Inovatif

Category: business

  • ICMR Research Series: Taking a Dual and Systematic Approach to Address Investor Vulnerability in Malaysia

    Before the COVID-19 pandemic, Malaysia was already faced with multiple complex challenges – from the impacts of climate change, and ageing populations, to rising inequalities. The pandemic has only accelerated these challenges and to a large extent, also exacerbated vulnerabilities affecting households and individuals’ levels of financial resilience.

    Given these challenges facing investors today, the burden of financial well-being is too heavy to rest solely on individuals themselves. To move forward beyond the present crisis, responsible finance will require that all stakeholders – government, policymakers, the financial industry, and more – treat individuals’ financial well-being as a shared responsibility.

    Building Financial Resilience

    Firstly, there is a need to build financial resilience across the population. As we explored previously in our series, a lack of financial resilience cuts across all drivers of vulnerability – predominantly linked to poor investment and saving behaviours, as well as an equally important factor when dealing with issues which are out of one’s control, such as unexpected life situations and industry-related issues.

    It is crucial to acknowledge that some individual barriers faced by certain segments of the population to be able to save or invest, involve embedded structural challenges that cannot be solved purely by market-based solutions. These include sluggish wage growth, unemployment especially for youths, mismatches between labour demand and supply, the rise of the gig economy and lack of social safety nets.

    Thus, a whole-of-nation approach which goes beyond the jurisdiction of any single regulator or an agency may be needed for holistic reforms that address both structural and individual barriers. Policymakers and regulators will need to focus their efforts on assisting vulnerable populations to become more financially resilient, such that they are better able to use market opportunities to save and invest.

    Since investor vulnerability is multifaceted, driven by various factors such as personal and financial circumstances, age, geographical location, and investment experience – policy actions need to take a tiered and nuanced approach. This includes a review of incentive structures complemented with behavioural nudges that can help shape and sustain the necessary savings and investment behaviours.

    Nudges are part of a wider toolbox in the behavioural sciences consisting of education and training, subsidies and taxes enable or restriction, and environmental restructuring (physical or social context) which specifically focuses on leveraging behavioural levers to guide people towards making decisions that benefit them the most in the long term, without significantly changing their present incentives.

    Examples of ‘nudge’ initiatives include behavioural interventions like “save more tomorrow” and “sidecar savings”, which encourage saving for retirement in easy, convenient, and painless ways, as well as micro-investing applications that help build an investment habit by investing in smaller amounts of money like the spare change from daily purchases.

    Raiz Malaysia for example is an automated investment service that rounds up each transaction from a user’s Debit Card to the nearest Ringgit and invests the change into a unit trust portfolio based on their financial situation and goals

    (Source: Raiz Malaysia)

    Dealing with vulnerable investors

    Secondly, the building of financial resilience must then be complemented with a targeted approach to improve the protection of vulnerable investors. ICMR’s study identified key trigger points that indicate vulnerability such as discretionary income and perceived financial status, health status, level of retirement savings, level of financial literacy, investment experience and encounters with scams.

    To identify if a possible investor could be vulnerable, the current Know-Your-Client (KYC) process could be further enhanced with the introduction of these trigger points into the process. Also, this assessment should be done on a more regular basis, preferably every 6 to 12 months, as one’s situation is not static and needs to be recalibrated accordingly.

    Emphasis needs to be placed on market intermediaries and agencies to better identify and manage vulnerable investors. Regulators then need to focus on the “duty of care” by providing guidance and overseeing the conduct of capital market intermediaries, including fair treatment of vulnerable customers coupled with investor protection measures.

    Most regulators have general guidelines for financial services that already require service providers to consider factors such as knowledge, experience, financial situation, and risk profile of the individual investor during service provision. At the same time, targeted programmes are being implemented in many jurisdictions to specifically protect certain vulnerable groups, like senior investors.

    In Malaysia, financial regulators have certainly been vocal on issues affecting investors such as unlicensed activities and scams, retirement inadequacy, as well as the inclusiveness of capital markets for retail investors. Given the prevalence of challenges facing today’s investors, considering how investor vulnerability may affect these outcomes would be beneficial for future policy and research.

    In line with this, the Securities Commission Malaysia (SC) launched the third Capital Market Masterplan (CMP3) in 2021, which identified “enhancing focus on protecting investors against vulnerabilities” as a strategic consideration, with the “identification and assessment of vulnerable investors” being one of the priorities over the next five years, as illustrated in the diagram below.

    Source: Securities Commission Malaysia (SC)

    Collaborative and behavioural insights for effective implementation

    Creating policies and initiatives alone may not be enough to address the rising issues of vulnerability. To ensure the effective implementation of these initiatives, financial vulnerability must be viewed across the value chain. Our report highlights that vulnerability drivers are a combination of behavioural and structural issues that fall and cut across the purview and jurisdictions of multiple agencies.

    Behavioural insights should be incorporated into every stage of a policy cycle, from development to all the way to post-implementation. While this may require embedding more rigorous evidence-based approaches to design and evaluation such as Randomised Control Trials (RCTs) into the policy cycle, it could eventually reduce the need for corrective measures once a policy is at the implementation stage.

    RCT is a trial in which subjects are randomly assigned to either a treatment group or a control group. The treatment group receives the intervention being studied, while the control group receives either no intervention or a placebo. The effects of an intervention or treatment are measured by comparing outcomes between the groups.

    Policymakers can also leverage this understanding to evaluate the effectiveness of policy implementation and make necessary adjustments. Behavioural insights can also help uncover unintended consequences or knock-on effects of certain policies, which regulators may not have been measuring or looking out for in the first place.

    Given the delicate environment and crossroads of change, there is a dire need for policymakers to take proactive steps now while we still have the policy space to make reforms and improvements for the long term. With more collaboration with industry stakeholders, policymakers can create a resilient financial ecosystem that safeguards the interests of the most vulnerable investors.

    This article is part of a content series by the Institute for Capital Market Research (ICMR). Follow ICMR’s Facebook page to stay updated on behavioural tips and insights for better investing habits. To learn more about ICMR’s research on new-age vulnerabilities, visit www.icmr.my or download the full report.

  • Property Tussle: Being Left Homeless After Sister’s Death

    Property Tussle: Being Left Homeless After Sister’s Death

    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. It is about a property tussle, then being left homeless after her sister’s death.

    Chung was unable to get a loan from any financial institution to purchase a house. The easiest way out was to purchase the house under a name of his sister who would be eligible to obtain a loan. Nancy did not mind this arrangement as Chung gave the undertaking to pay the monthly loan payments.

    The arrangement worked well until Nancy passed away suddenly. She had no Will and since the house was under her name, it was considered her asset. Under the Distribution Act, Nancy’s husband, Jay, and children are entitled to her properties, which include the house that Chung bought and is living in.

    Read: Tears In Heaven: Who Protects Your Insurance Money?

    Property Tussle Begins

    Jay, who is not on cordial terms with Chung, would not want to hear anything from his brother-in-law that he had been servicing the housing loan and the house rightfully belonged to him. Chung’s pleas that Jay returns his house fell on deaf ears.

    Chung was left with two choices; either goes to court and fight for an equitable interest which may take a long time and the outcome, uncertain; or to stop making instalment payments which will result in the bank claiming from Nancy’s estate for the loan amount.

    Either way, Chung is at the losing end with a certainty of incurring losses.

    The above scenario of purchasing an asset under another name is quite common, especially among business partners, close friends or relatives for various reasons. Most of them do not realise or appreciate the seriousness of the problem that would occur upon the death of the person whose name is used to register for the asset if no proper estate planning is done – and an ugly property tussle will ensue.

    In the event the entrusted person dies or goes into a coma or becomes of unsound mind, his/her representative may not be as cooperative, especially when something of value is involved – that’s when the property tussle will rear its ugly head.

    Read: Special Needs Trust: I’m Nobody’s Child

    Declaration Of Trust To Prevent Property Tussle

    What Chung could have done was to get Nancy to sign a Declaration of Trust. Under this Declaration of Trust, Nancy will hold the house for Chung as a main trustee and an appointed licensed trust company shall be the substitute trustee in the event of her death.

    All Nancy needs to do is sign a trust deed which is irrevocable power of attorney with the trust company. Upon Nancy’s death, the trust corporation will take over as substitute trustee and follow the terms and conditions of the trust deed to transfer the house to Chung. From this arrangement, Chung has established a legal right to the house, and the problem with Jay could have been circumvented.

    The main benefit of a Declaration Trust is that though the house is under Nancy’s name, the rightful heir to the house would be Chung. Moreover, there is no need to transfer the house to another trustee, and thus there are no transfer fees payable.

    The fees are only payable upon the demise of Nancy. The transfer of the house of Chung’s name is hassle free since there is no need to wait for letters of representation over Nancy’s estate.

    Furthermore, with a trust company, Chung and Nancy will have peace of mind and their rights and obligations are well preserved without any third party interference since a trust company is duty bound to follow the trust provision and therefore more reliable than an individual.

    Moreover, the trust company has continuity compared to a natural person liable to die, fall ill, meet with an accident and be incapacitated, become of unsound mind or go bankrupt. When an individual trustee passes away, his assets are frozen until the necessary legal estate administration processes are completed, which means the asset is frozen too.

    And that’s how you can prevent a property tussle with the right tool, a Declaration of Trust.

    Read: Bob’s Dilemma: How To Convert Highly Illiquid Assets To More Liquid And Easily Realisable

    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 done over 300,000 wills and 16,000 trusts and holds more than RM25 billion in assets under trust.

  • Employment Opportunity Fraud Syndicate: Lidt Cooperation Advertising Sdn Bhd Or Lidl Cooperation Advertising Sdn Bhd

    Employment Opportunity Fraud Syndicate: Lidt Cooperation Advertising Sdn Bhd Or Lidl Cooperation Advertising Sdn Bhd

    We will look at the modus operandi used by Lidt Cooperation Advertising Sdn Bhd or Lidl Cooperation Advertising Sdn Bhd. Both names are fake names used to trap victims. The modus operandi used by this company is like what the author has detailed in the first and second series published on the inovatif.com.my/ website.

    In the first series, the author details how this fraud syndicate offers job opportunities to subscribe to channels on YouTube or as a Shopee product promotion assistant, while in the second series, the author details the type of fraud that occurs on Telegram first by hacking accounts and stealing someone’s identity, second, NORDFX Trader’s Investment scheme that promises returns that are too perfect to believe.

    These two series were written based on the author’s experience, who disguised himself as an individual looking for job opportunities and accidentally found this scam and decided to investigate further.

    This paper is a continuation of the previous two series. What makes this sharing a little different is that it is the experience of a victim who experienced this event himself. The victim also agreed to share his experience on the condition that his identity be kept confidential. The victim gave permission and consent to publish his experience as one of the steps to raise awareness among the community about the existence of fraud syndicates like this.

    Here is what she shared:

    1. The employer (Lidt Cooperation Advertising Sdn Bhd or Lidl Cooperation Advertising Sdn Bhd) contacted me via WhatsApp, saying they got my personal information on JobStreet (Picture 1, left). I am trying to get a job opportunity because, with my current income, I cannot make any savings at all.

    2. I did not find any information related to their organization using the Google search engine, such as company profile and phone number. Searches on JobStreet, LinkedIn, and Indeed also show similar results.

    3. They will bait the victim to do a simple task by asking the victim to “LIKE” several videos on YouTube; usually, the victim will be asked to “LIKE” three different videos and will get RM15 as payment for their work. The victim will receive this RM15 within a few hours (Picture 2, right).

    Picture 1: Left (Phone number used to invite and contact the victim), right (conversation with the individual who invited the victim)

    4. There is no contract (black and white) for this job. Not to mention the terms and conditions imposed by the employer on the employee (this is a sign that we can probably pay attention, there is something wrong here).

    5. No interview process occurs via phone call or online (Zoom, Google Meet, Microsoft Team, and others). Claiming this job is only a full-time or part-time job (also a sign that we may notice something wrong here).

    6. Victims will be given a Telegram link to contact their customer service officer, Steven (Picture 3, left).

    7. Victims will be put into a group on Telegram, to begin with. Steven will give the victim a task categorized as “PROJECT”. Each task will be paid. Victims will be deceived and blinded by receiving payment money from their bank just by giving a “like” to the video only.

    8. The victim will be given an assignment. And the link for the assignment is as follows: (https://m.lidlcooperation.com/home). But, for this task, the victim will be asked to pay a sum of money as a deposit. In this case, customer relations officer Steven will determine the deposit amount. The victim just follows what Steven instructs; this task has three transactions. The victim was not told how much of the deposit needed to be withdrawn until the victim reached RM600 as a deposit.

    Picture 3: Left (Victim introduced to customer relations officer – Steven), right (Victim invited to join Telegram group)

    9. The victim will continue to be tied to the task because this system has been designed to trap the victim, and they will not be able to escape. This task starts from task 1, and the victim is asked to give “like” to several videos on YouTube. This will continue until the 18th task, which relates to giving “like” to the video. At this stage, after the victim is included in the group on Telegram, several fake accounts that resemble normal individuals are created to give the impression that other people are involved in this work and are not alone.

    The engagement from these fake accounts is very active as if creating healthy competition among participating members. Until at some point, the victims will feel left behind if they do not participate in their activities because they look very convincing. However, this account is operated by a bot that resembles/mimics the way of normal human conversation.

    After that, their customer relations officer will ask for another deposit of RM150. And asking for a second deposit of RM2k (this is also a sign that we can watch out for because there is unlikely to be any job opportunity that asks us to give a deposit of money in advance to get paid for our work).

    10. I do not have a sum of money of that value. And the RM600 money that I had taken out in advance to pay the deposit could not be taken out either. If I fail to pay the deposit of RM2k, they will not care about the deposit I have already paid since the beginning. It will be considered burnt just like that.

    11. When I give a message/chat to all the individuals in the group, the response to their message is like coming out of the “bot”. Even using Malay language is not capable, even using pictures as if they are local people. They will give a reply, “I don’t even know you”. The conversation in the chat room is from the “bot” itself to create a normal atmosphere in the chat group, and there is nothing odd about it. Until then, their employees warned me that if you don’t want to commit to a task, stop bothering others. This means their fraud has been exposed, and I have discovered they are scammers (Picture 4, right).

    12. They have kicked/removed me from the Telegram group. After I tried to contact all the individuals in the group.

    13. I tried to call back the WhatsApp number that offered me a job before. I need help because they have blocked my phone number.

    In conclusion, hope those out there are always vigilant. Undoubtedly, with the rising cost of living, monthly commitments, and other things that are out of bounds, we need more than real work to make any savings for emergency days. This is added when we work in a big city like Kuala Lumpur, where the cost of living here is higher than in other cities throughout Malaysia.

    However, looking for sustenance and side income, we must always be vigilant and careful and take advice from this experience. I was blinded by easy money; easy enough work made me lose judgment and become a victim. When faced with a job offer that is too perfect to happen in the real world, refer to your closest friends, and don’t make decisions recklessly without thinking about the consequences of the actions we take.

    I also feel sorry for the pictures of individuals used as a fraud tool that is placed as profile pictures of bots. A little advice from me, don’t share our personal photos excessively; two or three photos may be enough because there is a possibility that irresponsible parties will use personal photos as a fraud tool without our knowledge.

    *The Malay version of this article has been published “Sindiket Penipuan Peluang Pekerjaan: Lidt Cooperation Advertising Sdn Bhd Atau Lidl Cooperation Advertising Sdn Bhd”.  

    About the Author

    Rashid Ating. Researcher at the Department of Economics, Faculty of Business and Economics, and Institute of Advanced Studies (IAS), Universiti Malaya (UM), Kuala Lumpur.

    More articles by Rashid Ating:

  • What You Need To Know About The Insurance Industry In Malaysia

    What You Need To Know About The Insurance Industry In Malaysia

    Insurance is a means of protection from financial loss where a party agrees to compensate another party in the event of loss, damage, or injury; in exchange for a fee. In other words, insurance is a risk transfer mechanism where you transfer your risk to the insurance company to get coverage for any financial loss you may face due to unforeseen events. The emotional and psychological loss can never be compensated, but at least the financial loss can be compensated with insurance.

    Smart Investor spoke to Fabrice Benard, CEO of Generali Insurance Malaysia Berhad and Country Head of Generali Entities in Malaysia to learn more about the current insurance landscape in Malaysia.

    Fabrice Benard, CEO of Generali Insurance Malaysia Berhad and Country Head of Generali Entities in Malaysia

    Smart Investor: Has the pandemic impacted the insurance industry? What’s the penetration rate for Malaysians?

    Fabrice Benard: Definitely, the pandemic has impacted most economic sectors, with very few exceptions. But I would say there is an advantage in such adversity. It has presented new, emerging protection needs, and accelerated innovation, transformation and sustainability practices within the industry.

    We also noticed a shifting landscape of insurance awareness during and post pandemic – where many Malaysians are becoming more informed, health conscious and aware of the importance of insurance protection. This has given us an opportunity to protect what matters, address the protection gap and actively reach out to a wider range of customers and communities.

    SI: With high inflation, people have less disposable income and might have less to spend on insurance. How can they cope? And is there any help coming from the insurance industry?

    FB: As a lifetime partner to our customers, part of our commitment is to bridge the protection gap and extend our protection far beyond our existing customer base. Financial inclusion is important to us, and we want to engage and educate the communities as much as possible and ensure that everyone can receive the protection they need. For example, providing instalment payment plans via our partner banks for selected products to ensure that our products remain affordable.

    Besides that, it is also essential to create a value-added service ecosystem to address customer needs. This is deployed via our strong distribution network, strategic partnerships and other type of services: information, prevention, protection, assistance. We also continuously find ways to be more inclusive, yet innovative and personalised in our product offerings to target different customer segments.

    For example:

    • We launched SmartTraveller Enhanced ― the first-in-market travel insurance in Malaysia with pandemic illness coverage up to RM350,000 in view of increasing travel protection needs due to reopening of borders.
    • Launched SmartMedi Outpatient ― the 1st standalone outpatient medical insurance in Malaysia that offers standalone outpatient coverage for General Practitioner / Simulated Patient clinic visits which does not require hospitalization.  It is a complementary product to the In-patient coverage. 
    • Launched Multi Medic – the 1st modular Individual Medical insurance that allows consumers to build the coverage to suit their life stages and financial needs.
    • The Multi Biz Protector Enhanced – a customisable and comprehensive insurance plan designed for owners of small and medium-sized businesses (SMEs) to cover their key business risks. It is a comprehensive product where most of the risk exposures are covered in this ‘one stop’ package. Customised to their needs, business owners can select their preferred protection needs.

    SI: Post-Covid or Long Covid symptoms are considered chronic diseases that insurance might not cover; why is that so?

    FB: Post-Covid or long Covid symptoms are common exclusions in the insurance industry. Usually, when it comes to health or medical claims, there needs to be objective medical proof to support the claim. It goes without saying that health insurance only covers conditions where medical attention is absolutely necessary. Long Covid symptoms usually develop after the original Covid infection has cleared, and they can be tricky to measure or assess, especially when it comes to the treatment duration and standards of care.

    But beyond claim coverage, we are committed to extend our best support to our customers struggling with long-term Covid symptoms. It is important for us to provide our customers with the care they need, while ensuring our panel medical partners implement appropriate clinical guidelines and practices.

    SI: Company insurance only covers you until the age of 60. Is there any insurance for those approaching retirement age and those with disease

    FB: While company insurance typically covers up to 60, it is recommended to have a complementary individual comprehensive insurance plan that can keep you protected up to a higher age limit. For example, our comprehensive critical illness plan – CritiCover, do cover up to age 100 with protection against 194 critical illnesses and any future unknown illnesses. This plan will help to ease your financial burden while allowing you to focus on your recovery. Besides that, we also have various other products such as the SmartPA Enhanced and other Individual Health Plans such as SmartCare Optimum Plus that provides coverage up to age 100.

    For individuals with health conditions, insurance companies may still offer insurance plans that have additional restrictions or exclusions for certain pre-existing conditions. The type of plans, coverage and premium offering may differs depending on the person’s health status.

    SI: Any medical insurance for pregnant ladies and babies? Is it necessary to take such a policy?

    FB: Complications such as cardiovascular disease, hypertension etc. may be contracted by pregnant or postpartum ladies, and such diseases may lead to unexpected medical expenses. Having an insurance plan is recommended to ensure you receive the necessary care and support on your recovery.

    Though most individual insurance plan do not cover the cost of delivery or normal hospitalisation bill, there are several critical illness insurance plans that cover pregnancy complications.

    Aside from the importance of a pregnant lady being insurance protected, having medical insurance for your child is equally important too. Children, especially infants, are susceptible to illnesses and accidents. Medical Insurance can provide peace of mind and security to the parent, knowing that their child will have access to the necessary medical attention when they need it most. For as young as 15 days old, your child can be covered under our comprehensive medical insurance plan – OneMedic Elite, which covers hospitalisation bills incurred should your child requires medical treatment.

    SI: Education is getting more expensive. Is education insurance important?

    FB: An education savings insurance plan is a type of insurance policy that provides a combination of insurance protection and savings elements, specially designed to help families to save aside for the future cost of education. Such plans allow you to save aside over a period of time, and such savings will be further invested to grow over time and, at the same time, provide regular bonuses to your insurance savings fund. You can access your savings fund to pay for your children’s education expenses. The amount required to set aside for such an insurance plan depends on your target education fund.

    Such insurance plan also provide a lump sum payment to the beneficiaries in the event the insured person’s death, disability or diagnosed with critical illness, where such event may prevent your children from completing or paying for your children’s education. This will allow you to focus on their education goals without having to worry about the financial consequences of life’s unexpected events.

    To help you to achieve your desired education for your child, our insurance savings plan – Wealth Saver, is designed to help you diversify your savings and achieve your financial goals. With just a short-term commitment of only 4 years, you can enjoy a guaranteed annual income of up to 18% of the sum insured. You will continue to be payable to you or your loved ones in the event of death or Total and Permanent Disability (TPD).

    SI: What’s the reason people are not buying insurance? And what can be done to increase awareness of the importance of having insurance?

    FB: Many think that insurance is expensive and an unnecessary expense. There are also some who merely see insurance as an investment rather than a form of protection. But insurance works on the principle of risk transfer and pooling – the whole intrinsic idea of insurance is to protect against uncertainties and unexpected risks.

    Increasing awareness of this takes a collective effort from all insurers. While continuous educational campaigns are important, we are also looking at providing better insurance experiences as a whole by transforming our role beyond just selling products to providing more value-added, personalised services. Our guiding principle is to make the entire purchase, service, claims, assistance, and renewal effortless and care while ensuring that our customers receive personalised, phygital advice with a human touch for complex matters. We believe this will help bring a better experience and create more avenues for new protection.

  • 5 Rules For Malaysians To Improve Their Financial Wellbeing

    5 Rules For Malaysians To Improve Their Financial Wellbeing

    In the face of looming predictions of a recession in 2023, financial experts have raised concerns about the state of financial preparedness among Malaysians. Nurhisham Hussein, the chief strategy officer of the Employees Provident Fund (EPF), has shed light on the alarming statistics that reveal a lack of financial readiness for retirement.

    With merely 3% of Malaysians considered financially prepared for retirement, disregarding healthcare expenses, 71% of EPF members have savings below 50,000 ringgit, and a surprising 28% have less than 1,000 ringgit. Furthermore, research conducted by Ringgit Plus found that 57% of individuals under the age of 35 in Malaysia cannot sustain themselves financially for more than three months based solely on their savings.

    Additionally, 24% of this demographic cannot rely on their savings for more than one month, while 45% either spend exactly or exceed their earnings.

    The conjunction of a dire economic situation and poor financial decision-making underscores the pressing need for Malaysians to control their finances. This article explores the significance of financial literacy and offers practical steps to empower individuals to improve their financial health and habits.

    In an era of increased digital adoption and a regulatory climate fostering the growth of digital banks, access to financial literacy resources has improved tremendously, providing an opportune environment for Malaysians to gain the necessary knowledge and skills for financial well-being. By taking charge of their finances and implementing sound financial practices, individuals can pave their way to a secure financial future.

    1. Expense And Income Tracking

    To gain a clear understanding of where your money is going, you can utilize various tools and methods. One effective solution is to use budgeting apps or financial management software that automatically categorizes your income and expenses.

    This simplifies the process of tracking your cash flow and provides visual representations, such as charts or graphs, to help you analyze your spending habits. By consolidating your cash inflows and expenditures onto a single platform, such as a budgeting app, you can easily monitor and review your financial transactions in one place.

    For example, apps, like Be U app, will allow you to track your expenses, providing updates and insights into your finances. Be U offer features such as expense categorization, a personal finance graph and a dashboard to help you stay on top of your finances.

    By having a comprehensive overview of your income and expenses, you can identify areas where you can make adjustments, set savings goals, and ultimately improve your financial progress.

    2. Differentiate Between Needs And Wants

    Practising mindful spending requires conscious decision-making regarding distinguishing between essential needs and discretionary wants. Consider implementing a “pause and evaluate” approach to address discretionary wants.

    Before making a non-essential purchase, give yourself a set period, such as 24 hours or a week, to assess whether it aligns with your long-term financial goals and values. This solution allows you to evaluate whether the item is a necessity or a want driven by emotions or spur of the moment.

    By implementing this practice, you can avoid impulsive purchases and redirect your funds towards more meaningful goals, such as saving for a down payment on a home or investing for your future.

    3. Start Saving Early

    Recognizing the value of compounding returns emphasizes the importance of initiating saving habits as early as possible. One solution is to set up automatic transfers from your checking account to a designated savings account.

    By automating your savings, a predetermined portion of your income is regularly deposited into your savings account without requiring constant manual effort. This solution ensures consistency and discipline in your saving habits.

    For example, many of our customers enjoy using our NEST feature in our Be U app to save money. As the NEST feature allows users to set up automatic transfers to occur on a periodical basis, ensuring that saving becomes a priority before allocating funds towards discretionary spending.

    Furthermore, users are allowed to set financial goals and track their financial progress. By utilizing this feature, users are able to track and achieve their financial goals more seamlessly.

    4. Build An Emergency Fund

    Establishing an emergency fund is crucial for financial stability and preparedness. One solution is to automate your savings by setting up regular transfers from your checking account to a separate savings account designated for emergencies. This ensures that a portion of your income goes directly into your emergency fund without requiring constant manual intervention.

    For instance, you can set up a monthly or biweekly transfer that aligns with your financial capabilities and goals. By automating your savings, you remove the temptation to spend the allocated funds and ensure that you consistently contribute to your emergency fund. Over time, your emergency fund will grow, providing a financial safety net for unexpected expenses such as medical emergencies, car repairs, or job loss.

    5. Take Care Of Your Belongings And Health

    Opting for repairing instead of replacing items whenever possible is a practical solution to reduce unnecessary expenses. For example, if your electronic devices, appliances, or clothing require repairs, consider researching local repair services or DIY solutions before considering a replacement. Often, repairing items can be more cost-effective than buying new ones, especially for items that are still functional with minor issues.

    Additionally, prioritizing preventive healthcare measures can lead to significant long-term savings. Regular exercise, maintaining a balanced diet, and practicing good hygiene are all examples of preventive measures that can help prevent costly health conditions. By investing time and effort in your physical and mental well-being, you reduce the likelihood of incurring high medical expenses related to chronic diseases or illnesses.

    While these practical tips cannot solve all financial challenges, they serve as a starting point for developing positive financial habits and setting individuals on the path to financial well-being. It is crucial to make a plan with specific target amounts and deadlines, reducing the likelihood of overspending and ensuring progress towards financial goals.

    With the increased availability of financial literacy resources and the rising adoption of digital tools, Malaysians have greater opportunities than ever before to enhance their financial knowledge and improve their financial health. By taking charge of their personal finances, individuals can gain a better understanding of financial concepts, assess their current financial situation, and make informed decisions to improve their overall financial well-being.

    About CDX, Bank Islam

    CDX has been established since 2020 and Centre of Digital Experience was developed under the purview of Bank Islam to explore experimental new businesses and technologies. Our vision is “Financial literacy for everyone”. Our Core Mission is to inculcate financial literacy, financial inclusion, financial independence to our customers and devising a sustainable charity model. CDX is building a challenger bank and mobile banking app known as Be U to serve the underserved and youth by providing next-level banking for modern consumers consisting of an app, a debit card and a financing facility proudly backed by Bank Islam, the leader in Islamic Banking since 1983. For any enquiries, do contact our customer service by email at beu.communitysupport@bankislam.com.my

  • Tears In Heaven: Who Protects Your Insurance Money?

    Tears In Heaven: Who Protects Your Insurance Money?

    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. It is about who protects your insurance money.

    Heng could not help but feel emotional as he saw little Tim at the playground without a care in the world. His thoughts were how Tim meant the world to his late sister and that she is weeping in heaven now that all the insurance monies meant for him is gone.

    A cruel twist of fate had robbed Tim of what is rightfully his.

    Being a single parent, June is ever careful of making sure that there is something for Tim in the event that something happens to her. She dutifully took up a life insurance policy which will serve to provide for Tim’s living expenses and education when she is not around.

    Putting Ownself As Trustee, Who Protects Your Insurance Money?

    But little did she realise that by naming herself as trustee in the insurance policy, she started a chain of events that made Tim an innocent victim of circumstances. Poor Tim.

    Not well versed in insurance matters, she just followed the norm to name herself as trustee. June who had come to terms with her terminal illness and had got Heng’s consent to be Tim’s guardian, was at peace in her final days thinking that Tim’s welfare would be well taken care of, financially as well.

    After the funeral, Heng set about to handle June’s financial matters. It was only after submitting for insurance claims did Heng learn of an oversight by June which turned out to be a costly mistake.

    Heng was told that since the policy owner had passed away, the nominee in the policy will be the trustee. However, for that to happen, the nominee must be at least 18 years old and not incapacitated mentally.

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

    Who Protects Your Insurance Money, When The Nominee Is Not Yet 18?

    Then comes the hard question of who protects your insurance money? Since Tim is not 18, the trustee will be his surviving parent, which is in this case is his father, who left both mother and child some time ago.

    Heng knows that once the money reaches his hands, Tim would never see it again. If she had known, June would have appointed a new trustee – an individual or a trust company who can hold this insurance money for Tim until he grows up.

    This is reaffirmed by the new Financial Services Act (FSA) which repealed the Insurance Act and made it invalid for the policy owner to be trustee of the insurance policy. Those who named themselves as trustee even prior to the FSA coming into force would have to change trustees for complete protection of the money.

    As this is a common situation, the best solution for a single parent to protect their insurance monies from ending up with an unintended person or used for unintended purpose would be through the setting up of a Single Parent Trust.

    In June’s situation, she can easily set up this trust by assigning the life insurance policy to the licensed trust company. This will enable the trustee to claim the insurance proceeds upon her death or disability.

    Read: Special Needs Trust: I’m Nobody’s Child

    Setting Up A Trust Deed

    She could provide instructions to the trustee through a trust deed, for example; to cover her medical expenses if she is critically ill, for scheduled payments for Tim’s living expenses and education, thus ensuring that his needs will be provided for as she would have wished for him.

    In this manner, she is also rest assured that another problem is averted – an inheritance being squandered away in the hands of a young heir who is inexperienced in handling a large sum of money so early in life.

    A trust is indeed a viable approach to ensure total protection of insurance monies to be utilized according to one’s wishes. It is also an advantage to have a trust company as trustee instead of an individual as the trust company is impartial and is duty bound to follow the terms and conditions in the trust deed whereas an individual may not be so compliant with regard to other people’s money.

    The perpetuity of a trust company is also another advantage as a natural person is liable to die, fall ill, meet with an accident and be in capacitated, become of unsound mind or go bankrupt. At least you will have a peace of mind, knowing that there’s an organisation who protects your insurance money.

    Read: Bob’s Dilemma: How To Convert Highly Illiquid Assets To More Liquid And Easily Realisable

    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 done over 300,000 wills and 16,000 trusts and holds more than RM25 billion in assets under trust.

  • Patterns And Types Of Cybercrime In Malaysia From 2016 To 2021: Part 2

    Patterns And Types Of Cybercrime In Malaysia From 2016 To 2021: Part 2

    In Part 1, we have discussed the definition of cybercrime and commercial crime. We also see the cases recorded for financial and recorded crime in Malaysia from 2016 until 2021, the total losses due to cybercrime and commercial crime. Lastly, we deep dive into the classification of cybercrime and the number of cases happening in Malaysia. For this part 2, we will investigate the arrests and charges against cybercrime cases.

    From 2021 to 2016, PDRM made 35,065 arrests and 23,718 charges. Over the six years, the number of arrests increased year-on-year, with an average of 5,844 arrests per year. The same pattern is also shown in the number of charges, which grows yearly, with 2,897 charges in 2016 to 4,970 in 2021. This indicates that the authorities are doing their best to reduce these online fraud cases in Malaysia.

    Source: Commercial Crime Investigation Section (CCIS), March 2022.

    For cybercrime from 2015 to March 2022, an investigation paper was opened. The total loss recorded was RM2,575,293,503.85; e-commerce ranked first with 41,303 or 43 per cent, followed by telecommunications fraud (line/sms) with 33,218 or 34 per cent.

    While cybercrime involves fake news with 48 investigation papers, protecting personal data with 98 investigation papers and no category with 212 investigation papers is the least reported type of cybercrime.

    Source: Commercial Crime Investigation Section (CCIS), March 2022.

    If viewed up to March 2022 alone, based on the investigation papers, reported losses amounting to RM124,166,360.00 with telecommunication fraud (line/sms) were the highest with 2,269 cases or 48 per cent. They followed by e-commerce (online purchase) with 2,070 cases or 44 per cent.

    Meanwhile, cases involving pornographic material (Section 22 of the Penal Code), intellectual property (CD/VCD/DVD), no categories and personal data protection were the lowest recorded cases, with only three, one, one, and two cases recorded.  

    In terms of locality for the cybercrime cases, if viewed by state from 2015 to 2021, most cases occurred in major cities such as Selangor with 17,191 cases, followed by Johor with 12,457 cases and Kuala Lumpur with 11,658 cases. At the same time, cybercrime was seen relatively less in towns such as Terengganu, with 3,054 cases, Kelantan, with 2,932 cases and Perlis, with 1,284.

    Cybercrime is common in large and rapidly developing cities because it is a hotspot for finding better job opportunities and thus increasing social mobility in their society.

    Source: Commercial Crime Investigation Section (CCIS), March 2022.

    The same statistics also show that until March 2022, cybercrime cases were widespread in Kuala Lumpur, with 600 cases, Johor with 558 cases and Selangor with 511 cases. These are the three highest states that recorded cybercrime by the state in March 2022.

    Meanwhile, Sabah, Kelantan and Perlis were the three states that recorded the least cybercrime by recording 203, 172 and 75 cases.

    Source: Commercial Crime Investigation Section (CCIS), March 2022.

    In the case of mule accounts or donkey accounts according to bank accounts used from January 2012 until March 2022 showed that these accounts mostly used CIMB Bank Berhad with 32,492 or 27 per cent, followed by Malayan Banking Berhad or Maybank with 36,765 or 31 per cent. Donkey accounts often use These two banks to carry out their operations.

    Meanwhile, Agrobank, Affin Bank Berhad and Bank Kerjasama Rakyat are the least used banks to operate this donkey account.  

    Source: Commercial Crime Investigation Section (CCIS), March 2022.

    *The Malay Version of this article is currently under review at e-Jendela Dewan Ekonomi, Dewan Bahasa dan Pustaka, June 2023. Researchers also would like to thank the Criminal Investigation Department (JSJK), Bukit Aman, for providing this data to the authors.

    Rashid Ating. Researcher in the Department of Economics, Faculty of Business and Economics, Universiti Malaya and Institute of Advanced Studies (IAS), Universiti Malaya (UM). 

  • Patterns And Types Of Cybercrime In Malaysia From 2016 To 2021: Part 1

    Patterns And Types Of Cybercrime In Malaysia From 2016 To 2021: Part 1

    Every day we are often presented with various cases of online fraud. As technology progresses, which is getting increasingly advanced, the techniques and methods scammers use to trap victims also keep evolving. Every day there are always some cases of online fraud involving the public.

    Data from the Bukit Aman Criminal Investigation Department (JSJK) reported that are for commercial crime and cybercrime cases, according to the number of investigation papers, show an alarming trend.

    Cybercrime can be defined as an act of harming someone’s finance and security. This kind of crime is conducted using computers and internet networks. Examples of cybercrime include computer fraud, financial scams, financial crimes, and advertisement fraud. This type of crime has happened frequently in Malaysia lately and was the focus of this Part 1.

    The number of investigation papers showed a significant increase from 12,798 cases in 2016 to 18,435 cases in 2021, with an increase of 5,637 over the six years. The year 2018 recorded the fewest cybercrime cases, with 10,753 cases. On average, 13,790 cases occurred annually from 2016 to 2021.

    It will be alarming as it is feared that more innocent Malaysians will become victims because of the actions of some irresponsible individuals that exploit the naivety of the victims that are not updated with the trends of online scam activities.  

    Meanwhile, commercial crime or known as a white-collar crime. This type of crime is committed in professional settings like government and business. Examples of white-collar crime include embezzlement, financial crime, copyright infringement, and others.

    On the other hand, commercial crime recorded almost twice the number of cybercrimes from 2016 until 2021. We can assume that commercial crime was more severe than cybercrime in Malaysia. On average, 29,589 cases of commercial crime happened in Malaysia yearly from 2016 until 2021, higher than on average 13,790 cases of cybercrime in the same period.

    The year 2016 recorded the highest year of commercial crime cases, with 32,948, while 25,594 cases in 2918 for the lowest number of cases recorded. 

    Source: Commercial Crime Investigation Section (CCIS), March 2022

    In terms of total losses due to cybercrime, there was an increase of RM239,531,609 in 2016, followed by RM266,957,862 in 2017, RM398,617,147 in 2018, declining to RM497,926 in 2019, rising sharply to RM413,653,962 in 2020 and slightly decreasing in 2021 with RM403, 825,846.71. On average, RM287,180.726 money losses due to cybercrime in Malaysia.

    While on the other hand, the losses caused by commercial crime were more alarming compared to cybercrime, with the highest losses recorded in 2018 at RM23,927,045,190. The lowest losses were in the year 2016, with RM2,026,874,111.

    On average, during the six years from 2016 until 2021, Malaysia suffered an average loss of around RM2 billion per year due to commercial crime.   

    Source: Commercial Crime Investigation Section (CCIS), March 2022

    E-commerce and telecommunication fraud syndicates are among the two highest types of cybercrime reported according to investigation papers and modus operandi from 2016 to 2021. E-commerce fraud recorded 6,448 cases in 2016, slightly down the following year with 5,959. It continued to plunge to 3,326 cases and remained stagnant at 3,519.

    However, in 2020, 5,995 cases of e-commerce fraud were reported in Malaysia and continued to increase to 9,575 cases in 2021. While for telecommunication fraud syndicates, the number of cases recorded annually is not as alarming as e-commerce fraud syndicates, with 1,987 cases in 2016, 4,177 in 2017, 4,963 cases in 2018, 5,750 cases in 2019, 5,995 cases in 2020 and rising to 6,300 cases in 2021.

    The cybercrime that recorded the lowest cases was intellectual property fraud involving (CD/VCD/DVD), pornographic material fraud syndicate and fraud 233, Communications and Multimedia Act (CMA).

    *The Malay Version of this article is currently under review at e-Jendela Dewan Ekonomi, Dewan Bahasa dan Pustaka, June 2023. Researchers also would like to thank the Criminal Investigation Department (JSJK), Bukit Aman, for providing this data to the authors.

    About the Author

    Rashid Ating. Researcher in the Department of Economics, Faculty of Business and Economics, Universiti Malaya and Institute of Advanced Studies (IAS), Universiti Malaya (UM). 

  • ICMR Research Series: Millennials And Gen Z Must Plan Early For A Better Retirement In A Changing World Of Work

    ICMR Research Series: Millennials And Gen Z Must Plan Early For A Better Retirement In A Changing World Of Work

    The world of work is changing. The COVID-19 crisis has accelerated existing structural trends and caused organizations to rethink many aspects of employment. How work gets done, where and by whom is becoming more varied and fluid. As the nature of work and how we make money continues to change, this will inadvertently impact other aspects of personal finances as well.

    If you’re a young Malaysian saving for retirement, your future might be less secure than you think. Even though the next decade will see one of the greatest transfers of intergenerational wealth to millennials and Gen Z, the current financial habits and behaviours of these young generations, as well as the changing nature of work, are poised to put their future savings in jeopardy.

    The Existing Pension System Won’t Be Enough

    ICMR’s nationwide study of millennials and Gen Z in Malaysia found that 70% of respondents anticipate changes to their work life over the next 12 months. Of this, 61% see themselves changing job modalities, be it taking up additional side hustles or part-time work, or working as a freelancer or business owner.

     Figure 1: Expected job changes in the next 12 months (Data Source: ICMR)

    As the number of people moving away from the traditional notion of a single full-time job increases, issues of coverage and adequacy within the existing pension system will become more serious. The old retirement wisdom of relying on traditional retirement plans might have worked for their parents and grandparents, but these won’t be enough to get millennials and Gen Z through their golden years.

    The existing pension system in Malaysia is largely employer-based, with a portion of salary automatically deducted from payroll and put towards retirement savings. But as we highlighted in our previous report, gig workers, freelancers, and small business owners are not covered by the existing system, and neither does it accurately capture extra income from side hustles or other job modalities.

    “I’m comfortable with freelance working arrangements, and I don’t think I’ll go back to full-time work in the future. But I’ve been looking to buy a house recently and it’s been hard to get a loan because banks don’t recognize freelance work, even though I’m getting paid consistently every month for it.”

    – Hussein, 30, freelance consultant

    Overcoming Present Bias For A Better Retirement

    Without access to employer-based pension plans, young Malaysians will be left to take on the responsibility of planning for their own retirement. However, ICMR’s survey found that a worrying number of millennials and Gen Z do not consider retirement savings as a top priority. Instead, they are prioritising to buy a house, high-priced items, and making profits from higher investment returns.

    This is in line with insights from our qualitative interviews, where only one respondent had a specific retirement financial goal in mind. For all other respondents, retirement was a vague and distant notion, or there was a belief that “things would fall into place” for retirement purposes. Many also felt they had too many present commitments and expenses to think about retirement.

    Present bias makes us favor the present and discount the future – fueling problems like addiction, procrastination, impatience, immediate gratification, and poor planning (Image Source: Don McMinn)

    These examples indicate a present bias when thinking about retirement, or the tendency to settle for a smaller present reward than to wait for a larger future reward. In fact, past research has shown that Malaysians only start planning for retirement after the age of 40, hence missing out on the critical long-term accumulation stage that could make a significant difference in their retirement savings. 

    “I lost my job in March 2020. Now I’m a Lalamove driver, and I help out at a friend’s workshop for extra income. It’s hard to think of financial goals or make any long-term plans when I’m just focused on trying to get by day-to-day. I don’t have the time or the energy to research these things, and I don’t have the funds for it.”

    – Zaim, 34, Lalamove driver

    Starting Early To Benefit From Lifecycle Planning

    The lack of retirement adequacy among young Malaysians is concerning both on an individual level, as well as on a national policy level. The combined effects of population ageing and lack of retirement savings is multifaceted and complex, with policy implications for the labour market, productivity, as well as social and family institutions.

    Fortunately, millennials and Gen Zs who have a longer time horizon can benefit from better lifecycle planning based on their own risk appetites. It is therefore crucial that individuals take the first step as early as possible in assessing their overall financial situation, and making a long-term financial and investment plan that fits their own needs and lifestyle.

    What can help is to think of retirement savings as wealth accumulation instead. Building a sizable nest egg becomes more difficult later in life as one acquires more and more expenses, such as a mortgage and a family. But by starting early, saving for retirement can be a much more pleasant – and exciting – prospect. Even a small amount saved for retirement now can make a huge difference in the future.

    With time on their side, millennials and Gen Z  can take advantage of the power of compound interest and minimize the impact of market fluctuations on their investments. They can also make informed decisions about their career choices, education, and lifestyle, all of which can have a significant impact on their financial futures.

    The more time money has to compound and grow, the more opportunity for those earnings to earn additional money. (Image Source: Ramsey Solutions)

    Redesigning Retirement For The Future

    As the nature of work continues to evolve in Malaysia and across the globe, it’s important for individuals to recognize the impact this can have on their personal finances, particularly in relation to retirement planning. Meanwhile, policymakers must also play their part in ensuring that the current pension system is adequate and inclusive for all Malaysians.

    Ultimately, building a sustainable and secure financial future for all Malaysians requires a combination of individual action and systemic reform. By prioritizing early and comprehensive planning, as well as addressing policy gaps, we can ensure that all Malaysians have the opportunity for a comfortable and dignified retirement.

    This article is part of a content series by the Institute for Capital Market Research (ICMR). Follow ICMR’s Facebook page to stay updated on behavioral tips and insights for better investing habits. To learn more about ICMR’s research on millennials and Gen Z, visit www.icmr.my or download the full report.

    About the Authors

    Datin Aida Jaslina Jalaludin, Head of Research, ICMR
    Nadhirah Ibrahim, Research Analyst, ICMR
  • The State Of Malaysia’s Education And Financial Literacy Among The Youths

    The State Of Malaysia’s Education And Financial Literacy Among The Youths

    A report by the Department of Statistics Malaysia (DOSM) in 2019 showed that 390,000 out of 560,000 SPM candidates were interested in joining the
    workforce immediately after the exam, while only 170,000 students were interested in continuing their studies. The three main factors why youths aged 17 to 18 did not want to continue their studies were:

    • The belief that furthering their studies did not guarantee better-paying jobs;
    • The availability of job opportunities in the gig economy, and;
    • The interest to become influencers on social media.

    Such is the sad state that this worrying trend is set to continue over the years. This could potentially impact Malaysia’s future supply of skilled labour, hindering its progress toward becoming a high-tech nation.

    But on the other end of the spectrum, the Malaysian government has adopted aggressive measures aimed at internationalising its higher education system, a process it hopes will improve the sector’s dynamism and make it more responsive to the demands of a knowledge-driven world economy. In 2012, the higher education ministry established Education Malaysia Global Services (EMGS) to promote Malaysia as an international education hub and facilitate the movement of international students into the country.

    Offering a degree that is well-recognised globally, Malaysian universities rank in the world’s top universities, with a total of 13 in the top 600, according to
    QS World University Rankings. Based on QS World University Rankings by Subject 2022, 10 Malaysian programmes were placed among the top 50 universities for studying their academic subject.

    As a result, Malaysia was the 13th-largest destination for international students in the world in 2020. According to the UNESCO Institute of Statistics (UIS), in 2020, Malaysia hosted 89,193 international degree-seeking students.

    Smart Investor talked to several industry experts to learn more about the state of Malaysia’s education among the youth and their level of financial literacy.

    The State Of Malaysia’s Education And Financial Literacy Among The Youths

    Raja Edriana Baizura, head of career services at Taylor’s University

    “Education at the very base of it is required for everybody. Having an education will lay the foundation that the youths of today require to be better shapers of tomorrow for society to live in,” said Raja Edriana Baizura, head of career services at Taylor’s University.

    “It is said that education and knowledge are two different things. Knowledge is what one knows, and education is how one learns it. Knowledge can be gained by the environment we are exposed to while growing up, while education is acquired knowledge from teaching and learning,” she added.

    Terence Ooi, the co-founder of Wiki Impact

    “Being in Asian culture, the value of structured education has not diminished. In fact, those who can afford it would be looking for alternatives for their children to receive a better education than what is being offered mainstream. The pressure of getting straight A’s is still there as it is perceived that this would be a stepping stone to tertiary education and progress in life,” echoed Terence Ooi, the co-founder of Wiki Impact.

    Yeap Jun Rong, Market Strategist, IG International

    “In the past, a heavy emphasis was on getting higher education to secure a high-paying job. However, current perceptions about having a traditional 9-to-6 job have shifted as youths are more inclined to look for alternative sources of income, such as trading or even growing and monetising their social media. While general sentiments are that higher education may aid one’s chances in securing a better job, the key is to find your niche,” stated Yeap Jun Rong, a market strategist at IG International.

    Haida Tahir, Director of Contingent Workforce Central, PERSOLKELLY Malaysia

    “Today’s job landscape is so competitive, and while education does not guarantee a high-paying job or that you will land your dream career, it is a fundamental requirement. Nonetheless, it is undeniable that higher education leads to better job prospects in the long-term. Beyond furthering your studies, continuous learning is also very important, more so now as technological advancements shift the demands of what an organisation requires from talents,” shared Haida Tahir, the director of contingent workforce central at PERSOLKELLY Malaysia.

    Dr Sanjay Sarma, CEO, president and dean of Asia School of Business (ASB)

    “I have never met a young person disinterested in learning. Curiosity is the most fundamental aspect of learning, and it is impossible to extinguish. I have, however, met many people who are disaffected with how we teach,” explained Dr Sanjay Sarma, CEO, president, and dean of Asia School of Business (ASB).

    “At ASB, we are all about action – and I believe classrooms need to have a more engaging, thought-provoking nature for the next generation to be prepared,” he added.

    The emergence of new methods of teaching and learning platforms, such as self-learning through learning management systems (LMS), has given students the ease of studying at their own pace. This minimises the effects of constraints they have when pursuing their education and their opportunity cost. They are becoming smarter and gaining skills faster than their predecessors, all at the same time.

    For example, Udemy is an online learning platform founded in 2010. According to the company’s website, Udemy has over 155,000 courses taught
    by over 70,000 instructors and has served over 50 million students worldwide as of 2021. In terms of growth, Udemy has seen significant expansion over the years. In 2016, Udemy reported that it had over 11 million students enrolled in its courses, and by 2019, the number had grown to over 50 million.

    The number of courses on the platform has also grown significantly, from around 30,000 in 2016 to over 155,000 in 2021.

    Johary Mustapha, founder and CEO of Forest Interactive

    “Through our foundation arm, Forest Interactive Foundation (FIF), we are trying to bridge this gap by developing future innovators in tech. Our FIF programmes upskills young entrepreneurs and students alike by curating a robust tech-focused hands-on curriculum needed to solve the digital skills shortage and increase the overall employability rate within the country,” said Johary Mustapha, founder and CEO of Forest Interactive.

    Nisa Saharuddin, the community engagement lead, Forest Interactive Foundation

    “Through our various programmes, we provide the younger generation with a varied skill set to help them stay relevant with the progressing economy. Our #SeKODlah programme, partnered with corporations like CIMB Bank and CIMB Foundation, would enable the future Malaysian workforce to explore and develop in-demand skills through e-learning and mentorship. If we are to meet the ever-increasing demand of the economy, it must be a collective gesture of both the private and public sectors,” shared Nisa Saharuddin, the community engagement lead at FIF.

    Education is and always will be important. However, the dynamics of learning have changed. Evidently, the younger generation places less value on traditional education as, from their viewpoint, there are multiple ways of achieving economic growth.

    Are The Youths Of Today More Financially Savvy?

    Bankruptcy cases are a telling point of where we stand regarding financial literacy. The number of bankruptcy cases seems to be declining, but let’s not forget that our government amended the Insolvency Act 1967 in 2017, raising the bankruptcy threshold from RM30,000 to RM50,000. This was followed by another amendment, raising it from RM50,000 to RM100,000.

    Personal loans are the highest cause of bankruptcy among Malaysians, contributing almost 42%, followed by hire purchase loans at almost 15%.
    Another worrying sign is the high number of cases in the 25 to 34-year-old age group, which makes up more than 21%, with the highest being in the 35 to 44-year-old age group, with more than 37%.

    “As information is readily available on the internet, consuming the right information to be financially savvy is important. Not many know how to save or start investing early but those who have early exposure to financial literacy will or may start saving and investing earlier in life,” said Edriana.

    “From my observation, they are generally still quite largely ignorant. Many are still unaware of basic investment options and opportunities. However, if compared to generations of the past, they do have greater access to resources on financial tips and investments – thus if you compare apple to apple, they are in a greater state,” added Ooi.

    “They are more aware and practical of their financial capacity, so it’s a yes – if we take the literal meaning of financially savvy. However, long-term planning is also important, and that depends on a case-by-case basis,” opined Johary.

    Where Do The Youths Invest?

    The Institute for Capital Market Research Malaysia (ICMR) recently conducted a nationwide study to better understand their issues, challenges, and behaviours regarding personal finance and investing. The survey was distributed to 1,500 respondents and found that millennials and Gen Z Malaysians can be categorised into three groups, each with unique characteristics.

    A higher proportion of respondents from the east coast do not invest (Group A), while Group C has a higher proportion from the Central region. More notably, there are differences in household income levels between all three groups. While 69% of Group A earns less than RM5,000 in monthly household income, 56% of Group B earns between RM3,000 to RM7,000.

    Meanwhile, respondents who fall under Group C were found to have significantly higher incomes, with 31% having household incomes above RM10,000.

    Financial Literacy And Risk Tolerance

    ICMR’s research suggests a link between financial knowledge, financial confidence, and risk tolerance with the likelihood of investing and the products invested in. For instance, someone who does not know much about financial matters and has little financial confidence would also be unwilling to take risks – hence not investing and falling into Group A.

    This could also explain behavioural differences between Group B, which invests only in ASNB funds or unit trust products, and Group C, which invests in other capital market products. The first unit trust company in Malaysia was set up in 1959. This might be why retail investors are most comfortable with unit trust products, considering their long history in Malaysia.

    Additionally, many investors who only invest in ASNB funds or unit trust products (Group B) tend to be less risk tolerant and financially confident. In contrast, those who invest in other capital market products like shares or cryptocurrency, which are perceived to be riskier, tend to have higher risk tolerance levels and feel more financially confident.

    “Based on our data at IG International, with the recent volatility, youths are more inclined to trade major US indices and forex. The Dow Jones Industrial Average and Nasdaq 100 are popular choices. Since the Covid-19 trading boom, youths continue to have their feet in the game in terms of trading,” shared Yeap.

    Jason Low, Co-founder and CEO, Virtualtech Frontier (VTF)

    “In addition to the stock market, young people are also investing in alternative assets such as cryptocurrency, NFT’s, and real estate. Cryptocurrency has become increasingly popular among younger generations, with platforms like Coinbase and Binance providing an easy way to buy and sell various cryptocurrencies. Real estate investing has also gained popularity among young people, with crowdfunding platforms like Fundrise and RealtyMogul allowing investors to pool their money together and invest in commercial real estate,” explained Jason Low, co-founder, and CEO of Virtualtech Frontier (VTF).

    “Personally, I have seen students who invest in the stock market or even trading to make their money ‘grow’ even as early as their first year of university. We invite speakers from the industry to introduce topics such as financial literacy to students in their final year during Professional Development Week, where they learn the importance of being financially savvy,” added Edriana.

    “Most young people I know are investing in insurance and crypto. This is perhaps the access they have to either opening the accounts or someone within the industry educating them,” said Ooi.

    “Some common options for youth to invest in are NFTS, cryptocurrency, stocks, fixed deposits, and real estate. Stocks are popular with those looking for higher returns and are willing to take more risk while fixed deposits are a more conservative option that offer guaranteed returns. Real estate is also popular for those who are looking for long-term investment with the potential for appreciation,” mentioned Johary.

    The State Of Malaysia’s Education And Financial Literacy Among The Youths Summary

    In short, youths of today are more financially savvy than previous generations. But it is important for them to educate themselves about personal finance and investing and seek advice and guidance from trusted sources.

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