even brownie points given for technology promoted in green buildings.

However, there has not been enough consideration of the impact of producing these man-made products. Some of these materials are potentially hazardous and unwittingly, we are increasing the consumption of these resources. So the costs of making green buildings may not be so green after all.

We are unfamiliar with substances like tetrachloride, cadmium telluride, or flourinated hydrocarbon. Some of these toxic materials used in building technology products are yet to be fully ascertained on its long term environmental impact.

Also, all technology products have a lifespan and it is getting shorter as the technology itself changes. In many instances, the reliance on technology demands active energy to maintain a comfortable living environment.

These are the running costs involved, not to mention replacement costs which is all great for the tech business but not so for a sustainable lifestyle. We need to revisit our senses and sensibility on the possible over reliance on technology.

Harnesting The Earth’s Energy

Alternatively, consider this, we can draw from nature by responding to reproduce the natural passive environment by harnessing the earth’s energy for an urban solution. For instance, mimic nature and create a green canopy cover to provide shade.

Shading under a tree provides protection to shield against the harsh tropical sun and how remarkably comfortable and safe it feels like a sensation. These shading over the exposed hard road and structural surface areas will minimize and reduce heat gain, which reduces further warming in the tropical heat.

The ancient Chinese practice of practical Feng Shui, not the mystical one, has a lot of environmental wisdom in carefully positioning the built form on the land as a response to nature. Orientate the built form to be sensitive to the microclimate to draw the prevailing wind into the created spaces. The system relies on the wind to force exterior air already cool under the green canopies into the building.

It uses the differential air pressures to be directed as cross ventilation. This wind cooled form harnesses the dynamics of natural air flow to mimic a condition similar to resting below a tree canopy. The practical significance is to replace air conditioned spaces with natural ventilation and less energy is required to cool the ones that has less heat gain.

Natural lighting is another fundamental consideration in passive environmental design. The shading must not be misunderstood as the omission of sunlight but the direct light and glare redirection. Natural light has an emotional and therapeutic feel-good effect on human beings. Designs that allow natural light to permeate the spaces create a desirable habitable environment. It will eliminate the need for artificial lighting.

The default mode of reliance on technology has allowed too many deep sterile and practical spaces to exist—many of these spaces house working people who psychologically do not know if it’s night or day.

Do Not Idolise Technology

The natural environment is a greater ally if you harness its natural potential. Do not idolize technology to dominate your mindset. There is a place where technology does matter when it does more good than bad. Technology is there to supplement and facilitate. No greenhouse gas emissions are released into the atmosphere when solar power is used to create electricity.

Converting waste into power generation is another worthy technological advancement which will reduce the by product of the urban lifestyles. Electric transport systems supplanting fuel cars within urban developments also reduce fuel consumption and carbon emission.

The passive environmental design prioritizes the optimization of nature’s forces over our human determination to compel the physical environment to bend to our will. When we learn to work with nature, we run faster because the background can look after itself better.

Empty your mind, be formless, shapeless – be like water.

The legendary Bruce Lee had quoted with the wisdom of the oriental martial arts.

It is a philosophy to borrow someone else’s energy to work in your favor. It would help if you took your mind to understand how to yield to the forces of the natural environment to work for you. If you invest wisely, you create a living environment that draws from nature to cost you less.

About the author

Ng Wai Keong is the principal director of NWKA Architects Sdn Bhd, a boutique architectural design house which focuses on his passion to conceptualise the idea that success is a process of design excellence.

May 31, 2022
Can You Be Athletic And A Vegetarian?

A vegetarian diet excludes meat, poultry, and fish; some people also omit eggs and dairy products, while vegans exclude animal products altogether.

You can take it a step further by going on a raw or gluten-free diet. Besides the obvious, which is that any diet built on exclusions is emotionally hard, a vegetarian diet can be a challenge when it comes to your nutrient intake and energy levels.

On the plus side, however, a vegetarian diet usually involves a higher intake of antioxidants and phytonutrients which reduce free radical damage during intense exercise.

Nutrient Concerns

Protein also acts as a complement to carbs. They help regulate the rate at which carbs enter your bloodstream and prevent sugar spikes and crashes. In addition, strength athletes need protein to build muscle mass. A plant-based diet is also usually high in fibre which further inhibits protein absorption.

Vegetarian diets are also generally low in B12, iron, and calcium. These are particularly important for endurance athletes as B12 helps produce red blood cells and prevents you from becoming anaemic. It’s also important for nerve and mental health – long-term deficiency can lead to cognitive impairment, while lack of iron and calcium can affect your immunity and bone health respectively.

Salt and fats seem like bad things to want to put into your body as an athlete, but they are essential to your overall wellbeing. Poorly planned vegetarian diets lack both. Fats help your body absorb fat-soluble vitamins like A, D, E, and K and regulate carb absorption so that your sugar levels stay consistent.

KFit Asia head of operations Shakira Shanaz, who is currently on a vegetarian diet as part of her yoga teacher training course, agrees. “My body craved more sugar, so I’d make myself Milo when I would usually just have water.” Low sodium levels, on the other hand, can lead to muscle cramps, especially if you are sweating a lot.

So, can you still be athletic and a vegetarian?

Read : What Happens To Your Body When You Stop Exercising?

Supplementing A Vegetarian Diet

Adequate protein intake on a plant-based diet is difficult but possible with proper planning. Opt for protein rich foods like beans, lentils, legumes, nuts, and seeds. Quinoa and soy are great protein solutions too, as they are complete sources of protein―tempeh is a firm favourite.

It is important to remember that you will need to eat larger portions for the same amount of protein you would get from meat, and a handful of nuts in your salad is not going to cut it.

Read: How To Manage Your Quarter Life Crisis?

Increase iron absorption with the aid of vitamin C rich fruits and vegetables. B12 is not readily available in non-meat items but you can opt for fortified cereals or supplements. Give your body the good fats it needs with avocado, olive oil, or flaxseed oil.

Avoid fibre-heavy meals right before a workout so that you have plenty of time to digest. You should also include a post-workout protein meal to help with muscle synthesis. Protein shakes are useful here too.

Meals don’t need to be boring! You can also substitute your usual flour with soy protein powder or bean flour. Peanut butter is a great source of nutrients for vegetarians as well.

Don’t forget to salt your food (within reason)!

Yes or No?

There are marginal benefits to being an athlete on a vegetarian diet. Over time you tend to feel less bloated and have a quicker recovery time, plus you will probably have a lower intake of bad fats and cholesterol.

However, D. Enette Larson-Meyer, associate professor of human nutrition at the University of Wyoming, has a different opinion.

Many people tell me after they start a vegetarian diet that they feel better, but then again many of them… were eating a pretty poor diet, so of course they feel better. They could have switched to a healthier meat-based diet and they would have probably felt better.

Shakira concurs. “I mostly self-prepare my food as eating out while vegetarian is expensive. I also avoid greasy food since I’m already making an effort to be healthy. I feel like this, more than the vegetarian diet, contributed to my feeling lighter and less lethargic.

“Would I continue to be a vegetarian once my course is over? Probably not. I will eat cleaner and healthier, but I don’t think being a vegetarian is necessary for health.”

Still, there is no harm being an athlete on a vegetarian diet if you choose to do so. It requires greater care and planning than a meat-based diet to ensure you are getting all the nutrients you need, but it’s not impossible.

May 30, 2022
Uplifting Women’s Role In Family Finances

C: Women have inherent qualities that enable them to plan their own and their family’s finances

In my financial planning practice, I have observed that female clients, whether they be single career women or married with children, tend to face similar dilemmas and challenges when it comes to planning their personal finances.

But why is that happening to them? They should and they must have their roles in family finances.

Lack Of Time Due To Multiple Roles

There is no denying that the modern-day woman is highly adept at multi-tasking – from her job, her family, her children’s education to other social obligations and so forth. The downside of assuming so many roles and responsibilities is that it leaves hardly any time for herself at all.

Any precious moments of “me-time” that ladies can manage to squeeze out of their packed schedule goes towards rest and de-stressing to rejuvenate themselves. Financial planning issues will hardly be on their minds after a long day.

Tendency To Priorities Family Rather Than Themselves

Being selfless and filial are undoubtedly noble characteristics that every parent, husband or sibling would want their daughter, spouse or sister to have. However, when putting the interests of family members ahead of your own, more often than not, your own needs may be neglected.

A Senses Of Apprehension When It Comes To Managing Money

This can be real, imagined or selective. Numbers and calculations can be intimidating to certain individuals regardless of gender or age. Others tend to shy away from money matters because they find it too complicated and confusing, preferring to let their spouse handle it so that they can focus on other responsibilities.

My wife is happy to help our son with his algebra and trigonometry, but she claims to make no sense out of a financial spreadsheet.

Worth A Read : Financial Literacy & Financial Accountability Are Life Changing

Decision Making Guided By Sentiments And Emotion

Female clients sometimes base their decisions on how they “feel” about something. While having a keen financial gut instinct has made many billionaires, it is another thing when the heart overrides the mind in making investment decisions.

Examples would be putting money in investment plans because a friend “strongly recommended” it, or out of sympathy for your banker whom you known for ages and needs to meet his/her sales target.

Choosing To Save Rather Than Invest

Some individuals consciously decide to continue saving in cash, preferring to keep the bulk of their money in fixed deposits despite the dismal returns. They are in fact aware and reasonably well informed of their options but due to their position in the family (for example, being the only daughter or the only unmarried sibling), they feel a sense of duty or responsibility to have funds on hand to assist other family members should they require it urgently.

Read : How to Choose the Right Investment Vehicle for Yourself?

Taking on the status of the family’s “standby banker” no matter how well-meaning, denies some women the opportunity to plan for their own financial future. Instead of viewing these challenges as barriers, turn them into catalysts for your personal financial growth instead. There are many ways to empower oneself to take control and own your financial destiny.

Reprogramming The Mindset And Be Prepared

While you may currently have the luxury of someone else handling the household’s financial matters for you, i.e. your spouse, there may come a time when you need to take over or assist in those duties. If you are already prepared, well and good. If not, take time to increase your own financial literacy so that assuming the role of the home’s financial manager will be a comfortable transition.

Be Heard And Be More Involved

Suppose money matters are not exactly your cup of tea. It may be tempting to leave all the family finances to someone else, especially if things are running smoothly and the party handling it has the necessary expertise and experience and doesn’t seem to mind doing it. However, you may have insights and suggestions for improvements, so share your thoughts rather than keep them to yourself.

Make It A Learning Process

If your financial matters are currently delegated or outsourced to other parties, there is the danger that you may one day find yourself in a situation where this party is unable or unwilling to continue the responsibility. Thus, it is important to get yourself educated on how to handle your own personal finances rather than leaving such a crucial task entirely to someone else.

Leverage On Other People’s Time

If you find yourself already overwhelmed with work and other obligations, learning to put your personal financial matters in order from ground zero may seem like a mammoth task. Under these circumstances, a licensed financial planner would be able to work together with you and assist you through the entire process while ensuring your involvement every step of the way.

Individuals are not born with good personal financial skills, but everyone can learn how to be competent at it. Due to personal and family circumstances, women are often unable to take advantage of the opportunities present to improve their financial knowledge and be as hands-on in their personal financial matters as possible.

Nevertheless, women already have a natural advantage in taking on the role, thanks to two critical attributes that play a huge part in successful financial planning.

Firstly, regardless of age group, education level or social strata, almost all women are inclined toward a long-term mindset in whatever course of action is decided upon. This is usually more evident when it comes to buying a vehicle for example, or renovating a home or planning for the children’s education. Rarely are decisions made by women in the household without thinking two or more steps ahead about the effects and implications, contrasted with men like many of us who are more prone to “act first, think later”.

Secondly, women tend to err on the conservative side of men by questioning downside risks before taking action, which is actually a good thing. While profit and returns are typically top on the list of male investors, having a woman jointly involved in the investment decision would help to temper any hasty actions and mitigate potential financial risks.

As such, these inherent qualities in women make them suitable candidates to plan their own and their family’s finances. With guidance and financial education, they have the potential to surprise even themselves.

A household may have mixed styles of financial management as both men and women are good in personal finances in their own ways, therefore by complementing one another and learning from one another, amazing results can be achieved.

About the Author:

Felix Neoh CFP ^{CERT TM} is the Director of Financial Planning at Finwealth Management Sdn Bhd and is a certified member of FPAM. He can be contacted at enquiry@finwealth.com.my

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

May 27, 2022
Thinking Of Using An Initial Exchange Offering (IEO) To Raise Funds?

Fintech has made it easier for ordinary retail investors to discover new opportunities through innovation in crowdsourcing. Investors can participate directly as shareholders of private enterprises via equity crowd funding (ECF) or become lenders via peer-to-peer financing (P2P).

Conversely, these enterprises gain access to new capital pools beyond their immediate network of families and friends. Or they get to tap into alternative funding sources after exhausting the credit lines in their banking relationships.

Initial Exchange Offering (IEO) opens another avenue for them. Theoretically, digital assets are borderless and enable free movement of capital. This means that IEO can potentially attract global capital inflows for local enterprises, which is an advantage vis-à-vis ECF and P2P.

A Boon for Local Tech Entrepreneurs?

We know that the financing gap for micro-, small- and medium enterprises (MSME) has always been a perennial problem. This is a key growth engine for the economy but lack funding options. Based on estimates by the Securities Commission (SC), the MSME segment contributes around 60% of our country’s gross domestic product (GDP) but face a financing gap of RM90 billion.

^[1] Funding from conventional equity and bond markets mainly cater to listed companies, even though they contribute to only an estimated 15% of GDP.

In the technology sector, which is typically loss-making in the early stages, the problem is more acute. It has to rely on a limited base of angel investors, government grants, and onshore venture capital (VC) funds, many of which are also government-linked.

It doesn’t help either that the local VC landscape is less robust compared to our neighbours like Singapore and Indonesia – with fewer active firms, smaller fund sizes, and lower risk appetite.

This is where IEOs come in to fill this gap, as an alternative tool for enterprises to form capital across their spectrum of growth (see diagram).

IEOs specifically cater to enterprises with projects that “provide an innovative solution or a meaningful digital value proposition for Malaysia”.[2] This is wide enough to include anything that “addresses an existing market need or problem; or improves the efficiency of an existing process or service”.

By allowing IEOs to raise up to a maximum of RM100 million, this could carry start-ups and early-stagers through to the Series rounds. In fact, this amount is even higher than what late-stagers averagely raise at public listings on the junior boards of Bursa Malaysia like ACE and LEAP!

Source: Securities Commission Malaysia

Is it Difficult to Become an Issuer?

While there are regulatory requirements to ensure the integrity of the offering, the funds are kept in trusted hands, and the people running the show are fit and proper – overall, the entry barrier is kept low. If you are planning to issue tokens for your business, you can approach the IEO operator who will qualify your investment thesis and make the decision to approve or reject it. It does not have to go through SC for approval.

What you do need is to prepare a whitepaper for submission to the IEO operator and SC. Although this is not subject to stringent Prospectus Guidelines, the requisite coverage of contents is extensive. Put bluntly, this is not going to be any run-of-the-mill whitepaper of an Initial Coin Offering (ICO) project that you just pull from the web.

It has to include, among other things, the audited financial statements of the issuer, distribution policy of the digital tokens, their accounting and valuation treatments including “all reasonable presumptions adopted in such calculation”, and the scheduled timeline for drawdown and utilisation of proceeds.[3] And should there be any material changes or omission to the whitepaper, a supplement is required for submission anew.

The issuer should also note that an IEO is an ‘all-or-nothing’ raise. Essentially what this means is that the issuance must be fully subscribed. If it is under-subscribed, the issuer is not allowed to keep the monies raised unless the target amount is achieved, and the IEO operator must refund back to investors. If it is over-subscribed, the issuer is not allowed to keep any amount exceeding the target amount raised.

Does This Replace Venture Capital?

No, it doesn’t. The intent is to diversify funding sources as shown in the diagram above. But there are other factors at play.

To the cash-hungry entrepreneur, the IEO option generally provides lower cost of funds with lower cost of issuance (though this is debatable). Their investors are less demanding than banks when it comes to assessing the credit risk profile of the enterprise.

More importantly, digital tokens are not considered shares (as mentioned in Part 1) and are thus non-dilutive to capital structure. The shareholding control and cap table will remain the same post-IEO.

On the other hand, VCs may prefer the conventional funding route for their investees because digital token issuance can complicate valuation during investment rounds and cause problems for eventual public listing. Why would VCs want to accept digital tokens, which might seem legally untested, instead of the usual tried-and-true convertible notes?

Furthermore, the VC contract includes detailed covenants and provisions which cannot be summarily replaced by the ‘smart contract’ used in digital tokens in an IEO relationship.

And while there are global ‘crypto VCs’ that do accept digital tokens, they face a hurdle in Malaysian IEOs because cryptocurrency is not allowed as a form of payment for investment. More on this in Part 3.

One thing to note is that IEOs cannot provide the kind of support that VCs do: To incubate, mentor, and accelerate the business. This is a major lesson from the ICO Boom-Bust during the 2016-19 period: While most people think of ICOs as scams or money grabs, the truth is, many projects were genuine without malicious intent, but their entrepreneurs didn’t know how to handle too much investors’ money and ended up failing. Cheap and easy capital can be both a blessing and a curse!

Simply said: IEOs can give what entrepreneurs want but not necessarily what they need. The IEO regulations ensure that there is accountability for the funds raised – but not the advisory to prevent these funds from being misused by management.

Why Are Other Sectors Also Eyeing This?

The ability to tokenise assets and businesses into units of investment, and distribute them through IEOs, has captured the imagination of other industries such as property, agriculture, and hospitality.

For lumpy or indivisible assets like real estate or property, tokenisation can carve them up conceptually into smaller affordable portions (commonly known as ‘fractionalisation’) with lower minimum investment for retail investors. For commoditised sectors like agriculture, the issuer can sell digital tokens that represent metric units of their production yield e.g., one token equals to one tonne of wheat.

It boils down to how you play with the economics: Hotels are intuitively tokenisable as they are made up of individual rooms which generate income. Investors can estimate how much a hotel room unit is worth based on its future earnings potential.

Certain suites can be tokenised at a higher price. Shopping malls and integrated projects can choose to unbundle different property rights by issuing different class of tokens, or strip the property into different income streams which are hardcoded into the ‘smart contract’.

There is no doubt that a tokenised structure can provide much flexibility for property owners or developers sitting on illiquid stocks. It can be similar or even go beyond what securitisation models or REITs (real estate investment trusts) can achieve.

However, it is important to realise that what is technically possible may not always be legally feasible. Given the dearth of regulatory guidance on IEOs at this point, there are a lot more questions than answers.

Finally, the RM100 Million Question…

In the end, literally the hundred-million-ringgit question on everyone’s minds is this: Could an IEO operator raise this kind of money, consistently? Even a mere 10% of this is a huge raise on its own, and extremely rare, by ECF standards. Where will the investors come from?

Let’s find out in Part 3.

About the Author

Edmund Yong is the managing partner of Celebrus Advisory and appointed by MDEC as part of its Talent Expert Network (formerly known as Digital Expert Panel) for blockchain technology. He is also the resident consultant for GLT Law, a multi-award-winning legal practice with specialisation in digital assets. All opinions expressed are the author’s own.

[1] Securities Commission of Malaysia, Capital Market Masterplan 3: 2021-2025 (2021).

[2] Securities Commission of Malaysia, Guideline on Digital Assets (28 October 2020).

[3] Ibid.

May 27, 2022
Financial Literacy & Financial Accountability Are Life Changing
For us to pursue our multiple life goals, we will need to have financial resources, which is like our ‘financial muscle’. We will need to have muscles to do the weight-lifting, which is to turn our life goals into reality. Therefore, we need to have the know how.

This, essentially, is financial literacy.

The Organization of Economic Co-operation and Development has defined financial literacy as a combination of awareness, knowledge, skill, attitude and behaviour necessary to make sound financial decisions and ultimately achieve individual financial wellbeing.

Why Is Financial Literacy Important?

Obviously, the decision we make today has a long-term impact on our financial wellness in the future. Hence, a poorly made decision may have a very detrimental impact on our future.

If a person is not financially literate, then this person may face multiple challenges in respect to managing his or her own wealth. Potential consequences can be:
- Not protecting savings and assets adequately;
- Not prudent in borrowings and ending up with too much debt;
- Not investing to inflation-proof your purchasing power;
- Not having a will; and
- Not having financial safety net like an emergency fund and health insurance.
The list can go on and on.

When a person is in a situation as above, it’ll be rather difficult person to attain financial independence as well as pursue his or her life goals.

How Financially Literate Are We?

The following statistics from the National Strategy for Financial Literacy 2019-2023 Report gives us a picture of where we stand as a nation in terms of financial literacy.
- 43% of Malaysians understand that growth of money is compounded over time, while 22% believe money grows on linear basis;
- 75% of Malaysians understand that inflation means cost of living is rising, only 38% can relate the effect of inflation on their own purchasing power;
- 84% of Malaysians who claim to save regularly typically withdraw it at month-end to cover daily subsistence expenses;
- Three in 10 of working adults need to borrow money to buy essential goods;
- 52% have difficulty raising RM1,000 as an emergency fund;
- Only 24% are able to sustain their living expenses for at least three months if they lose their main source of income, and only 10% can sustain for more than six months;
- Six in 10 adults are self-employed and hence not covered by a social security system or any formal retirement fund; and
- About 60% of investors were found to have unrealistic expectations on potential annual return from investment in capital market products.
A Financially Responsible Person

When a person is financially literate, he or she will be more capable in understanding how his or her decision can impact their financial future, hence becoming a responsible person financially.

When we are financially responsible, we will be careful about adding financial responsibility to our finances. We will ensure that we do not spend all we make but make provision for our future, and for emergencies.

In fact, most people are aware of this but somehow, fail to take action.

What Is Missing?

Since most of us who are working adults have not been taught about financial literacy in school, we need to learn it from somewhere.

Learning is a passive thing – you can continue to read, learn, listen to podcasts or attend workshops for years. However, it is not the learning that matters but the doing that makes a difference.

To ensure that we do what is in our best interests, not only do we need financial education, we also need financial accountability. I truly think this is the key missing piece of the puzzle.

Perhaps you can read Unit Trusts, The ‘Safest’ Investments For Beginners In Malaysia?

That is why we are unable to behave rationally and stick to our plans, fail to save what we plan to save every month, all because of a lack of accountability.

I will define accountability as having a sense of ownership over your work and accepting consequences for your actions and behaviours.

Many times, we are aware that if we don’t save, it will leave us in a worse shape compared to when we save. But we spend anyway.

So to increase your financial accountability, it’s best if you work with someone interested to help you stay true to your own words, and be accountable for your own actions.

Financial Accountability Partner

An accountability partner is someone who coaches another person to keep a commitment. Getting a right accountability partner is known to be a highly effective strategy for goal-setting and achievement.

The good news is that If we want to stick with our action plan, we just need an accountability partner. The bad news is that we cannot be our own accountability partner.

And if you have selected a candidate who is not so suitable, your accountability partner may well turn into your partner in crime.

What To Look For In Your Accountability Partner?

Ideally, this person should be able to complement you in terms of knowledge, skills, expertise. Since this is a financial accountability need, your candidate should possess extensive knowledge on this subject matter. Otherwise, coaching you to do the wrong thing will eventually send you down a path that is cursed as well.

However, you should look beyond things that are measurable such as knowledge. Will this person be willing to challenge you to out-grow your limit?

Your main objective of getting an accountability partner is to outperform your own set objectives. Therefore, you need someone who has the courage and discipline to tell you what you need to hear, not what you want to hear.

Your accountability partner should also be able to make sure you follow through on your commitments, monitor and review your action plans with you so that you can find ways to improve on it.

When you are in doubt, he should also be able to provide you with independent feedback and show you the next step so that you will not be stuck at status quo.

Who Can Be Your Ideal Financial Accountability Partner?

Most of us have friends, and family members who we care a lot for. Are we their financial accountability partner?

Did any of our friends or family members volunteer to talk to us about our financial successes and planning? Has anyone have taken the time or initiative to tell us the importance of save-first, spend later, or the importance of having an emergency fund?

I guess the common answer to these questions will be a string of “no’s”.

That is also why I volunteer myself to be your financial accountability partner by devoting my lifework to be a licensed financial planner. I have a strong sense of fulfilment whenever people feedback to me that they are seeing progress and happy because they are sticking to their own plans and are seeing results.

That sense of fulfilment is even stronger when I get credit for the success my client is having.

Personally, I believe that it is important for us to work at something we love to do and are passionate about. I’m just glad I’m under this category.

I think someone who is doing what they are doing when not motivated by monetary reward alone, will be the right person to do the best work.

So, get an accountability partner to make sure you are accountable for your financial independence.

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.
May 27, 2022
Going Global With The Property Investment Life Cycle

Over a long time of observing and interviewing many established developers, high-profile bankers, ultra-high net-worth investors, successful entrepreneurs and private equity firms, I would like to share with you a market proven real estate investment strategy that I call Property Investment Life Cycle or PILC.

With the skyrocketing house prices since 2010 in Malaysia, common investors have stampeded into property investment to ride the wave of fortune. Indeed, property investment is always one of the favorite options for high net-worth individuals to preserve their wealth and is arguably the safest asset class of all.

Delving into the fundamentals of property, I noticed that PILC is very similar to the human life cycle – people are born, grow up, age, and cease living. It makes no difference when it comes to property development and the property investment cycle. By adding value to a property according to different stages of its life cycle, investors can enjoy continuous profit regardless of the market condition.

Property Investment Life Cycle

The following are the six key stages in PILC and how you can reap significant return in these stages:

1. Land Acquisition

Buying land is usually significantly less costly while it is undeveloped compared to land that has usable construction structure. To put it clearly, the land is the raw material of any property development. Thus the saying – the best investment on earth is earth. Land is always a scarce resource as it is non-produce-able.

Hence, developers are constantly on the lookout to increase their land banks. Acquiring the right type of land such as agriculture, industrial, residential, commercial, and many more with the right size of density, plot ratio, type of usage and development, individual unit size will ultimately decide the potential value of the land.

Getting a housing or any loan in Malaysia? Worth a read Housing Loan In Malaysia: What Is Debt Service Ratio (DSR) And How To Calculate DSR?

2. Development

Where property is “born” – this is the real crown jewel among the six stages as it contributes the biggest profit-making ratio within a short period in the PILC. Traditionally, developers acquire a parcel of land (or sometimes have a joint-venture with the land owner) and build multiple units on the same title.

Upon construction completion, the developers will market the end units to the public at a premium. Due to the high barrier of entry, huge capital and expertise involved, only large corporations and conglomerates are able to participate in this lucrative segment. However, by deploying the joint-development strategy a common investor can now invest together and earn like a developer as well.

3. Management

With an eye to enjoying constant property value appreciation, good property management always plays a pivotal role. Once a property is constructed, it needs both building management and tenants’ management to keep it in top-notch condition and attract quality tenants.

However, for some common investors, management is a nightmare in the journey of property investment while for an experienced investor, there are a lot of hidden gems in managing a property.

On the other hand, some special purpose property management strategies are able to reap high profit margin compared to the ordinary property investment. For example, Airbnb, co-working spaces, commercial car parks, student hostels, short stay accommodations are some proven strategies in property management.

4. Renovation

Renovation is like adding the soul into the body. It grants new functionality and enhances the appearance of a property. This strategy is one of the investors’ favourite as it can drive high profit within a short period of time.

In fact, there are many buildings in disrepair due to negligence of the owners. To shake the dust off the owner’s feet, they are willing to let go the property at a discounted price. By picking up these properties, you will attain profit by renovating the property and reselling it to the market at a better price.

5. Refurbishment

When an ageing property, especially heritage buildings in some countries, is occupied over some years, it may experience rundown, be severely damaged and may not be in liveable condition anymore. The deterioration of the abandoned building sometimes go beyond renovation works. This type of building requires a large fund for refurbishment.

Due to the reason that some property owners do not have the financial capacity to refurbish the building, these buildings can be purchased much lower than the market value. It can then be refurbished to a new design, providing new life to the historical building.

6. Redevelopment

When experiencing special events e.g. natural disasters such as an earthquake, volcanic eruption, fire, or change of market demand, the accelerated depreciation of the property value makes redevelopment a sensible decision.

Through redevelopment, existing buildings are fully or partially demolished and a new building is constructed. At this final stage of the PILC strategy, the said piece of land is given a new life to meet the local demand and thus boost the value of the property.

As mentioned in one of the famous quotes of The Art of War by Sun Tzu:

If you know your enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.

In short, if you plan to invest in any country, you need to understand its background including its economy, politics, risks and other important considerations that may ease your forthcoming investing journey.

What we invest in our time defines who we are.

About the Author

Max Shangkar is group CEO of Max Capital Management Holding Ltd and an expert in global project management consultancy. He is also the author of the best-selling book Investment Strategies for Global Real Estate.

He propounded the market-proven investment strategies of Property Investment Life Cycle and Business Investment Life Cycle that educated over 6,000 Global Investment Community members to invest in property projects and businesses in over 10 countries.

May 27, 2022
The Benefits Of Unit Trusts Investment In Malaysia

In previous articles, we already touched on what a unit trust is and how it works. Most probably, you will have rough ideas of how unit trust works in Malaysia and what unit trust is. How about the benefits of unit trusts?

Let us now take a closer look at the benefits of a unit trust investment. You may consider investing in a unit trust after being well informed about this product.

If you don’t follow what unit trust is, please have a read first at Unit Trusts, The ‘Safest’ Investments For Beginners In Malaysia?

Benefits Of Investing In Unit Trust

What are the benefits of investing in a unit trust? ASB is one kind of unit trust investment. Keep in mind that ASB is only for the Bumiputera. How about the others? Does investing in unit trust profitable enough?

1. Managed By The Professionals

You know what? An expert is looking after your investment. Worry not, it’s better to have someone professional to take care of our investment portfolio rather than most of us who know nothing when it comes to investing.

Fund managers are responsible for managing and investing the pool of money from the investors. They’re skilled investors who understand the market, spending a lot of time analysing shares as well as the industry and economy at large.

They’re always on the market to be as fast as they can to take advantage of the market price movement. Would you be able to do that?

2. Diversification Of Portfolio

You have a small amount of money, but there are so many potential things that can be profited from your investment. Well, unit trust can help you diversify your investment portfolio. Diversification will help you to reduce your investment risk.

Let’s say you have 10 eggs. Would you place all your eggs in one basket or place them into a few different baskets? If anything happens to one basket, then what about the rest of the eggs?

The same goes for investment. If anything happens to one or more of these shares while you put everything in the same stock or industry, your investment portfolio will be affected. To reduce the risk, diversify your investment!

3. Liquidity

Most investors prefer their investment to be liquid. It means that the investment can be easily converted to cash. Unit trusts provide this feature. Any unit can be bought or sold easily. Some of the funds can return your investment to cash within the same day.

This option will help those in their emergency time to gain cash by liquifying their investment easily.

Unit trusts may be the best investment, especially for beginners but it will not suit every investor’s appetite. Make sure that you understand your risk and also the investment products before making any investment decision.

May 26, 2022
How To Manage Your Quarter Life Crisis?
As a counsellor, I have seen many young adults come in claiming that they are depressed. From my perspective what they might actually be experiencing can be termed as ‘’quarter life crisis’’

Then the question arises “What is quarter-life crisis?’’

This is a new phenomenon that is happening to young adults who are in their twenties and thirties. Fresh graduates who are entering the ‘real world’, suddenly find themselves under a lot of pressure to succeed vocationally, relationally and financially even before hitting their thirties!

Signs That Young Adults are Facing a Quarter Life Crisis
- They are confused about what their next step in life should be – Questions like these would appear in their minds: Is this what I want in life? Will I be stuck here? What can I do next? There are tons of questions that they don’t seem to be able to answer.
- They are overwhelmed by all the possibilities out there – The modern economy is fast and dynamic; it’s in a constant state of change. Adapting or succumbing to change is the only option. This creates high stress and anxiety effect on them.
- They feel stuck in terms of their life choices and feel like not having control over their own future – Some may feel pressured to marry and have children before the age of 30 as some of their friends may already be married and have a high-paying job to accommodate their luxurious lifestyle whereas they are still questioning the decisions they made for their life.They keep jumping from one career to another. They spend a lot of time wondering if they should work for money or follow their passion and do what they love. They would second-guess their choice of career field and be probably wondering if they should go abroad to explore the opportunities or stay where their family and friends are.
Finding the Right Ways to Cope

Become aware

Identify which aspects of their life they struggle with and break them down into smaller segment. Look at it one by one; don’t mix relationship issues with career, and don’t compartmentalise them either.

Don’t be hard on them

Remember that they are a beginner and it takes time to adjust. Venturing into something new is a tough transition so be patient.

Don’t be afraid to let them try new things

It is okay to make mistakes as they journey through this phase in their life. They will slowly gain experience as they go along and this will be their priceless assets. It is like learning how to ride a bicycle and once they master it, they will be able to do it without having to think of it much.

Recognise their achievements

Recognise their accomplishments. Take pride in them. Be grateful for them. It will provide them with the energy to keep moving forward. Take comfort in knowing that through hard work and determination, everything else will fall into place.

Seek help from a counsellor or a mentor

Find a counsellor/career mentor to help them strategise what their next move should be. Counsellors/career mentors are trained to identify problems people face and will be able to empower a person who is facing difficulties find practical solutions to their problems.

Lastly, quarter-life crisis is not a crisis! It is an expected development of personal growth and evolution of an individual. Young adults are growing, learning and noticing new talents as they grow. It is not a crisis if they have not achieved greatness by their late twenties and it is okay to make mistakes as it helps them become better human beings.

As long as they continue to love themselves, discover their potentials, and evolve into their authentic self just remember that every step they take in life is helping them become something better.

So, if at any point of time you come across a young adult who is facing a hurdle in their path, don’t let it overturn them, just encourage them to keep going as this is just a small dent in the road, to the beginning of the rest of their life. After all this is what is called LIFE.

About the author

Faith Foo (MA Counselling) is a Registered & Licensed Counsellor at Rekindle Therapy (www.rekindletherapy.com)
May 26, 2022
Malaysia’s Employer-Sponsored Medical Benefit Costs Expected To Increase 12% In 2022

Insurers in Asia are experiencing above inflation rises in the cost of employer-sponsored medical benefits programs over pre-pandemic levels, according to a report by Mercer Marsh Benefits (MMB). According to findings in MMB Health Trends, costs in Malaysia decreased by 3% in 2020, but increased by 8% in 2021. Insurers are expecting medical costs to further rise by 12% in 2022 – six times the predicted general inflation rate for Malaysia, the third highest increase in Asia, the report noted.

The MMB Health Trends report surveys 210 insurers globally, including 74 in Asia, and identifies key trends influencing the future of employer-provided medical benefits. The results show that five countries in Asia experienced higher medical trend rates than the regional average (8.8%) in 2021, namely India with the highest medical inflation rate of 14%, followed by China (12%), Indonesia (10%), Vietnam (10%), and the Philippines (9%). Overall, 81% of insurers in Asia indicated an upward trend in medical claims activity in 2021, even though 53% of insurers reported lower medical claims than pre-pandemic levels.

Malaysia’s Ministry of Health has estimated that non-communicable diseases (NCDs) cost the Malaysian economy RM 12.88 billion in terms of productivity losses arising from absenteeism, presenteeism or premature death in persons of working age per year.[i].

The MMB Health Trend report reveals that cancer (55%), diseases of the circulatory system (43%), and COVID-19 (36%) were the top cost drivers of medical claims in Asia in 2021, while respiratory diseases (47%), gastrointestinal diseases (36%) and COVID-19 (34%) are healthcare conditions that experienced the most frequent claims.

Joan Collar, Asia Regional Leader, Mercer Marsh Benefits, commented: “Costs have soared despite lower levels of medical treatment than before the pandemic, a trend exacerbated by deferred healthcare treatments that for many have resulted in more adverse outcomes, leading to higher costs. Reducing NCDs remains a key priority for employers for the health of their employees and their business. More than ever, employer-sponsored medical benefits should be viewed as an investment in employees’ well-being. Employees who feel their employer cares about their health and well-being are more motivated, productive, committed, and loyal.”

Gaps remain in mental health coverage though inclusive benefits increase

Of all global regions, the report identified Asia as having the most inadequate coverage in relation to mental health, with only 34% of insurers providing coverage for outpatient treatments in mental health, and just 21% providing coverage for preventive mental health measures. Moreover, 32% do not offer any coverage for mental health services, reflecting a huge protection gap between access to benefits against the burden of mental health risks.

However, the study shows that 33% of insurers are making changes to facilitate more inclusive medical plan designs by allowing coverage for the non-permanent or full-time workforce with 54% either adding or considering extending eligible expenses that are more inclusive for women.

“Employers need to develop a mental health strategy to enhance the overall well-being of their employees and refine their benefits strategy accordingly to align it to their diversity, equity, and inclusion goals and the different needs of their employees. With a sharp rise in the number of employees experiencing burnout and fatigue, this has become a workplace imperative. Employers need to deploy investments and resources to ensure they maintain a mentally resilient workforce,” Ms. Collar added.

The Mercer Marsh Benefits (MMB) is the service value proposition that Marsh brings to its clients. MMB is not an insurance product. In India, an insurance product can be provided only by a registered insurance company. Insurance is a subject matter of solicitation.

About Marsh

Marsh is the world’s leading insurance broker and risk advisor. With over 45,000 colleagues operating in 130 countries, Marsh serves commercial and individual clients with data-driven risk solutions and advisory services. Marsh is a business of Marsh McLennan (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people. With annual revenue nearly $20 billion, Marsh McLennan helps clients navigate an increasingly dynamic and complex environment through four market-leading businesses: Marsh, Guy Carpenter, Mercer and Oliver Wyman. For more information, visit mmc.com, follow us on LinkedIn and Twitter or subscribe to BRINK.

[1] The Impact of Noncommunicable Diseases and Their Risk Factors on Malaysia’s Gross Domestic Product (2020). Putrajaya, Malaysia: Ministry of Health Malaysia.

May 25, 2022
When Investment Habits Affect Your Optimal Wealth Growth
Over the course of the Movement Control Order in Malaysia, brought about by the global pandemic of COVID-19, the lives of every individual in the country have been upended in more ways than one. Changes to our daily routine that we would not have imagined half a year ago have become part and parcel of the “new normal” and almost second nature by now: wearing a mask in public spaces, having a bottle of hand sanitizer available on hand anywhere we go or constantly keeping a social distance from friends and colleagues.

Apart from adopting new habits, a silver lining has emerged where some have ended up discarding unhealthy habits such as late-night suppers, smoking or regularly eating out. Had it not been for circumstances forcing a change in lifestyle, many individuals would probably carry on less than ideal practices without giving much thought to them.

Likewise, when it comes to making investments, many individuals may not realise that some of their investment habits are actually detrimental to their financial health and can impede their ability to grow their wealth optimally. It is important that these “unhealthy” investment habits are recognised so that they can be addressed in a timely manner to avoid long term repercussions. These are some of the most common habits that we observe among many investors:

1. Investing TOO Safely

Many people particularly retirees may prefer to play safe by putting all their money in FD alone because it is deemed to be the safest form of investment. However, in the current market environment where FD rates are below 3%, the impact of inflation is very apparent.

The Rule of 72 states that when you take 72 and divide it by the rate of return, the answer will tell you the number of years required to double your money. So, if you are getting a 3% return, it will take you 24 years to double your money! With inflation eating into your money, your purchasing power 24 years later is going to be a lot less than today. In comparison, if you can navigate through a moderate risk diversified investment portfolio and earn an 8% annualised return, it would only take 9 years to double your money.

2. Emotional Investing

Some investors tend to wait for the “right time” to invest, anticipating a feel-good factor when markets go up and this is when they decide to ride the wave of the moment in hopes of buying high to sell even higher.

In contrast, when the markets come down, they stay on the side-lines and play the waiting game, using negative market sentiment as justification for inaction when instead they should be taking the opportunity to bargain hunt. This is contrary to the investment philosophy of “buy low, sell high”.

3. Following The Crowd (FOMO: fear of missing out) Mentality

When it comes to investing, word of mouth among friends and relatives is a common approach. Often what you hear are the good things informed to them by the salesperson and passed on without verification of facts or supporting evidence.

Victims of investment scams are commonly “recruited” into it by people they know and trust. It usually starts off innocently enough with a nominal amount put in for the sake of maintaining a cordial relationship with the so-called referrer and also out of curiosity to see how the scheme pans out.

However, small losses can add up over time and the opportunity cost of missing out on bona fide investments is time permanently lost.

4. Misplaced Sense of Confidence

This is when an investor applies knowledge garnered from certain investment exposure as THE investment strategy for all investment asset classes, not realising that expertise in one area does not necessarily translate to identical outcomes in other areas as far as investments are concerned.

For example, a share trader who is used to high frequency trading activities decides to apply the same investment strategy in diversified investments such as unit trust, but the experience might turn out to be entirely different. As a result, he decides to stick to investments which allow active trading like forex or crypto currency investing since high frequency trading is his forte.

5. Not Investing Based on the Best of Breed Investments

This is quite typical of investors who, perhaps due to lack of time to do the necessary research, tend to invest with a blinkered approach instead of comparing the best investments in the target category. In other words, are you considering all the available options for the similar type of product to compare, or are you limited to only one or two options as presented by the salesperson?

For example, an individual who wishes to invest in Malaysian small capitalised stocks should comb through the performance of various funds in the same category before arriving at a decision. Thereafter, this process should be repeated periodically to ensure that he remains in the best funds within the same category.

6. Investing Without a Strategic Asset Allocation in Mind

All investments can be loosely categorised as low, moderate or high risk. This categorisation is a function of the inherent price volatility of the investments. When one invests, it is important to understand the appropriate percentage or allocation of low, moderate and high risks assets and this is dependent on one’s risk profile.

As an example, the strategic asset allocation of a moderate risk investor should be around 10% of investable assets in low risk assets, 70-80% in moderate risk assets and the remaining 10-20% in high risk assets. Low risk assets will comprise of assets such as bank deposits, capital protected investments or investment grade bonds.

Moderate risk assets consist of investments such as balanced diversified portfolios, high dividend yielding shares, property investments or REITs. Lastly, high risk assets would encompass highly volatile assets such as growth focused or small cap stocks and alternative assets such as crypto currencies.

Very often, we come across those who invest a very high allocation (>70%) of their investable funds in their favourite assets, either properties or shares or plain old fixed deposits.

While it is not wrong to invest in instruments that you are familiar with, choosing these over your ideal strategic asset allocation could result in an over exposure in certain asset classes that can leave you vulnerable during in a down market cycle of that asset class, or having to deal with very low yields as is the current scenario for FD investors.

7. No Active Performance Management

Another habitual tendency of investors is investing – full stop. What this means is once they put their money in an investment product, it’s hands-off from thereon. Active performance management is important because it allows:
- Tracking the performance of the investment and taking profit when there’s an opportunity;
- Reinvesting profit when the market goes down to average down your cost;
- Rebalancing your investment portfolio with a target asset allocation in mind; and
- Restructuring in order to move from an under-performing fund to a better performing fund in the same category.
Without active performance management, investors may miss out on time sensitive opportunities to better their investment returns.

In conclusion, while unhealthy investment habits may not bankrupt you overnight, they can potentially pose a large stumbling block to your wealth accumulation in the long run. In the current economic situation, most of us would agree that every ringgit counts. Replacing these habits with new, healthier investment practices only requires some willpower and determination and the rest will follow suit.

About the Author:

Felix Neoh CFP ^{CERT TM} is the Director of Financial Planning at Finwealth Management Sdn Bhd and is a certified member of FPAM. He can be contacted at enquiry@finwealth.com.my

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
May 25, 2022