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 How much is your net worth?, gauging your financial performance.

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yewkhuay
post Sep 13 2009, 08:31 AM

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QUOTE(jasonhanjk @ Sep 13 2009, 02:27 AM)
@tinkerbel

I ain't rich yet but I always consider myself to be a rich person. So most of my friends are going the same path as me. Know one in Melaka for example, he finally owe the bank 1 mil.
That is when I congratulate him.
*
congratulate him for "Owe the bank 1mil" ?
SUSjasonhanjk
post Sep 13 2009, 10:56 AM

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QUOTE(yewkhuay @ Sep 13 2009, 08:31 AM)
congratulate him for "Owe the bank 1mil" ?
*
Yes.

If one can owe the bank 1 million and repay timely every month, how much do you think his actual income would be? notworthy.gif
yewkhuay
post Sep 13 2009, 12:08 PM

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QUOTE(jasonhanjk @ Sep 13 2009, 10:56 AM)
Yes.

If one can owe the bank 1 million and repay timely every month, how much do you think his actual income would be?  notworthy.gif
*
pls explain further on the debt tht ur fren is having, and by having a mil debt and able to pay back doesn't mean he has a good net worth, it takes one recession that hits ur fren to wipe out everything he has.
gavin_lim
post Sep 13 2009, 02:14 PM

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QUOTE(jacboy @ Sep 10 2009, 07:07 PM)
Ladies and Gentlemen, member of the press,

I am new here smile.gif
May I ask you all the following questions. As LYN has very vast pool ppl from all kind of backgrounds, so this is going to be a good pool of
information sharing.

I want to learn if my existing financial status and net worth is healty, lousy, etc.

So I want to share my info and hope you can share your info too. Please follow the format. At the end of the sharing, you can add your comment/advice.
Age: 28
Occupation: Service Engineer
Marital Status: Not Married but got gf.
Asset(s):

House (2 stories)-
RM220k Outstanding Loan: RM 98k  15 years more

Car (Japanese car)-
Market Value: RM 60k Outstanding Loan RM 45k 4 years more
Liability (ies):
Study loan: RM115k -borrowed from my uncle and he say when he need money will ask from me, any moment(cash)!
Parents, sorry ah pa and ah ma to call you all liability smile.gif

Insurance:
Life: RM20k

Investment:
Bond: RM20k
FD: RM 220k

Cash in hand
RM10k
*
Hi:
Just a stupid question here. Does FD means fixed deposit? RM220K, what is the rate bank offer you?
SUSjasonhanjk
post Sep 13 2009, 02:41 PM

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QUOTE(yewkhuay @ Sep 13 2009, 12:08 PM)
pls explain further on the debt tht ur fren is having, and by having a mil debt and able to pay back doesn't mean he has a good net worth, it takes one recession that hits ur fren to wipe out everything he has.
*
First I like to ask you, do you understand the difference in good debt and bad debt?
Joink
post Sep 13 2009, 03:03 PM

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QUOTE(yewkhuay @ Sep 13 2009, 12:08 PM)
pls explain further on the debt tht ur fren is having, and by having a mil debt and able to pay back doesn't mean he has a good net worth, it takes one recession that hits ur fren to wipe out everything he has.
*
I guess this is what he is trying to do....

http://www.iproperty.com.my/reviews/miland...7/coverpage.asp
tinkerbel
post Sep 13 2009, 03:33 PM

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@jasonhanjk,
Er.... good debt and bad debt; debt is still debt! Also, U didn't elaborate the reason Y ur friend's owing the bank RM1m hence how'd we know if U were being sincere or sarcastic; I really thought it was the latter tongue.gif

@gavin_lim,
Yes..FD = Fixed Deposit and I believe interest rates on FD's fixed by BNM so it's thereabouts.
Pai
post Sep 13 2009, 03:46 PM

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QUOTE(yewkhuay @ Sep 13 2009, 12:08 PM)
pls explain further on the debt tht ur fren is having, and by having a mil debt and able to pay back doesn't mean he has a good net worth, it takes one recession that hits ur fren to wipe out everything he has.
*
IMO, if the guys can borrow 1mil to buy properties today, 1Mil net worth is only a matter of time. As long as one stays prudent in managing their reserve, that is........



wink.gif
Ern3st
post Sep 13 2009, 04:46 PM

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QUOTE(jasonhanjk @ Sep 13 2009, 02:27 AM)
@tinkerbel

I ain't rich yet but I always consider myself to be a rich person. So most of my friends are going the same path as me. Know one in Melaka for example, he finally owe the bank 1 mil.
That is when I congratulate him.
*
Anyway it is too early to judge whether it is a good debt or bad debt because it is still not the end of the investment and not for us to judge too. But what is the good thing is he got enough qualification while bank is willing to issue him 1 million debt.
SUSjasonhanjk
post Sep 13 2009, 04:58 PM

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@tinkerbel

Ahh, yes. Most people only think that debt is just debt.

I have to tell you this, there are a few individual out there will know their difference. If the debt you are borrowing will generate income for you, that is good debt.
Likewise borrowing money to buy an LCD screen to show off, that I would consider a bad debt.

Now, he owns some property and one of them is a oil palm plantation.
If he would to go through a recession, his net worth might be down, but that wouldn't break him.

Added on September 13, 2009, 5:01 pm
QUOTE(Pai @ Sep 13 2009, 03:46 PM)
IMO, if the guys can borrow 1mil to buy properties today, 1Mil net worth is only a matter of time. As long as one stays prudent in managing their reserve, that is........
wink.gif
*
You got any debt to equity ratio that you use?

This post has been edited by jasonhanjk: Sep 13 2009, 05:01 PM
yewkhuay
post Sep 13 2009, 05:53 PM

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QUOTE(jasonhanjk @ Sep 13 2009, 04:58 PM)
@tinkerbel

Ahh, yes. Most people only think that debt is just debt.

I have to tell you this, there are a few individual out there will know their difference. If the debt you are borrowing will generate income for you, that is good debt.
Likewise borrowing money to buy an LCD screen to show off, that I would consider a bad debt.

Now, he owns some property and one of them is a oil palm plantation.
If he would to go through a recession, his net worth might be down, but that wouldn't break him.

Added on September 13, 2009, 5:01 pm

You got any debt to equity ratio that you use?
*
tht's d reason y i ask for explaination on what kind of debt he owe bank before I assume anything (businessman also have millions of debt that generate $$ for them...), and yes, i know what is good debt n bad debt. I myself have few 100K debt tht generates income for me but I do not think i need to be congratulated. as long as u have debt, there are variables that can turn bad.
dreamer101
post Sep 13 2009, 07:07 PM

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QUOTE(jasonhanjk @ Sep 13 2009, 04:58 PM)
@tinkerbel

Ahh, yes. Most people only think that debt is just debt.

I have to tell you this, there are a few individual out there will know their difference. If the debt you are borrowing will generate income for you, that is good debt.
Likewise borrowing money to buy an LCD screen to show off, that I would consider a bad debt.

Now, he owns some property and one of them is a oil palm plantation.
If he would to go through a recession, his net worth might be down, but that wouldn't break him.

Added on September 13, 2009, 5:01 pm

You got any debt to equity ratio that you use?
*
jasonhanjk,

<<If the debt you are borrowing will generate income for you,>>

To be precise, POSITIVE CASH FLOW. If the income is not big enough to cover the debt payment, it is NEGATIVE CASH FLOW. NOw, it may or may not work out for NEGATIVE CASH FLOW situation.

<<one of them is a oil palm plantation.>>

By the way, given that bank typically only loan people 30% of the plantation value to buy palm oil plantation, it is usually NEGATIVE CASH FLOW. No, I am not saying that it is NOT a good deal. But, a person need to have enough reserve and other cash flow to fund this.

In my brother-in-law's case, he refinanced and mortgage his house to buy Palm Oil Plantation. The interest rate is low enough now and the yield of the Palm Oil Plantation is high enough for the calculation to work out. It is STILL NEGATIVE CASH FLOW. But, he has other business to generate cash flow to finance this.

Dreamer
idunnolol
post Sep 13 2009, 07:55 PM

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Guys,
How is the net worth of a company owner calculated?
SUSjasonhanjk
post Sep 13 2009, 07:56 PM

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@dreamer
Thanks for the claryfication. wink.gif

So your bro-in-law still needs some time to turn it around so it generates more income to exceeds expenses?
dreamer101
post Sep 13 2009, 08:11 PM

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QUOTE(jasonhanjk @ Sep 13 2009, 07:56 PM)
@dreamer
Thanks for the claryfication. wink.gif

So your bro-in-law still needs some time to turn it around so it generates more income to exceeds expenses?
*
jasonhanjk,

???

Income from Palm Oil Plantation is fixed as per CPO's price with slight variation. Let's call this as Y

Payment to loan is fixed. Let's call this as X.

I just tell you that X is greater than Y.

<<so it generates more income to exceeds expenses?>>

The only time that this will happen is when the loan is paid off in 5 years. In this case, X = 0. You get pure Y.

Dreamer
SUSjasonhanjk
post Sep 14 2009, 09:26 AM

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@dreamer

I always make sure my property cash flow positive, treating it as a business.
That's the reason I always take 30 years loan.

Buying oil palm plantation to me is a business too, if it's run down due to lack of management by the previous owner. It may require the owner some time to turn it around to make sure cash flows in.
So your bro-in-law took a 5 years loan only?
dreamer101
post Sep 14 2009, 09:37 AM

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QUOTE(jasonhanjk @ Sep 14 2009, 09:26 AM)
@dreamer

I always make sure my property cash flow positive, treating it as a business.
That's the reason I always take 30 years loan.

Buying oil palm plantation to me is a business too, if it's run down due to lack of management by the previous owner. It may require the owner some time to turn it around to make sure cash flows in.
So your bro-in-law took a 5 years loan only?
*
jasonhanjk,

1) My uncles and cousins managed the Palm Oil plantation. My brother-in-law own a share in the company. So, this cannot be done unless you have someone that know how to manage this and you can trust them.

<<So your bro-in-law took a 5 years loan only?>>

2) I think he took a 10 to 20 years loan just in case. But, he will pay this off in 5.

Dreamer
SUSjasonhanjk
post Sep 14 2009, 09:44 AM

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Good to hear that. Another 5 years it's an income generator without the expenses to repay the loan.
ehl
post Sep 14 2009, 12:07 PM

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QUOTE(Pai @ Sep 13 2009, 03:46 PM)
IMO, if the guys can borrow 1mil to buy properties today, 1Mil net worth is only a matter of time. As long as one stays prudent in managing their reserve, that is........
wink.gif
*
If the 1 million is borrowed for investment in property that generate net positive cashflow and safely paid by your tenant monthly.
You should realised that, every month you are getting nearer to be come a millionairs, not to mention capital gain at the end of the process.
cheahcw2003
post Sep 14 2009, 01:47 PM

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QUOTE(jasonhanjk @ Sep 13 2009, 02:41 PM)
First I like to ask you, do you understand the difference in good debt and bad debt?
*
To me, good debt generate positive income to your pocket (the income u generated from the investment using debt > cost of borrowing), on the other hand, bad debt takes your money from your pocket...

for eg, if u borrow at BLR-1% (Overdraft rate) @ 4.55% to invest, whilst your annual return of your investment is fixed at 10%p.a.(assumption), meaning u r generating a positive net return of 5.45% (10-4.55%), so it will consider a good debt. Successful businessman often borrow to invest, by using other people money to maximize their income.

Correct me if i am wrong.
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