Inovatif

Category: business

  • Malaysians And Inflation: Are We Going To Feel The Pinch, Pinch-ier?

    Malaysians And Inflation: Are We Going To Feel The Pinch, Pinch-ier?

    In April 2022, our national inflation rose to 2.3%, which exceeded the average inflation of 1.9% in Malaysia from the period April 2011 to April 2022. And just recently, it was reported that inflation rose to 2.8% in May against consensus of 2.7%. A vast development indeed. In addition, US Federal Reserve’s (Fed) move to raise the interest rate hike by 75 bps on 15 June 2022 had alarmed all quarters over the world on what could possibly be coming next – big inflation. However, what does all these means? Especially to the people out there?

    Generally, if most people do not understand what the numbers above mean, they do know one thing – they are feeling the pinch from the price hike of basic necessities, which has begun trickling the wallets of every household. From there, they knew and sensed that the inflation period is here. Not very surprising but not pleasant either, inflation is to stay persistent this time around.

    In concurrence with the recent development, Mr Jason Wong, Research Manager of FSMOne Malaysia commented: “On one hand, inflation is reducing the purchasing power of consumers. On the other hand, rising interest rates means that consumers are “forced” to absorb these rising borrowing costs. These are double whammies for consumers which would lead to dwindling disposable income while wages and salaries are hardly changed.”

    “Nevertheless, Bank Negara Malaysia’s move through its raise of Overnight Policy Rate (OPR) in May 2022 by 25 bps to 2.00% is commendable as the central bank is being proactive to stave off rising inflation in the country. At the same time, we believe this move will cushion some of the negative impact on the Malaysian Ringgit caused by the Fed’s recent aggressive interest rate hikes.”

    “The Research Team at FSMOne foresees that the central bank will make another 3 more 25 bps hikes to the interest rate during the remaining Monetary Policy Committee Meetings (MPCs) that are set to take place this year. We believe the central bank does not wish to make the mistake like Fed did, by hiking rates too slowly and letting inflation to spiral out of control. Hence, BNM stays abreast on this matter,” said Mr Jason Wong.

    Translating this to the current daily living of majority of people, Jason further elaborated that the current economic situation has led to Hobson’s choice moves by the Government. “Government has started the removal of subsidies moderately. As the pandemic came along with the Ukraine-Russia war recently, where supply chains were disrupted and shortages increased, many household commodities prices have been soaring up. China’s lockdown at certain provinces also affected major productions of industrial parts that they supply to Malaysia and other countries. Domino effect took place and subsequently, our local production is delayed resulted from this and affected end users as well.”

    “All factors combined and ramped up, these contributed to the increasing inflation in the country. Malaysian Government is now challenged to cope with the increasing cost of many commodities,” added Mr Jason Wong.

    By 1 July, the prices of eggs and chicken are expected to increase from the current price, RM8.90 per kg. The Prime Minister recently announced that the new ceiling price for chicken will be announced by Agriculture and Food Industries Ministry (MAFI) soon. The price ceiling for bottled cooking oil weighing 2kg, 3kg and 5kg will also be removed on 1 July.

    Based on these factors, it is foreseen that Malaysians will be facing greater food security issues as food items, even eating out, will be more expensive. In addition, food supplies could be tighter than before which may lead to limited quantity to be sold to consumers.

    Besides food security, majority of Malaysians are challenged with job security in terms of disposable income, as basic items are getting more expensive and possibly overall wholesale, retail and trade sales would drop as an effect to this. Malaysians may have no other choice but to start cutting off expenses and tighten their budget to match with their monthly income.

    Not to mention commodities and energy prices are also increasing higher than ever. RON97’s price is now lifted to RM4.84 per litre from RM3.94, which was last recorded on 11 May 2022. Although the price of RON95 has not changed from RM2.05 per litre, but it is foreseen that the price of RON95 may follow suit RON97 at certain point of time. It is just a matter of sooner or later. However, the water and electricity tariff maintain in Peninsular Malaysia.

    What does this mean to all Malaysians? Are we expecting recession in the near future?

    We are living in the bubble of protection from the Government today, with the lifting of fuel subsidies, like a balloon, as the air pressure increases internally, it’s only a matter of time, the rubber material gives way and pops.

    About FSMOne Malaysia and iFAST Capital Sdn. Bhd.

    FSMOne Malaysia (previously known as Fundsupermart.com Malaysia) is a Multi-Asset Investment Platform under iFAST Capital Sdn. Bhd. (“iFAST Capital”), established in Malaysia since 2008.

    iFAST Capital is a holder of a Capital Markets Services Licence (CMSL) and is licensed by the Securities Commission to deal in securities (includes Stocks & ETFs, unit trusts and OTC bonds), dealing in private retirement scheme, offer investment advisory services, financial planning services and fund management services in relation to portfolio management.

    iFAST Capital is a Federation of Investment Managers Malaysia (FiMM) registered Institutional Unit Trust Adviser (IUTA) and Institutional Private Retirement Scheme Adviser (IPRA). It is also an approved Financial Adviser licensed by the Central Bank of Malaysia to conduct financial advisory business and also a Participating Organisation of Bursa Malaysia Securities Berhad.

    iFAST Capital is a subsidiary of iFAST Malaysia Sdn. Bhd. which is wholly owned by iFAST Corporation Ltd. (“iFAST Corporation”). iFAST Corporation is headquartered in Singapore and the iFAST group of companies are also present in Hong Kong, Malaysia and China. The company was incorporated in Singapore on 10 January 2000.

    iFAST Corporation was listed on the Singapore Exchange Mainboard in December 2014.

  • A Comprehensive Approach To Building Personal Wealth

    A Comprehensive Approach To Building Personal Wealth

    When it comes to success in personal finance, investors oftentimes relate their personal wealth to a measuring performance index. We are immersed in our busy schedules primarily to create more wealth.

    It is fair to say that when it comes to wealth creation, everyone will be interested, but not everyone will know how to achieve it. Some may end up getting a less desirable outcome from their wealth creation attempt.

    Creating More for the Future

    Generally speaking, the goal in mind in wealth creation is so that our future wealth will be more than the wealth we presently have.

    If you are not careful, however, you can get wealth reduction as an entirely opposite outcome instead. This will be unfortunate as we will not be able to turn back time, which eventually means we will have to either delay our plan, or make drastic adjustments to the new reality of the future.

    Invest to Create Wealth

    A simple way to wealth creation is to increase income while keeping expenses at status quo, or spend less while income remains status quo, or we achieve additional wealth via investing.

    However, chasing more income requires trade-offs like having less time for other aspects of life such as family time, hobby or leisure. Likewise, to spend lesser also requires compromise in not living the most desired lifestyle or you may have to forgo changing to the next new smartphone, or fashion trend. Investing our hard-earned money also has a trade-off. It needs the investor to take a risk and accept that “cash is king” is not always right.

    Throughout my experience and the many cases I have seen, it is common to observe that people have their primary focus on growing their wealth so much that they at times overlook some factors. Avoiding wealth reduction or reducing the extent of wealth reduction is perceived to be one step closer to greater future wealth.  

    In sport, sometimes people say that the best defence is the best offence, because you are more likely to be in a position of not being defeated. Thus, we should try to train ourselves to consciously pay attention to minimising the leakages or waste in our financial system while we attempt to invest to grow our wealth. At least when we do this simultaneously, we will have more than “one engine” running our wealth creation process.

    In the worst case scenario, investment outcome may be capital loss and wealth reduction due to certain vagaries such as paying medical bills from our own hard-earned savings, penalty on income tax bills, or under-estimating inflation, overlooking on currency hedging, children’s education expenses, and so on.

    Wider View of Personal Finance

    As a financial planner who believes in comprehensive financial planning, I would suggest that a person look at personal finance from a comprehensive angle that includes:

    • Cashflow and debt management
    • Retirement planning
    • Education fund planning
    • Asset protection planning
    • Tax planning
    • Estate planning
    • Insurance planning
    • Investment planning

    It is not difficult to hear real life stories where a person has set forth to invest their money hoping to see a positive return on investment (ROI) in a few years’ time, only to find that their capital was lost. In fact, it could be that only a handful of investors are well aware of what they are investing in. Many of us may not know that we are paying excessive fees for the investment, or some may not even know that such fees exist. Ultimately, fees are always a factor that will eat into our return.

    Risky Ventures

    I have also seen investors who disregard the need to have health insurance, but they are very focused in making risky investment such as penny stocks, or leveraged investing. Wealth creation strategy like this generally assumes that life will move in a straight line and the anticipated investment return will be positive and without much volatility that may hurt their standing.

    But in real life, anything could happen, and we may have sudden need of cash and fund, if we are not careful and do not have a decent financial foundation, we may then be forced to put our hand into our investment and make unplanned withdrawal, if at the point of withdrawal, the investment is making a loss, we will then be realising those losses. This is a sure way to lose your money, and if you are sane you will not be interested to do this.

    Apparently, “cash is not king” but cashflow is king. Therefore, when we set out to take adventurous ventures with our money, or to create a new business start-up, it is best we ensure that our cashflow position is within our control and is stable, and that we have a safety net to cushion us should there be an unexpected fall. This is what people usually call an emergency fund or buffer.

    When our cashflow situation is healthy and we also prepare a safety net to weather challenges and unexpected events, then our wealth creation process will become less risky. An entrepreneur personal financial management will very likely impact the financial success of their business, and vice versa. So, it is also important for business owners to separate their personal financial affairs from their businesses. As we embark on the journey of wealth creation, perhaps it is in our best interest to recognize that there are things that are well within our control to reduce or increase wealth creation process will become less risky.

    An entrepreneur personal financial management will very likely impact the financial success of their business, and vice versa. So, it is also important for business owners to separate their personal financial affairs from their businesses. As we embark on the journey of wealth creation, perhaps it is in our best interest to recognise that there are things that are well within our control to reduce or increase wealth.

    About the author

    kevin neohKevin 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. 

  • Debt Management: Bad Debt vs Good Debt

    Debt Management: Bad Debt vs Good Debt

    A middle-aged executive named John finished work, drove home, and the very first thing that he saw was an envelope that contains the latest credit card statement. It states:

    Outstanding Balance: RM 36,867.44.

    He was overwhelmed and pondered, “How on earth am I going to clear off my credit card debt? It’s way too much, and I don’t have much cash in my bank account to do so. I’m so screwed.”

    If this sounds like you, fret not – let this article be a helpful guide on how to move forward.

    1. What’s a Bad Debt?

    First, not all debts are bad. There are two types of debt: Good Debt and Bad Debt.

    Good debt is debt that makes you richer. For instance, property investors are experts in using debt as their leverage to expand their property portfolio and thus, have become wealthier as their properties’ value continue to appreciate over time.

    Bad debt is debt that makes you poorer. For instance, many borrow money to buy things where their value drops over time, thus, resulting in the person becoming poorer. These debts include credit card debt and personal loans, where the interest costs are substantially higher than collateralized obligations like a mortgage.

    2. Discover the Root Cause

    debt root problem

    For some, such is life. For many people, their debts may stem from medical bills, a failure in business, a pay cut, or job loss. If this is you, just know this: It’s temporary and you may proceed to Point #3 to work on a solution.

    In most cases, having excessive bad debt is more than just a financial issue – it can be a psychological issue. I believe there is a deeper cause that might be the main culprit to your financial problems. For example, let’s say now you don’t have much money. Why do you:

    • Buy stuff that you do not need?
    • Attend expensive social gatherings?
    • Go on a holiday trip overseas?

    3. Work with a Partner

    debt

    If you are young and single, you may consult your parents for some financial advice. In many cases, you might even receive some financial grace which is much needed as a temporary relief to your problems.

    But, with that said, you might lose a valuable chance to improve your financial intelligence as you’ve been bailed out. But, if you opine: “I still want to solve the issue like a man”, then your next best option is to find a friend whom you trust and is more financially-savvy than you to impart some financial wisdom to you.

    If you are in a relationship, it’s ideal for you to work on these financial issues as a team. It’s helpful, but not easy, to be transparent about it and to find the solutions together. One thing is for sure: Both of you will come out stronger and more refined as a couple after you have cleared your bad debts.

    4. Go on the Offensive

    If you have little financial resources to work with, you may set a small goal to raise another RM500 a month which is dedicated to clear off your bad debt.

    It may be hard initially. But, if you have learnt how to raise RM500 a month to clear bad debts, very soon, you’ll also know how to raise even more which could be used for your investments.

    Here, I’ll share a guideline that enables you to take baby steps towards your freedom from debt. Firstly, you can split the RM500 a month into two categories:

    • Earn RM250 a month
    • Cut RM250 a month in expenses.

    Secondly, here’s a list that you can do to:

    Make RM250 a month

    • Do Overtime
    • Make more sales if you’re a salesman.
    • Take up one or two freelancing jobs.
    • Sign up as a Grabcar driver.
    • Have a part-time job.
    • Give tuition classes to school kids.
    • Sell your unwanted stuff on eBay or Mudah.my
    • Refer customers to your business friends for a commission.
    • Join MLM, sell insurance, but please … don’t join money games.

    Save RM250 a month

    • Track your expenses. You’ll find items to cut on very quickly.
    • Say ‘No’ to expensive social gatherings.
    • Say ‘No’ to smoking, alcohol, nightclubs and KTVs.
    • Say ‘No’ to gambling.
    • Cut entertainment expenses.
    • Cancel expensive gym memberships. Run in the park or do Tabata at home.
    • Cancel Low-Yielding Unit Trust Investments.
    • Cancel endowment plans with Low Sum Assured.
    • Exercise delayed gratification.
    • Quit drinking Starbucks or reduce four RM15 drinks a month.

    5. A Word on Balance Transfers

    debt credit card balance transfer

    Being aware of the latest promotion of Balance Transfers is helpful. Having said that, it’s essential for you to check the following before agreeing to do a balance transfer on your credit card debt:

    • Is it on an Effective Rate or Flat Rate?
    • Is it calculated based on an Annual Rate?
    • What are the clauses for Early Repayment?
    • How much is your monthly repayment after doing balance transfer?

    If you are not sure whether a Balance Transfer is to your advantage, you may consult a trustworthy friend first before proceeding with it.

    About the Author

    This article is co-written by KC Lau and Ian Tai.

    Ian Tai is a Dividend Investor. Financial Content Machine. Producer of 200+ Articles, Weekly Host and Presenter at KCLau.com. Co-Founded DividendVault.com, an online educational membership site that empowers retail investors to build a stock portfolio that pays rising dividends in Malaysia and Singapore. 

    KCLau is a financial educator, having published seven books including the current bestseller Money Smart, and co-created a dozen online financial courses. He gives away his popular Money Tips e-book volumes free at his website: https://KCLau.com

  • The Future of Retirement?

    The Future of Retirement?

    Retirement, is defined as the ending of working phase in life, which is anticipated to be one that is dominated by leisure that is paid for by savings and benefits accumulated during the employment phase. This is how most investment companies sell retirement plans ideas anyway.

    There seems to be a great divide of lifestyle – before and after retirement period.  But most people who have experienced the shift would tell you otherwise, especially as we journey into the future with increased longevity, greater responsibilities, eroding filial piety, shifting attitudes and different economic landscape.

    The idea of retirement would be rather different, say by 2050. I would think that in the future, the younger cohorts may not know the word retirement, either due to circumstances or by choice.

    Stop Working? No Way!

    “Oh I don’t plan to retire. I’ll work till I die. It’s more fulfilling.”

    This is a phrase we hear increasingly often nowadays. Unfortunately, this may soon be a reality for many of us, as the sociographic landscape is bound to evolve in years to come.

    The societal acceptance of single living or family without kids has dropped birth rates historically low, causing our projected population to be made out of a growing number of the elderly.

    This would undoubtedly affect our dependency on the older generation to contribute to the workforce. Coupled with the increase in retirement age following the increase in life expectancy in the next 30 years, we would have no choice but to let the elderly continue working for the betterment of our economy.

    Work? Leisure? Why Not Both?

    retirement

    Friedmann and Havighurst who first defined the concept of retirement  which we think of today, in a 1954 research found that people at that time viewed retirement as a time that they could truly engage in leisure activities and that their working age was the period of time to save towards this end.

    However, fast forward to today and towards the future, when general standard of living increase and leisure becomes more accessible and affordable, not to mention more varied, we tend to enjoy both work and leisure at the same time.

    This makes the concept of retirement seems less convincing and attractive. In the past, people did not see work and the workplace as central to their life interests.

    Today, as the pace of economic growth quickens, we look at our career as being central to our lives, and as work and leisure become inextricably interwoven, Friedmann and Havighurst’s idea of retirement as a discrete phase of life dedicated to leisure becomes less relevant.

    Blessed With Longevity

    With progress in medical treatments and the rise of health-conscious lifestyle through better awareness, an extended life expectancy can be expected.

    There is a high probability that life expectancy will continue to increase in industrialised countries in the Americas, Australia and the Asia- Pacific. Already, the average life expectancy will increase in many countries by 2030 – with South Korea expected to exceed 90 years of age. (Source: A 2017 analysis by Imperial College London and the World Health Organisation)

    As life expectancy increases, people are also living healthier lives both physically and mentally, and being “too old” to work may seem to come much later in life than anticipated.

    Some would argue that the elderly would become irrelevant due to technological knowledge demands. We might be able to say this about the elderly of yesteryear, but it certainly would be different for current generations which grew up with technology and the Internet of Things, and whose lives are being intertwined with technology whether they like it or not.

    Shifting Attitudes – Do You Even Want To Retire?

    retirement

    As jobs turn into careers and knowledge or experience is prized over physical labour, we value our contributions to the society.

    With mundane jobs and repetitive tasks are replaced by technology and artificial intelligence, our society in the future would be left with nothing but intellectual jobs.

    Having to stop working all of a sudden would certainly leave a gap in a person’s purpose in life, especially when filial piety is on a downtrend as well.

    As we crystal-ball into the future, the very idea of retirement may seem invalid as people would continue working until they are mentally incapable. Indeed, the very idea that a person stops working and becomes irrelevant to society does not sound like a very appealing thing to do.

    Do You Still Need Financial Planning?

    With all that said, having a financial plan will allow you to successfully not retire. Financial planning is far more expansive than just “save for retirement.” There’s a lot of life to live between now and when or if you decide to stop working.

    There are plenty of other short-term goals and milestones in your life that you likely want to hit – starting a new venture, growing your family or buying a new home and traveling around the world. And financial planning provides a system and a process to make some of these goals possible.

    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

  • How Can You Save Money Without Even Realising It?

    How Can You Save Money Without Even Realising It?

    Life can throw us curveballs unexpectedly. Some of the events can be devastating and when we get hit, it could make life hard for many. To some, it may not be a significant event but to others, it may be a huge blow.

    Whether or not it is a huge blow, it boils down to whether or not we are in a good or healthy position to deal with the consequences and many a time, it involves spending or using money to solve or put off the fire.

    When these surprises happen, we have to deal with it and make adjustments.  Generally, we have these three choices:

    • Extend our timeline;
    • Forgo our goal;
    • Live with regret.

    Of Critical Importance

    save money

    That is what makes having emergency funds or savings a critically important item.

    I have seen many people in “thin” situations financially. In fact, not too long ago, it was reported in news that many young people (75% as a matter of fact) admitted that they would not be able to fork out RM1,000 to deal with unexpected emergencies. This shows how fragile we are.

    If you think that this news is unfounded, please know that the source of the alarming data is the central bank of Malaysia, so, this is certainly no fake news. In another news, we were told that working Malaysians could not survive six months if they were to lose their income.

    How to Put Money Away Easily

    Is there a good way for people to save money and ensure the money gets saved? The easiest way − and I have seen it working countless times − is to save the money you bring home without you being aware of it, or having to remind yourself to do it.  

    Automatically Move It

    The first way is pretty simple. You just have to login to your internet banking and look for the transfer of fund button, make it automatically repeat on a monthly basis on a date you are certain your salary will be credited to the account (don’t pick a date that is too far away from this date but try to be within a three-day range).  

    This mean you will have successfully “outsourced” this job to your online banking system in that it moves your money from your salary-receiving account to another account without you having to worry about forgetting to do it.

    However, it is important to note that you nominate an account you will not have easy access to, like an account without an ATM card, or an account that has very few branches or that each MEPs withdrawal will cost more than RM1.06.  The trick is to move the money where it will not be easy to make unplanned withdrawal or spending.

    Park at Flexi Mortgage Account

    save money

    If you have a flexi mortgage account, you can also “park” your money there. It will benefit you and help you to retain the money as a rainy day fund.

    Liquid Cache

    Alternatively, you may set up a standing instruction to move this saving into a money market fund or cash management fund. It is important for our rainy day fund to be liquid-like cash and money in a savings account, as these two options provide this feature.

    Big No-No

    If you are trying to force yourself to save money by signing up for an insurance endowment or savings plan, this may not be the best thing to do because when you signed on the dotted line, you are in fact agreeing or committing to pay the fixed amount of premium over a long term period which could be five to 20 years or even longer. This means you will not be able to withdraw the amount you may need in an emergency, unless you are in the late stages of the policy life or have past the guaranteed premium paying years.

    It is important to note that the instrument or place we choose to park our emergency or rainy day fund has the right criteria and characteristic, and is safe, liquid, and cost-free.

    About the author

    kevin neohKevin 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. 

  • Secrets To A Long Life

    Secrets To A Long Life

    The search for “the fountain of youth” has had a long history, from tracking down sacred, life-giving water sources in the days of antiquity, to the invention of “miracle pills” and stem cell research in the modern age.

    You are born with approximately 20,000 blood stem cells, which your body uses to replenish your blood. Over time, and depending on the “abuse” you put your body through, these cells become damaged and die. As your blood stem cells dwindle, your body becomes less efficient at repairing and regenerating itself.

    In essence, your blood stem cells may be the proverbial “clock” that eventually runs out, no matter how well you take care of yourself. In the meantime, however, you have a great deal of control over how quickly those cells perish.

    Is your personality geared for longevity?

    Personality for Long Life

    life, the longevity project

    According to results from The Longevity Project, a Stanford study spanning 80 years, your level of conscientiousness may have a great deal to do with how long you end up living. Having a personality that strives to do things well; being thorough and vigilant − this is a trait that most of the people who live the longest share.

    Sense of Purpose

    The Longevity Project also dismisses the idea that hard work will kill you early. On the contrary, those who stayed productive and worked hard all their lives tended to be happier, healthier, and more social compared to those who didn’t work as hard. That’s not to dismiss work stress as a factor that needs to be addressed and kept in check.

    Social Connection

    life socially happy

    But being productive can also lend a sense of purpose, which is very important for longevity. And working—especially in your later years—tends to keep you socially connected, which has repeatedly been shown to be an important factor for longevity.

    You Are What You Eat

    No discussion about longevity would be complete without addressing diet. A processed, high-sugar diet is undoubtedly the quickest route to an early death, barring a lethal accident. This is because consuming sugar and grains increases your insulin and leptin levels, which is the equivalent of slamming your foot on your ageing accelerator. Besides that, research by Professor Cynthia Kenyon shows that carbohydrates have a direct and detrimental effect on two key genes that govern longevity and youthfulness.

    Ideally, you’ll want to replace all forms of processed and refined sugars and grains with healthy fats such as butter, olive oil, coconut oil, avocado, grass-fed meats, and raw nuts. Many would benefit from getting as much as 50-85 percent of their daily calories from fats.

    Mindfulness and Perpetual Motion

    active life

    There’s compelling evidence suggesting that having a calm mind and active body are two important ingredients for longevity. The meditative technique known as “mindfulness” has even been shown to have a beneficial effect on genetic expression. Meditation has also been found to affect the enzyme telomerase, which some researchers believe is actively involved with the process of ageing. As for keeping your body active, avoiding sitting is perhaps of even greater importance than having a regular workout regimen.

    The science is very clear on this point: sitting too much is a surefire way to take years off your life! And that applies even if you exercise vigorously a few times a week. Basically, what the research is telling us is that getting too hung up on a once-a-day exercise routine is to put the cart before the horse. First, you need to make sure you’re engaging in more or less perpetual non-exercise movement, as this is an independent risk factor for chronic diseases like diabetes and heart disease.

    Life Long Learning

    Education is also strongly correlated with a longer life. If you think you know it all just because you went to high school or college, you might as well pack it up. It’s all downhill from there. My perspective is to be a lifelong student. If I lived for several hundred years, I don’t think there is enough time to learn all the topics I would like to. That said, merely getting an education can have a great impact, and perhaps it’s because it teaches you to be a student.

    Lifestyle Choices Today Impact Tomorrows

    good lifestyle choices impact your tomorrow.

    The takeaway message here is that you have a great deal of control over your life expectancy, based on the personal choices you make − from how you think to how you move, and what you choose to eat − and when.

    In the end, there is no quick fix when it comes to longevity. There is no magic pill and no fountain of youth. Although some people seem to be blessed with longevity in spite of their lifestyle choices, this is the exception and not the rule. For most of us, becoming healthy Centenarians will require effort and attention to the factors discussed above.

    This article was brought to you by Dr Mercola, a New York Times bestselling author. For more helpful articles, please visit Mercola.com

  • What Will Happen if You Don’t Pay Your Maintenance Bills?

    What Will Happen if You Don’t Pay Your Maintenance Bills?

    With prices of landed properties being way beyond what an average home buyer can afford in city areas like Kuala Lumpur and Penang, living in apartments or strata homes will be the norm for the future generation of urban homeowners.

    ‘Pay thy maintenance bills’. This is mentioned in one of the ‘sacred text’ better known as “Strata Management Act”, where it decrees that all strata home owners have to pay their maintenance fee.

    So, what’s a maintenance fee, you ask? It is the fee that would be collected from the owners within the strata development to be used for repair, maintenances, security and upkeep work of the common property.

    Consider this scenario: You have not paid your maintenance fees for the past six months and the management has been calling you day and night but they have not taken any action against you. You would think that you are invincible since all they can do is to annoy you with phone calls or email reminders. 

    You thought that the Joint Management Body (JMB) or Management Corporation (MC) (collectively known as the Management) is toothless and unable to do anything to you or your property.

    Think again! Let me shed some lights on what can happen to you if you continue to ignore the payment of your maintenance bills.

    1. Block Your Access to Shared Facilities

    The Management is legally able to restrict your rights to using the shared facilities such as gyms, swimming pools and clubhouses. Not only that, they are also allowed to evict you from said facilities if you’re ever caught using them.

    But for some, this may not be a problem as you don’t use these facilities anyway. So what else can they do to you?

    2. Send You Legal Letter of Demand

    maintenance bills

    There is no minimum amount of outstanding fees needed to send a lawyer’s letter of demand. As long as the legal notice remains unpaid after 14 days, the Management can proceed to bring the matter to court which may cost you even more money or may even land you in jail.

    3. Disable Your Access Pass Card

    While they may not be able to chase you out of your dwelling in the interim of any court order, they do however have the right to disable your access pass. This may compel you to enter the compound as a visitor and the inconvenience of registering as a visitor each time you come home.

    4. Blacklist Your Name on the CCRIS and CTOS

    maintenance blacklist

    Although you can bear some of the inconveniences, it may hurt you financially when your name appeared as a defaulter in your CCRIS and CTOS credit reports.

    Both CCRIS and CTOS show your credit payment ability and all of your financial commitments, which are used by financial institutions to determine your credit worthiness. This would affect your opportunity of getting better financial deals in terms of the quantum and interest rates when applying for a loan or a credit card.

    5. Having Guards Following You to Your Doorstep

    Still not convinced? If you still have not paid for your maintenance fee, the Management has the right to have a security guard follow you around, that is, to your doorstep when you arrive and to your designated car park when you leave the place. This is to prevent you from using any of the shared facilities when you are in the compound.

    6. Auction Your Personal Belongings

    maintenance furniture

    I bet you weren’t expecting this. You haven’t paid your maintenance fee in the past 10 months, and they cannot force you out of your house, and despite making matters difficult for you, you were able to live with the hassle.

    Now what if I tell you that by law, they are able to get a warrant to go into your house to take your personal belongings such as your laptop, computer, furniture and even clothes to be auctioned off to pay off your maintenance debt!

    In a bid to get defaulters to pay their maintenance fees, the Management can get a warrant to raid and seize the moveable items from their properties with the help from the Commissioner of Building (COB) and the government.

    The message is clear – pay your maintenance bills. While some JMB/MC may be quite forgiving and take a more passive approach on delinquent tenants, there are the more aggressive ones who would not hesitate to take such actions.

    Living in a community requires each one to play their role to ensure that the whole community benefits. Remember, maintenance fee will always be part of the deal when buying into a stratified development to take care of the development’s common property and services.

    Delays in paying your maintenance bills in timely manner will cost you more with interest charges and late payment fee. Therefore, as part of your financial plan, take into consideration this monthly obligation once you have committed to purchasing a strata title home.

    About the Author

    Chan Ai Cheng is the General Manager of S.K Brothers Realty (M) Sdn. Bhd.

     

     

     

     

     

     

  • Should I Take Out My EPF To Settle My Housing Loan?

    Should I Take Out My EPF To Settle My Housing Loan?

    I saw a news today regarding housing loan, and there are many netizens comment that they took their Employees Provident Fund (EPF) money to settle their housing loan earlier.

    Is it a wise decision to take out EPF money to settle housing loan earlier?

    Here is an example:

    Housing loan amount: RM199,000
    Interest rate: 3.15%p.a.
    Loan tenure: 25 years
    Outstanding balance at the end of 15th year: RM98,635.60

    Based on the information above, if I would like to do early settlement, I have to take out RM98,635.60 from EPF to settle off my housing loan at the end of 15th year (180th month).

    According to the calculation shown below, I can save a total of RM16,477.72 interest for early settlement.

    However, I could have made a potential of RM62,031.40 dividend if I leave the RM98,635.60 at EPF with expected 5% annual return (expected return based on past performance) for 10 years.

    I might be earning additional RM45,553.68 (RM62,031.40 – RM16,477.72) dividend if I do not take out my EPF to settle off my housing loan earlier.

    Hope that this simple calculation can solve the doubt of everyone who is planning to take out the EPF to do early settlement.

    Yet, I received some queries regarding the high housing loan interest rate of about 4%-5% in 20 to 35 years back, is it worth to take out the EPF to settle their housing loan when the rate increases back to 5%?

    Based on EPF historical performance, the time where the housing loan interest rate is at about 5%, the EPF dividend is about 7%-8%. Despite the historical performance does not guarantee future performance, but it can always serve as a guide for us before making our financial decision.

    About the Author

    Angel Chan is a Licensed Financial Planner attached to UOB Kay Hian Wealth Advisors Sdn Bhd. Besides providing comprehensive financial advisory to her clients, she is also committed to educate the public about the correct financial management mindset and methodology through article, YouTube video and Financial Management Workshop conducted by her and the team. Do reach out to her for more information.

    FB page: https://www.facebook.com/angelchan.financialplanner

    FB page: https://www.facebook.com/profinance.my

    YouTube channel: https://www.youtube.com/channel/UCf5f7O3vuOhnwy_wflDuuKA

    Smart Finance: https://smartfinance.my/planners/chan-aun-kei-rfp

    To book a free 1-hour consultation with Angel Chan: https://forms.gle/8Ur46Dox9T6g3yKS8

  • Insurance: Planning for the Future

    Insurance: Planning for the Future

    Insurance planning is the foundation of a good financial plan, ensuring that you have a backup plan to provide enough family income and to fund medical expenses in the event of unforeseen circumstances such as premature death, total permanent disability, critical illness, accidents and hospitalisation, in terms of personal risk.

    You should also extend your insurance planning to cover properties risk, liability risk and professional liability risk based on your circumstances and needs.

    In the financial planning process, you must first determine your current financial position and make sure you have emergency funds for six to 12 months before you proceed to insurance planning.

    With proper assessment of your current financial position, which includes your cash flow and net worth statements, you can determine your insurance needs more clearly in terms of family expenses and outstanding debts obligations.

    insurance

    As a financial planner, I would normally advise my clients to have adequate emergency funds and insurance coverage before they consider venturing into investment. As far as investment is concerned, all investment assets need time to mature to meet your financial goals without any disruption from personal risks, property risks, liability risks or professional liability risks arising from unforeseen circumstances.

    Insurance serves as the cheapest and most effective tool to cover potential financial losses without touching your investment assets.

    When engaging in insurance planning, seek advice from your trusted professional financial advisor to assist you while working out which insurance plan will best fit the requirements of you and your family, according to the following guidelines:

    • What kind of insurance do you need?
    • What will your insurance policy cover?
    • How much insurance coverage do you need?
    • How much will you be paying for the insurance coverage?
    • What happens if you fail to pay the required premiums?
    • Should you replace an existing insurance policy?
    • What happens if you terminate your policy?
    insurance

    Your active participation is required when working with your financial advisor to work out an insurance plan that best suits your needs. Be honest about your financial situation. Communicate your goals and objectives. Do not be afraid to ask questions! 

    In the attached charts, I have provided some guidelines as to the types of insurance coverage to consider. You may then determine the quantum of coverage to ensure you and your loved ones are protected. Take time to make your decision. Regard your financial advisor as a trusted partner, and not merely a salesperson.

    What Type of Insurance Do You Need?

    If you are worried about… You may want to consider this type of insurance…How it helps…
    Life insurance
    Death of breadwinnerLifeProvides some money for your family if you die.
    Total & permanent disabilityLifeProvides some money for your family if you suffer from a total or permanent disability.
    Death of mortgagor/main borrower of home loanMortgage term reducing insurance (form of life insurance)Pays off mortgage if mortgagor dies.
    Health insurance
    Trauma/critical illnessCritical illnessPays a portion or lump sum on first diagnosis of serious illness.
    Medical bills for major illness or accidentMedical expense,
    other hospital and medical plans & riders    		The main medical expense insurance plan pays a portion of hospital and surgical costs if you are ill or suffering from injuries due to an accident. Complementary plans such as riders cover co-payment portions (eg deductibles and co-insurance) that are not covered under a main plan.
    Long-term care for disabilityLong-term care, eg supplementsPays a fixed monthly amount for long-term treatment upon the insured’s inability to perform a number of “activities of daily living” like bathing, dressing, etc.
    Loss of income because due to hospitalisationHospitalisation cash plansProvides income if you are hospitalised.
    General insurance
    Loss of or damage to your belongingsHome contentsPays for repairs or replacement if you suffer loss or damage to your home or contents.  If you are renting your home, it’s your responsibility to cover loss of or damage to the contents of your home.
    Damage to car/theftCarPays for repairs or replacement if your car is stolen or damaged.
    Damage to your homeFire/homePays for repairs or replacement if you suffer loss or damage to your home as a result of perils such as fire, flood, and burglary.
    Loss of luggage/trip delays/cost of medical care while travellingTravelPays for repairs or replacement if you suffer loss or damage to your belongings. Also pays for financial loss if there are delays or cancellations. Pays for costs related to personal accidents while overseas, including medical and repatriation expenses.

    About the Author

    Tan Kim Book, CFP, IFP is a Licensed Financial Planner with Phillip Wealth Planners Sdn Bhd and certified member of Financial Planning Association Malaysia (FPAM). 

  • 7 Rights As A Financial Planning Client That You Should Know

    7 Rights As A Financial Planning Client That You Should Know

    Working with a financial planner can be an extremely rewarding and valuable experience for you and your family. If you’ve decided to work with a financial planner, it’s important to understand your rights in the professional relationship. By knowing your rights and what to expect from a financial planner, you can take an active role in shaping your financial future.

    1. You have the right to a planner who has integrity

    financial

    Trust between you and your financial planner is central to a successful financial planning relationship. You rely on your planner’s honesty, professionalism and abilities to achieve your financial and life goals.

    When you know that your financial planner takes his or her professional obligations seriously, placing principles over personal gain, you can develop the type of partnership that is crucial to the success of any professional relationship.

    2. You have the right to objective advice

    Your needs should be at the heart of all recommendations made by your financial planner. Your financial planner should use his or her experience and judgment to carefully consider your situation, and provide you with advice that best meets your goals.

    Sometimes, this objectivity may require your financial planner to explain that your goals are unrealistic given your current resources and financial commitments. He or she may then suggest alternative goals or priorities.

    3. You have the right to be treated fairly

    Your financial planner should treat you the same way he or she would like to be treated in a professional relationship. This involves clearly stating what services will be provided and at what price. Your financial planner should also explain the risks associated with his or her financial recommendations and any potential conflicts of interest.

    For example, does her or she gain personally or financially from your purchase of a particular product, or from the outcome of a suggested strategy?

    4. You have the right to a planner who is professional

    Your financial planner should not provide investment advice or stock brokerage or insurance services unless he or she is properly qualified and licensed to do so. If your situation requires expertise that your financial planner does not have, he or she
    should suggest other professionals who may assist you.

    5. You have the right to a planner who is competent

    You have the right to expect your financial planner to demonstrate an appropriate level of knowledge to offer financial planning advice, such as the attainment of CERTIFIED FINANCIAL PLANNER certification, the standard of excellence in financial planning.
    Your financial planner should complete continuing education courses as part of his or her ongoing commitment to competency.

    6. You have the right to privacy

    To get the best results from your financial planning relationship, you need to divulge relevant personal and financial information to your financial planner on a regular basis. Your financial planner should keep this information in confidence, only sharing it with others to conduct business on your behalf, at your consent, or when required to do so by court order.

    7. You have the right to a planner who is diligent

    Your financial planner should discuss your goals and objectives with you and explain what you can expect from the relationship before engaging you as a client. Once the financial planner has determined that he or she (or his or her staff and/or network of related professionals) can assist you and has gathered sufficient information, the financial planner should make – and, if appropriate, implement – recommendations that are suitable for you.

    A diligent financial planner reasonably investigates the products or services he or she recommends. A diligent financial planner also closely supervises any staff working with you.

    This article is courtesy of Financial Planning Standards Board Ltd (FPSB).