Inovatif

Category: business

  • The Amazing Reconciliation Of Father And Son, And This Reflected Inside The Will

    The Amazing Reconciliation Of Father And Son, And This Reflected Inside The Will

    The following story is based on an actual series of events, with some names and circumstances fictionalised. Any similarity to any person’s name, character, or history is coincidental and unintentional. Family in-fighting is common, but it should not hurt family ties and ultimately cause things to flow inside the will.

    David is a successful businessman who worked very hard building up his multi-billion dollar ceramic tile manufacturing business. So hard that he had little time for home and family, far less than he should have for bonding with his two sons, Ethan and Ben.

    Ethan was the older brother. A slow and steady person. Reliable. Non-controversial. Compliant. But unimaginative. He worked as the chief quality controller in his father’s business.

    Ben was a very bright child. The apple of his father’s eye during his younger days. The one his father hoped would take over the business in time.

    Read: He Had Everything But Children’s Harmony In The Family Business

    Don’t Make Hasty Decisions For Things Inside The Will

    One day, David called me to lunch at his office. Over dim sum, he told me he wanted to revise his will. Many years earlier, I had written a will for him when he wished to leave his business equally to his two sons and the rest of his assets to his wife.

    He instructed me to change his will to cut off Ben and set a small portion of his estate for a trust, RM10 million to be precise, to cater only for Ben’s basic needs for the rest of his life. I was shocked because his business, listed by then, was worth some RM500 million.

    “Are you sure?” I asked him. He suddenly looked downcast and said yes.

    “Why the great disparity between the allocations for the first and second son?” I asked.

    David said that Ben, after university, had worked in his company as the business development manager. Unfortunately, he became an alcoholic, to the deep disappointment of his father, and set a bad example in the office, often coming in late, slurring in his speech and reeking of the smell of alcohol.

    Read: Being An Executor Of Will Is Not As Easy As It Seems To Be

    Ties Can Be Repaired Before Finalising The Details Inside The Will

    I told him a clause would have to be added in the revised will to explain why he was excluding Ben from inheritance through the will. I also mentioned that he should talk with his wayward son before finalising the details inside the will.

    He said he had made up his mind, but I asked him whether he had considered that the underlying cause of the son’s behaviour and addiction could have been because he had been too harsh and draconian with the son without listening to his issues.

    He stopped in his tracks, stared into space and remained silent for a long while. He sent me off and said he would be in touch.

    After two months, he called me to meet again to discuss his new succession plans and to change the details inside the will. To my surprise, this time, his instructions were to leave the business 51% to Ben and 49% to Ethan.

    Anticipating my question, he said he finally concurred with Ben through a weekend trip. His son had turned to alcohol to vent his frustrations because of a perceived lack of listening ear from his father for many years. After many souls searching, the son had gone for
    rehabilitation treatment and managed to kick out his addiction.

    Needless to say, the father was ecstatic over his change and hence the revision of his will. Seeing the father and son reconcile after many years of misunderstanding was most satisfying as an estate planner. All because I had asked David a simple question, the family’s relationship improved, which was reflected inside the will.

    Read: Money Caused Breakup Among Four Close Friends, That’s Why it Is Important To Plan For The Succession Of A Business

    About Rockwills International Group

    Rockwills International Group, now in its 28th year, pioneered professional will writing in 1995 and has since evolved into the leading estate planning specialist in the country. It is today the largest provider of solutions and support services in trusts, succession, management and distribution of wealth. It has shareholders’ funds exceeding RM50 million. It has done over 280,000 wills and 15,000 trusts and holds more than RM25 billion in assets under trust.

  • How To Save 50% Of Your Tax Payment?

    How To Save 50% Of Your Tax Payment?

    It is that time of year we have to file our taxes. I heard most employees file it quickly to get their refunds quicker. Is that the same for you too?

    I hope you have taken advantage of all your tax relief, especially if you earn more than RM7,000 a month. But is there a way to save 50% of your tax payment?

    I did a one-on-one with one of my Double Your Networth student, and she asked me, “How do I take advantage of my tax relief?” And I am grateful she ask me this question.

    Because sometimes I take for granted that everyone around me knows what to do. Especially since she earns RM25,000 a month, I know how paying taxes through her nose feels.

    I won’t go through all 15 categories, but  I prepared a simple tool I normally use to plan to see the difference between ‘taking advantage of the tax relief’ vs ‘not taking advantage of it’. Once you download it here, you can see how much money you will save & more importantly, and you can see your Effective Tax Rate (ETR)

    ETR is very important as I was misguided when I thought my ETR was 24% when my income was RM200,000 a year. But in reality, when you deduct all the tax relief, my ETR was probably at 10% of my total income.    

    Here is a quick summary of what Personal Tax Relief you can take advantage of (and the typical misses) depending on which category you are in for YA 2022. Only by knowing these details, will you be able to save 50% of your tax payment.

    Single Or Married Without Kids

    1. Self – RM9,000
    2. EPF – RM4,000 (if you are under the EPF scheme and not the pension scheme)
    3. Life Insurance – RM3,000
    4. Medical Insurance – RM3,000 (read here on what mistakes to avoid, I wrote a blog on this last year)
    5. Private Retirement Scheme – RM3,000
    6. Lifestyle – RM2,500 (purchase of books, laptop, tablets and smartphones and internet subscription)
    7. Additional lifestyle – RM2,500 (purchase of laptop, tablets and smartphones)
    8. Domestic Travelling – RM1,000
    9. Sports Equipment and Fees for rental – RM500
    10. Medical Fees for Parents – RM8,000 (do ensure you are the only 1 claiming & not claimed concurrently by your other siblings)
    11. Socso – RM250
    12. Vaccination – RM1,000 (Up to RM1,000 for yourself)

    Married With Kids Under 18 years old

    1. All the above
    2. SSPN – RM8,000 (most parents don’t take advantage of this for their kids)
    3. Ordinary Child Relief – RM2,000 per child (either parent can claim and not a claim by both parents)
    4. Lifestyle – RM2,500 (You can buy laptops, tablets and books for your spouse and kids as well. Since they can’t track, you can even buy laptops, tablets, and books for your nieces or nephew)
    5. Additional lifestyle – RM2,500 (if you have more than 1 child, you can claim additional on this purchase of laptop, tablets and smartphones)
    6. Child Education Insurance – RM3,000 (read here on what mistakes to avoid, I wrote a blog on this last year)

    Figure 1

    Here Is How You Can Save 50% Of Your Tax Or Effective Tax Rate (ETR)

    Mr Nair (not his real name) is working for a famous foreign Bank for 5 years. He and his wife have 2 kids. He manages to buy one property for investment purposes and is getting rental income.

    The main strategy to save 50% of your Effective Tax Rate is to maximize all your tax relief (if possible) OR spend/save consciously in areas with tax relief.

    For Mr Nair, all he needed to do was to:

    1. Maximize his SSPN by saving for his 2 kids – RM8,000 (RM4,000 each)
    2. Maximize his PRS by saving RM3,000 to any of the approved Private Retirement Unit Trust
    3. Take his family for a year-end holiday of RM1,000 (through approved operators and selected premises here – Item 8)
    4. Buy a basic smartphone for his son – RM598

    Figure 2

    You will notice in Figure 1, his tax bracket dropped from 13% to 8% because his taxable income dropped below the RM50,000 level.

    Hence he could save RM1,136 on something he needed to do anyway (to save for himself and his kids).

    In case you are tight on cash, one of the method I used was to transfer some of my existing investments / spare cash / emergency funds to my kids’ SSPN or my PRS. The idea is like “Move from your left pocket to your right pocket.”

    Is this something that benefits you? Yes, I know this is a bit late, but this doesn’t stop you from planning for this year (YA 2023), right? Hope you have a clearer idea on how to save 50% of your tax payment.

    *DISCLAIMER: All tax references have been taken from PWC’s website. All my sharing on how to save 50% of your tax payment is for educational purposes and is my personal opinion. It should not be confused with tax advice. Do consult a licensed tax consultant for proper tax planning.

    About the Author

    Ka Hoe is a Licensed Financial Planner having a “Financial Adviser Representative” (FAR) with Bank Negara and “Capital Market Service Representative License (CMSRL) – Financial Planner” with Securities Commission. He is also the Founder of J Advisory, a Personal Finance Academy that helps struggling Malaysians elevate their financial well-being with proven tools, systems and strategies.

  • Money Caused Breakup Among Four Close Friends, That’s Why it Is Important To Plan For The Succession Of A Business

    Money Caused Breakup Among Four Close Friends, That’s Why it Is Important To Plan For The Succession Of A Business

    The following story is based on an actual series of events, with some names and circumstances fictionalised. Any similarity to any person’s name, character, or history is entirely coincidental and unintentional. It is good to have a plan for the succession of a business.

    Gerald, John, Steven and Mazlan were close friends, dating back to schooldays. So close they would get punished together for naughty things that schoolboys typically did.

    The first two were involved in building up a successful business in manufacturing and distributing car interior accessories. At the same time, the latter two had also built up an equally successful business, this one in car exterior accessories.

    Because of the obvious synergies involved, they decided to merge and apply for listing. The structure that was decided on was one where a holding company (Car Listco) was formed to hold the two operating companies as subsidiaries. 25% of the shares in Car Listco would be offered to the public.

    Read: Tragic Procrastination On Estate Planning Documents

    The Succession Of A Business: Case Study Of Four Shareholders

    At the same time, the balance shareholding held by the four individuals would be swapped into an investment holding company (Holdco), which would then control Car Listco. The four shareholders held shares in Holdco with equal portions of 25% each. Car Listco was successfully listed and well received by the public, and the market price on listing was about twice the offer price.

    The four shareholders were very happy with the high valuation, translating into approximately RM60 million above the pre-listing value. And that was not all. Others were also prepared to pay a control premium for control of a listed company of some RM50 million at that time.

    This kind of structure is, in fact, not uncommon for companies preparing for listing. Somewhat innocuous. Until the four shareholders disputed distribution, Car Listco performed well for many years, selling through a larger distribution network after the merger and declaring healthy annual dividends.

    In the initial years after listing, Holdco received its share of dividends and distributed 80% of all it received, and shareholders were happy with the arrangement. But five years on, the first two shareholders, who were also partners in another business, began to have cash flow problems and pressured Holdco to distribute more, even suggesting liquidation of part of the stake in Car Listco.

    This led to many arguments and fractured the close relationship the first two had with the other two, which puts a pressure on the succession of a business. Compounding the problem, Mazlan died, and his brother, the only next-of-kin, took over his directorship, which became the last straw because of his lack of trust and aggressiveness towards the other shareholders.

    In the end, the shareholders decided to liquidate Holdco and distribute it individually to each shareholder to be free to do what they wanted with the shares. The result of this breakup was that the shareholders lost the control premium, therefore they have failed in ensuring the succession of a business.

    Read: Being An Executor Of Will Is Not As Easy As It Seems To Be

    How To Ensure The Succession Of A Business?

    So what went wrong? How did a successful merger and listing end with a breakup and loss of control?

    The crux of the problem was the lack of liquidity. The Holdco made up of friends’ stakes tied together at the outset was a mistake. While Car Listco shares owned by Holdco were liquid, the shares in Holdco were not, leaving no liquidity for shareholders in need.

    It would have been better had 51% shareholding been locked up in Holdco and the balance distributed to the individual founders so that they would have liquidity. This would have avoided the disputes they went through before liquidation. In addition, it would have been good to plan the succession of a business, where shareholdings with a buy-sell arrangement, so that the founders would retain control when any of them exited.

    Read: Unfulfilled Wishes, Learn How To Protect Yourself

    About Rockwills International Group

    Rockwills International Group, now in its 28th year, pioneered professional will writing in 1995 and has since evolved into the leading estate planning specialist in the country. It is today the largest provider of solutions and support services in trusts, succession, management and distribution of wealth. It has shareholders’ funds exceeding RM50 million. It has done over 280,000 wills and 15,000 trusts and holds more than RM25 billion in assets under trust.

  • 5 Instagram Finance Influencer Accounts to Follow

    If your life feels too much like a parallel to ABBA’s “Money Money Money”, it may be time to take a look at your finances. Even so, it still is a good time to think about managing it wisely. With so much being thrown around about inflation, recession, and that one friend who spews cryptocurrency news on the daily – it can seem overwhelming to those who do not know where to start. The ‘finance influencer’ is also fast becoming a niche on social media – and there are many of them; how do you know where to start, lest you get an information overload?

    In an era where social media seems to be evolving at the speed of light – these platforms have also become a source of knowledge sharing. Different from financial vloggers or podcasts that usually take on a verbal, lengthy approach to dissecting every detail of the latest financial trend, Instagram finance influencer accounts rely on shorter, bite-sized information that can pique any doomscroller’s interest in a tiny square. 

    Whether it is through meticulously designed layouts to match the account’s branding, or a series of fun-filled comics that make even the most hesitant reader want to know more, here are five of such IG accounts that will help you consider important pitstops on your financial journey, and what you can do next. 

    For the youth: Financial Literacy for Youths

    FLYouths IG post
    Click on the image for the caption

    Possibly one of the greatest misconceptions about one’s financial journey is that some may be “too young” to start – when really, the one thing that youths have as an advantage is time to begin saving so they can reap the rewards later. @flyouths, the Instagram account of the Financial Literacy for Youths organisation was started by students for students with the goal of empowering youths through education. What’s even more impressive is that their team of researchers and journalists all comprise Malaysian university students across the globe! 

    From short quizzes on Instagram Stories (also saved in a highlight reel, ICYMI) to breakdowns of world events such as the controversial ‘trickle-down economics’ plan or the long-term effects of EPF withdrawals – @flyouth ’s content is catered to today’s youth. Even if it may not spark a financial revolution just yet – at least those scrolling through their content will come away having learned something new. 

    For women empowerment: Her Duit

    Her Duit IG post
    Click on the image to read the caption

    Born out of the intention to share about finance from a female perspective, @her.duit has grown from being a podcast series on financial tips to one of the most shared Instagram accounts in the scene today. A passion project by Michelle Chin (who has since co-founded digital-first pet insurance company Oyen), the account explores the topics of debt, EPF i-investment, setting money goals and emergency funds in formats that are easy to digest. 

    @her.duit also poses weekly thought-provoking questions via its “My Money Mondays” to kickstart dialogues surrounding various topics so they can hear from the audience themselves. By creating posts that tackle important financial topics that resonate with women – @her.duit is on a mission to empower as many as possible to live their best financially secure lives – and we are here for it!  

    For those who need a helping hand: Dare to Finance

    Dare To Finance IG posts
    Click on the image to read the caption.

    @daretofinance, easily recognisable from its quirky DTF doodle is the brainchild of our friends from across the causeway. Aside from providing their two cents on all things finance (according to them, the other 98 cents is up to you!), they also have their very own fintech arm (Financial Pathway) that aids users in documenting, planning and managing their finances. 

    Run by a team from a variety of backgrounds – including financial advisors – @daretofinance provides opportunities for users to ask them any finance-related queries. They are also available on their YouTube channel, podcast, medium channel – so you can consume their content and interact with them in whatever method works best for you! 

    For visually impactful lessons: The Woke Salaryman

    @thewokesalaryman, also started by a Singaporean probably needs no introduction – you’ve probably already seen them on your timeline! Providing financial advice through their own lived experiences, the account provides slice-of-life content depicted in a comic series, making it both engaging and memorable as one is able to glean their own learnings while swiping through short illustrations that make you think long after you reach the final frame. 

    Through a series of carefully and clearly explained content – and a little bit of humour – The Woke Salaryman is proof that finance does not need to be boring, and can be understood by all. 

    For those who want the best of both worlds: The Simple Sum

    Simple Sun Instagram Grid

    Need a little bit of advice with the help of visual aids? The Simple Sum, which got its start in Singapore (and is now present in Malaysia, Brunei, Philippines and Indonesia!) takes a tongue-in-cheek approach to the world of finance to help even those who are not in the know, get interested in how to manage their monies. 

    Whether it is breaking down the unspoken rule of having to fight for paying for the bill after a meal, living harmoniously with housemates without overspending or how credit card interest rates work, each topic is handled with local context and nuance to make it as relatable as possible to people like you and me, leaving a lasting impact on how all the little things in life add up to the sums you pay in your bank account. 

    By Grace Lim

  • Invest Malaysia Kuala Lumpur 2023: The Capital Market Conversation

    Invest Malaysia Kuala Lumpur 2023: The Capital Market Conversation

    Bursa Malaysia Berhad (“Bursa Malaysia” or the “Exchange”) and Maybank Berhad (“Maybank”) today co-hosted the 21st instalment of Invest Malaysia (“IMKL 2023”) in Kuala Lumpur. Themed “Reshaping Malaysia’s Narrative: Strengthening Resilience & Sustaining Growth”, IMKL 2023 was officiated by the Honourable Dato’ Seri Anwar Ibrahim, Prime Minister of Malaysia.

    To ensure that the Bursa Carbon Exchange (“BCX”) achieves its goal of greening our economy and to catalyse the voluntary carbon market, the Honourable Prime Minister announced the Government’s commitment to a RM10 million seed funding incentive to assure demand for Malaysian-generated carbon credits traded on the BCX. This commitment will encourage issuers and project developers to invest in the necessary efforts and processes to enable carbon credit issuance.

    Another announcement made by the Honourable Prime Minister at IMKL 2023 was the LEAP Market Transfer Framework, whereby Bursa Malaysia will be enhancing current regulations to facilitate LEAP Market PLCs to transfer to the ACE Market. Concurrently, Bursa Malaysia will share further enhancements to the Approved Adviser Framework to expand the pool of sponsors and corporate advisers for the ACE Market.

    The Honourable Prime Minister also announced that Bursa Malaysia will be working with the London Stock Exchange Group to launch a Centralised Sustainability Reporting Platform. This would enable companies − both publicly listed companies as well as non-listed SMEs − to calculate their carbon emission impact, and disclose common ESG datasets in a standardised manner that conforms to established global standards, such as the Task Force on Climate-Related Financial Disclosures (“TCFD”). Led by Bursa Malaysia, this pioneering initiative will include a consortium of two Malaysian conglomerates, their supply chain and a panel of banks.

    “Bursa Malaysia always listens and adapts to the demands of the investing community. Following public feedback from the consultation paper issued earlier, we will soon be announcing the LEAP Market Transfer Framework, as well as the development of the Centralised Sustainable Reporting Platform,” said Datuk Muhamad Umar Swift, Chief Executive Officer of Bursa Malaysia. “We believe these initiatives would increase the vibrancy and accessibility of our market, while better meeting the needs of market participants.”

    “We are also pleased with the Prime Minister’s announcement that the Securities Commission Malaysia will extend the Waqf-Featured Fund Framework to include Islamic Real Estate Investment Trusts (REITS) and Islamic Exchange Traded Funds (ETFs). By offering this Waqf asset class and solution on the Exchange, it will further diversify our suite of Shariah-compliant listed products and more importantly, will provide an effective instrument to support our nation’s social development,” added Datuk Muhamad Umar Swift.

    Dato’ Khairussaleh Ramli, Group President & Chief Executive Officer at Maybank, said, “A vibrant and robust capital market is a key component of Malaysia’s competitiveness that will help drive economic recovery. We welcome the measures announced by the Honourable Prime Minister at IMKL 2023 today and will continue to play our part in facilitating greater market participation and promoting Malaysia as an attractive investment destination.”

    “Maybank believes that sustainability is key to building resilience and ensuring long-term growth. We are working closely with both the government and the corporate sector to execute the national sustainability agenda, and we are pleased to be part of Bursa Malaysia’s sustainable supply chain initiative to support our companies in their decarbonisation journey.”

    Speakers at IMKL 2023 included the Honourable Mohd Rafizi Ramli, Minister of Economy who touched on measures to strengthen Malaysia’s economic resilience; the Honourable Senator Tengku Datuk Seri Utama Zafrul Tengku Abdul Aziz, Minister of International Trade & Industry who shared his views on enhancing Malaysia’s competitive edge; the Honourable Ahmad Fahmi Mohamed Fadzil, Minister of Communications & Digital spoke about developing a digital ecosystem; and the Honourable Anthony Loke, Minister of Transport who shared plans about national infrastructure development. Delegates also heard from newly appointed Treasury Secretary General, Datuk Johan Mahmood Merican on Budget 2023, especially pertaining to strengthening fiscal reform.

    “IMKL 2023 continues to be the capital market conversation for global fund managers and institutional investors to appreciate Malaysia’s competitive advantage as an attractive and sustainable investment destination,” concluded Datuk Muhamad Umar Swift. “We look forward to bringing the next instalment of IMKL, targeted to be held by the end of the first half 2023.”

    The IMKL forum attracted approximately 1,500 delegates attending in-person and virtually, comprising local and foreign fund managers that collectively manage an estimated total AUM of USD10 trillion (approximately RM44 trillion).

    The event was also live-streamed for public viewing on Bursa Malaysia’s Facebook page https://www.facebook.com/BursaMalaysia/.

    About Bursa Malaysia

    Bursa Malaysia is an exchange holding company incorporated in 1976 and listed in 2005, and has grown to be one of the largest bourses in ASEAN today. Bursa Malaysia operates and regulates a fully-integrated exchange offering a comprehensive range of exchange-related facilities, and is committed to Creating Opportunities, Growing Value. Learn more at www.bursamalaysia.com.

    About Maybank

    Maybank is among Asia’s leading banking groups and South East Asia’s fourth largest bank by asset. The Maybank Group has an international network of over 2,600 offices in Malaysia, Singapore, Indonesia, Philippines, Cambodia, Thailand, Vietnam, Myanmar, Brunei, Laos, India, China, UK, USA, Pakistan, Saudi Arabia, Uzbekistan, and Dubai. The Group offers an extensive range of products and services, which includes consumer and corporate banking, investment banking, Islamic banking, stock broking, insurance and takaful and asset management. It has over 42,000 employees worldwide. (www.maybank.com).

  • The Smart Investor’s Guide to Insurance

    Insurance is an essential aspect of financial planning. Think of insurance as a cushion. If tragedies or accidents occur, insurance acts as a financial cushion to protect what matters most to you – be it your loved ones, your assets, or your business.

    Before the Covid-19 pandemic, insurance was considered a ‘nice-to-have’ instead of ‘must-have’. However, the pandemic shook up the general perception of insurance as people started to realise the importance of having a financial safety net to shoulder against life’s uncertainties.

    Even so, many do not understand what insurance is, how it works and the types of insurance available.

    protect family
    Insurance is usually a financial cushion to protect you and your family. | Credit: fernandozhiminaicela

    What is insurance and how does it work?

    In a nutshell, insurance is a contract (deemed as a policy), whereby policyholders receive financial protection against losses resulting from an unforeseen event.

    Policyholders pay a fixed premium on a monthly, quarterly, semi-annually or annual basis to an insurance company which pools risks to hedge against potential losses. Financial planners recommend setting aside 6% of your monthly income for insurance.

    How do I know which insurance to purchase?

    Some simple calculations like what you can afford and how much coverage you’d need would be what you would consider before buying a policy. | Credit: stevepb via Pixabay

    Before you purchase an insurance policy, it is important to ask yourself:

    1. Your financial commitments: What is your debt situation? How would you manage your financial risks if you were to lose your job, or for your family manage if you were to pass on?
    2. Your dependents: If you were to lose your job or pass on, would your dependents be able to manage financially? How much would your dependents need to cover living costs?
    3. Your medical history: Is there a history of critical illness such as cancer or stroke in your family? Do you smoke?
    4. The nature of your job: Do you have a high-risk job, a physically demanding job or a job that requires frequent travelling?
    5. Your assets: Is your property insured against potential theft, fire, flooding, burst pipes or earthquake risks? Are you able to sustain losses or damages to your vehicle in the event of accidents, theft or fire?

    Based on your answers above, you would have a clearer idea as to the types of insurance as well as the policy limit (sum insured) that you would require.

    What are the types of insurance?

    1. Life Insurance or Takaful

    People often confuse life insurance and health insurance. Life insurance is essential primarily if you have debt or a spouse/dependents relying on your income. Your life insurance company pays a lump sum benefit to your next of kin to serve as a financial relief in the event of your demise or total permanent disability.

    Takaful is an Islamic financial product that is regulated through the Islamic Financial Services Act 2013 and is Shariah-compliant. Do note that it is not considered ‘Islamic insurance’, even though that’s what many seem to regard it as such. Unlike conventional life insurance, Takaful participants contribute or donate an amount to a tabarru fund, from which the mutual risk of losses is borne based on the Islamic principles of brotherhood.

    • Health or Medical Insurance

    If you are diagnosed with an illness, there are both direct and indirect costs involved. On top of direct costs such as your medical expenses, your illness may affect your ability to work, pay off debts or afford living expenses.

    According to Aon’s 2023 Global Medical Trend Rates Report, medical inflation in Malaysia stands at 12% and is expected to rise. Medical insurance or commonly known as a medical card is a policy that reimburses your medical expenses in the event of illness, hospitalisation or surgery.

    There are many medical cards in the market, with some starting from as low as RM5-10 per month. It is not mandatory but some employers include medical insurance as a fringe benefit which only covers up to a certain limit.

    health illness disease
    Illness can strike at anytime changing the course of your life; so it’s better to always be prepared. | Credit: geralt via Pixabay
    • Critical Illness Insurance

    Based on your family and medical history, consider purchasing critical illness insurance on top of a medical card. A critical illness policy offers a lump sum payout as an income replacement if you are diagnosed with cancer, stroke, heart attack and so forth.

    • Personal Accident Protection

    If you are a frequent traveller or involved in a physically demanding job, personal accident insurance is ideal for you as it covers medical expenses incurred from an accident, travel inconveniences or sickness resulting from travelling.

    • Property Insurance

    After spending your hard-earned money on your home or property, the last thing you would want is to leave it unprotected from potential risks such as fire, theft, flood and natural disasters. Though property insurance is not compulsory in Malaysia, it is worth purchasing as it is not too costly.

    • Motor Insurance

    Car or motor insurance is mandated by the Road Transport Department (JPJ) Malaysia, as you will not be able to apply for road tax without having a policy. In case of an accident, fire or vehicle theft, a comprehensive motor insurance covers damages and losses associated with the third-party injury as well as you or your authorised drivers who are driving the vehicle.

    Getting started with insurance may be an overwhelming process. Rest assured, it is not necessary to purchase all types of policies, only the ones you truly need.

    A great way to start is with the essentials such as medical and life policies. Afterwards, you can schedule a regular policy review to assess your evolving protection needs.

    By Mabel Yan

    If you enjoyed this article, you might also want to check this out:
  • He Had Everything But Children’s Harmony In The Family Business

    He Had Everything But Children’s Harmony In The Family Business

    The following story is based on an actual series of events, with some names and circumstances fictionalised. Any similarity to any person’s name, character, or history is entirely coincidental and unintentional. It is to manage a business, let alone a family business.

    Running a good business is one thing, but having a thriving family business is totally different. Steven was a very successful entrepreneur in the packaging business. He has a wife, Mary, and two sons, John and Wilson, who used to be close to each other. The packaging business has grown large and was listed five years ago.

    By then, Steven was 59 and had intended to hand the throne to his two sons when he was 65. Both of them were bright sparks who had graduated with honours.

    Going Into The Family Business

    However, John, the older boy by one year, was not interested in getting involved in his father’s business and preferred to pursue a career as a professional accountant. He started his accounting practise and got married shortly after to a woman his father disliked. He considered her a conniving woman with shallow thinking.

    Conversely, Wilson was happy to get into the business and became in charge of sales and marketing. The father hoped that John would eventually get into his business as the financial man, which would have been ideal for him—two trusted lieutenants, one overseeing the frontline and the other running the operations.

    Try as he might, he could not persuade John, who would not budge. Over the years, Steven had passed on a fifth of his shareholding in the holding company to each of his two sons.

    He was sad to note, though, that John had, in recent years, been picking quarrels with Wilson at family gatherings until both of the sons were no longer on speaking terms.

    Read: Fall of Family Business Empire, Why Family Business Fail?

    One day, Steven called me to meet him about his succession plan for the business in case he passed away. Over a private dinner, he confided in me that he was, while at the pinnacle of his business venture, very unhappy about his two sons’ relationship with each other.

    He was very concerned that their distribution could end in business breakup and means the end for their family business. I told him I would talk to both of them as it may be difficult for them to open up to their old man.

    After talking to John and Wilson separately, it became clear that Wilson had no problems with John, whom he still respected and looked up to as his taiko, but John had doubts about Wilson. It turned out that John didn’t like Wilson because his wife, who was always suspicious of her brother-in-law, made him feel that way.

    Raising questions like why Wilson was ‘abusing’ the company’s resources by frequently using its high-end cars, buying expensive corporate gifts, and enjoying lavish entertainment at fancy restaurants and nightclubs.

    At my next meeting, I told Steven about the underlying cause and suggested that he bring John on the board of the holding company of the listed company. I also asked him to call for monthly meetings where he and Wilson could brief the family on business developments, financial performance and issues confronting the business. He bright-eyedly accepted the idea.

    Two years later, I bumped into Steven, and he thanked me profusely for helping his family business. He told me that over this period, John became familiar with the father’s business strategies and understood why his brother did what he did.

    The packaging business was highly dependent on several large Japanese clients whose head office visitors expected to be entertained extensively and in a rather plush manner. Over time, John began to take an interest in the business, and the father felt that John would be ready to take over as the number one by the time he retired.

    It is good that this case had a happy ending simply because of transparency and getting buy-in from the outsider son to help the family business.

    Read: Hard Facts About The Executor Of A Will In Malaysia

    About Rockwills International Group

    Rockwills International Group, now in its 28th year, pioneered professional will writing in 1995 and has since evolved into the leading estate planning specialist in the country. It is today the largest provider of solutions and support services in the areas of trusts, succession, management and distribution of wealth. It has shareholders’ funds exceeding RM50 million. It has done over 280,000 wills and 15,000 trusts and hold more than RM25 billion in assets under trust.

  • Tragic Procrastination On Estate Planning Documents

    Tragic Procrastination On Estate Planning Documents

    The following story is based on an actual series of events, with some names and circumstances fictionalised. Any similarity to any person’s name, character, or history is entirely coincidental and unintentional. Hope that we better understand the importance of having estate planning documents set up as soon as possible.

    Ted was a close friend of mine. He had always struck me as a kind of bon vivant, enjoying life through fine foods and adventurous travels with a small group of friends.

    One day, out of the blue, he called me to meet up with him urgently. At a café in Damansara, he told me that he had just taken a health check that indicated heart palpitations, and he was due for a full heart check-up the following week.

    As such, he said he wanted to do a Will and a Trust, which he wanted to be done through me personally. I told him I was happy to oblige and started with a run-through of what he owned and owed.

    He had just moved into a large bungalow in an affluent area, and apart from various objets d’art and jewellery and four luxury cars, his biggest asset was his investment in Hong Kong.

    This was a trading company in which Ted had a 50% share, with a local Chinese who was his old schoolmate and partner for some twenty years. The company did very well in its contracts with China. The investment was significant because he could draw a salary of USD 50,000 monthly from the business and had been doing so for the last two years.

    However, the shareholding was in his partner’s name to fulfil local bidding requirements. He did not have any documentation to show his share of interest because they had both started the business based on trust.

    I told Ted that, apart from setting up a will and naming his distribution wishes, he had to, as a matter of urgency, set up a trust that his partner should sign, acknowledging his beneficial interest. He agreed and named his wife and two daughters as beneficiaries. He asked me to proceed with the estate planning documents as soon as possible.

    The estate planning documents were ready for him within a week, and we were to meet on a Sunday for him to sign. He, however, postponed the meeting to the following weekend and the weekend after that because of some ‘urgent business’ in Hong Kong he had to attend to.

    He said he would take the opportunity then to inform his partner of the trust deed to be executed. Unfortunately, he died of cardiac arrest on the eve of the day he was due to sign his documents.

    Just A Tad Late On The Estate Planning Documents

    All of us were in shock. The family and I gathered shortly after the funeral to review his files and estate planning documents.

    He had a rather messy record, but after painstaking work, it transpired that Ted had living parents and a sizeable debt – several million ringgit in the form of the house mortgage, a million ringgit in unsettled hire purchase, several hundred thousand ringgit in tax and about a hundred thousand ringgit incurred through ten credit cards.

    So, sadly for the family, they had to apply for letters of administration because of the lack of a will, and a quarter of Ted’s estate had to be shared with his parents.

    The most tragic part was that the so-called trusted friend and business partner in Hong Kong denied that Ted had any beneficial interest in the company shares (which were estimated to be worth USD 5 million for Ted’s 50% holding).

    In consequence, not only was the distribution of the estate considerably delayed, but the net value of the estate left for the family was drastically reduced, and the house they had just moved into had to be sold to pay for the debts in a moribund property market.

    It would have made a difference if Ted had signed his estate planning documents on time!

    About Rockwills International Group

    Rockwills International Group, now in its 28th year, pioneered professional will writing in 1995 and has since evolved into the leading estate planning specialist in the country. It is today the largest provider of solutions and support services in the areas of trusts, succession, management and distribution of wealth. It has shareholders’ funds exceeding RM50 million. It has done over 280,000 wills and 15,000 trusts and hold more than RM25 billion in assets under trust.

  • How To Free Up RM 2,000 Per Month Without Sacrificing Your Lifestyle?

    How To Free Up RM 2,000 Per Month Without Sacrificing Your Lifestyle?

    How would you 𝗳𝗲𝗲𝗹 when you are in this situation of…..

    ❗Total RM 382,000 𝗼𝘄𝗶𝗻𝗴𝘀 in credit card & personal loan

    ❗Have a 𝗱𝗲𝗳𝗶𝗰𝗶𝘁 of RM 5,328/month, of which RM 13,500/month is into servicing debt instalments

    ❗𝗡𝗲𝗴𝗮𝘁𝗶𝘃𝗲 net worth due to faster growth of loan interest than the growth of his assets

    To feel 𝗰𝗼𝗻𝗳𝗶𝗱𝗲𝗻𝘁 & 𝗳𝗿𝗲𝗲 like this……

    ✔️𝗥𝗲𝘀𝘁𝗿𝘂𝗰𝘁𝘂𝗿𝗲 his personal loan & Credit card outstanding to only RM 131,000 from RM 382,000

    ✔️𝗦𝗮𝘃𝗶𝗻𝗴𝘀 of RM 7,851/month by restructuring his commitments from RM 13,500/month to RM 5,649/month

    ✔️𝗜𝗺𝗽𝗿𝗼𝘃𝗲 his wealth to RM 565,000 after we help him restructure his debts, giving him 𝗰𝗼𝗻𝗳𝗶𝗱𝗲𝗻𝗰𝗲 to buy two properties worth almost RM 1 Million

    So this is what happened to Raymond, who is an IT professional, working for a famous Multinational company. Single & available, he is very friendly & has a very good relation with his friends & colleagues.

    Not settling for mediocrity, he always dreams of doing his own business. That is how he started partnering with a long-time friend in the chicken-rearing business. His friend was a veterinarian, and chicken is a staple food in Malaysia.

    So he put in his share of RM 225,000 in investment from his side, while his friend put in RM 75,000 to purchase live stocks and stock feeds. The condition was that his friend would run and manage the company’s operations.

    But within six months, the business couldn’t generate enough sales, struggled to stay afloat, and accumulated a debt of RM 120,000. He went from having good cash flow with monthly savings to having a deficit of RM 5,328/month by using his credit cards to finance the losses of the business.

    When we dive deeper into his situation, we see that his problem compounded because, over the years, he did not pick ‘G.O.O.D’ assets, despite earning a high income. Simply put, his assets were not growing as fast as his loans. We discovered that he also placed a large amount of his savings into insurance policies—21, to be exact.

    So while most individuals are right about having a mix of high-risk investment vs low-risk investment in their portfolio to generate good returns, Raymond was right on the big picture but struggled to see that insurance does not generate healthy returns.

    So here is two things we did to help Raymond:

    1. Restructure his debt of RM 382,000, which is causing him to have a negative cash flow of RM 5,328/month, by using Debt Replacement
    2. Freeing up RM 27k/year cash flow by restructuring his insurance using PMR rate and maximising his low coverage up to 5x

    You have heard a lot about Debt Restructuring, but what is PMR?

    You might be wondering, what actually is this PMR tool? Is it some kind of magic?

    PMR stands for Policy Maximisation Rate and is used to measure “Is your insurance coverage maximized with the lowest possible premium?”

    For example, a PMR rate of 125 means that for every Ringgit premium paid, you are getting coverage of RM125.

    One of the first things we did was to list down all his insurance policies and premiums and run them through my proprietary PMR tool to identify Raymond’s under-optimised policies and correct them.

    To his surprise, Raymond was undercovered despite paying for so many policies.

    Raymond: “But, Ka Hoe, all the savings plans are good. At least the premiums are not burned, and I will get a lump sum back?”

    “Well, it depends,” I answered. After calculating the rate of returns of the savings plans, we found that Raymond is getting about 2% per year. His money will earn better interest if deposited in FD.

    Next, we calculated how much Raymond needs to cover so he won’t be under-covered or over-insured.

    Raymond is not alone. Most people buy insurance based on what they think they need without calculating their actual needs and end up paying too much and covering too little.

    So, what is a good PMR, then? Based on my experience in the past 14 years, after reviewing thousands of policies, a PMR of less than 100 is normally under-optimised.

    If your PMR rate is between 100 and 200, it’s somewhat optimised, but it can be better. A PMR rate over 200 is well optimised, but you must ensure each component of your insurance needs is covered.

    You can learn more about the PMR tool here. (short video of my previous sharing on KCLau’s webinar)

    Interested to find out what is your PMR?  Are you currently under or over-insured or simply paying too much in premium?

    Then, I would like to invite you to our first “How to Free Up RM2k/month Without Sacrificing Your Lifestyle” webinar in 2023.

    This webinar has assisted many of my students in lowering their insurance premiums and increasing their coverage, allowing them to start working twice as hard and possibly retiring five to ten years earlier.

    During the webinar, I will not only go through with you the exact steps I did with Raymond with my proprietary PMR tool but also:

    1) How to identify under-optimized policies and correct them

    2) Calculate how much you need to cover so you won’t be under-covered or over-insured.

    3) Better prepare you for the future and prevent potential time bombs from blowing up during retirement

    4) Go through real-world case studies with proven results on how to free up your cash flow so that you can work your money 2x harder.

    Click here to learn more about how Raymond and the rest free up their cash flow up to 3x and maximize their coverage up to 5x. Use this promo code SIGUEST to get it at 9.87 (80% off the retail ticket of RM 47, the webinar is valued at RM 1,997)

    Ka Hoe is a Licensed Financial Planner having a “Financial Adviser Representative” (FAR) with Bank Negara and “Capital Market Service Representative License (CMSRL) – Financial Planner” with the Securities Commission. He is also the Founder of J Advisory, a Personal Finance Academy that helps struggling Malaysians elevate their financial well-being with proven tools, systems and strategies.

    Disclaimer: All strategies listed here are neither recommendations nor advise. The article is written purely for education and journaling only. The content of this article is an expression of my opinion and should not be taken as professional advise. If you are seeking professional advise, please consult me personally. When dealing with debt, you should conduct research and seek expert advice.

  • Do You Need Critical Illness Insurance In Malaysia?

    Many people think you don’t need critical illness insurance in Malaysia if you already have health insurance or are covered by your employer’s health insurance. Your health insurance might not cover severe illnesses like cancer, a stroke, a heart attack, or kidney failure well enough.

    Here’s what you need to know to have a better understanding of both medical insurance and critical illness insurance in Malaysia.

    What Is Critical Illness Insurance In Malaysia, And Why Would You Need It?

    Critical illness protection gives you a lump sum payment if you get one of the critical illnesses covered by your plan. Unlike a health protection plan, critical illness protection is not designed solely to pay your hospitalisation or medical costs but to provide a sum of money to take care of immediate expenses, which means you are free to use the money however you wish.

    For example, if you have one, you could use the benefit to pay for ongoing treatment costs or medical equipment not covered by your medical protection plan. You may also use the money for home nursing care, seek alternative treatments, or pay the mortgage for your family’s survival, whichever can help you focus on your recovery.

    Read: Should I Give Up Paying Insurance Premiums In Difficult Times?

    How Much Is Enough To Protect Me Against This Unfortunate Event?

    The rule of thumb for critical illness insurance in Malaysia is to have three times your annual salary. Why three times? In the event of a critical illness diagnosis, it takes at least three years for you to adjust your lifestyle and recover.

    What’s The Difference Between Medical Insurance And Critical Illness Insurance In Malaysia?

    Medical CardCritical Illness Insurance
    What does it do?pays for the cost of treatment and medication of a hospitalisationprovides a lump sum payout upon diagnosis of one of 36 critical illnesses, total and permanent disability or death
    What can I do with the payout?Pay for medical cost of treatment or hospitalisationThe patient can use the lump sum payout for anything they want, not restricted to medical treatment. For example, some use it to help their family’s financial situation.
    Who does it most benefit?The policyholder (and his family, if the plan covers family) as it helps pay for their medical treatmentThe policyholder and/or their dependents, depending on the payout use.
    What is the premium payment like?Premium increases with agePremium remains the same throughout the lifetime
    Eligible for income tax?Eligible Eligible

    Read: Financial Planning Is Not Only About Having Insurance

    When Should You Revisit Your Critical Illness Plans?

    1. When your income changes, this will affect your coverage with regard to income protection

    2. When your life changes, for example: getting married or having kids, this will also include the consideration of
    how your dependants may be affected if you are diagnosed with a critical illness and whether or not you would need a critical illness payout to help with managing your financial obligations

    Do I Need Critical Illness Insurance In Malaysia Right Now?

    It is common to think, especially in the prime of one’s life, that you have time on your side and that you do not need a critical illness policy. However, critical illnesses do not differentiate between age or gender. Certain behaviours, such as smoking or leading sedentary lifestyles, are high-risk factors for critical illnesses.

    One of the diseases spreading the fastest among Malaysians is kidney failure caused by diabetes. Accidents and incidents can cause injuries like major head trauma or third-degree burns, which are hard to predict and require a lot of (and possibly expensive) medical care.

    Having a sound financial plan before the unexpected happens is equivalent to having more choices for treatment and recovery. This includes the choice to take time off from work to focus on complete recovery, the ability to choose quality healthcare, or the privilege to spend time with your loved ones instead of thinking about where the payment for the treatment would come from.

    Read: Insurance Affordability vs Need, 6 Factors You Should Consider

    Case Study Of A Real-Life Example

    A client of mine was recently told she had breast cancer and had to have surgery. The total cost of the operation is RM26,000, and it is fully covered by medical insurance. Next, she would have to go through post-treatment, after which she would not be able to return to work for a short time.

    Critical illness insurance in Malaysia helps patients cover their living expenses with a lump sum payment. This money can then be used for anything and is not restricted to medical treatment (which the medical insurance already covers).

    If you have medical insurance, consider adding a premium waiver rider, which allows you to waive the basic premium if you are diagnosed with a critical illness.

    This means that the policy does not need to pay for the stipulated premium, while you would still have medical insurance coverage. If this coverage is within your budget, you should consider taking up this rider.

    Read: Should I Nominate My Wife As Sole Beneficiary Of My Life Insurance Policy?

    Do You Need Critical Illness Insurance In Malaysia?

    Many income protection products are on the market, so spend time understanding which caters to your current financial needs. While you are still well and able to work, you provide food, clothing, and shelter for your family.

    But if something were to happen to you, somebody must immediately take over this responsibility for you and your family. This is precisely how income protection works, where insurance will compensate you for the loss of income.

    Above all else, protecting and preparing yourself and your family for such uncertainty should be a top priority. That’s why you will need critical illness insurance in Malaysia.

    Read: How to Protect Yourself at Different Stages in Life With Insurance

    About the Author

    Cha Ai Bee is a certified financial planner, AIA Life Planner and certified member of Financial Planning Association Malaysia (FPAM).