Is it really nothing to sneeze at, sifu?

Yup, I've been working since December 2005... around 6 years++... And also from Kuching, Sarawak...

The first few years not much savings... that time still a hardcore gamer & single... got $$$, spend it mostly on original software... didn't think too much about my future at that time... mostly can hang on there coz i stay together with my parents (both working & earned more than me)... I'm not into clubbing, smoking, boozes & other luxury stuff (more of a techie geek) -- thank God, still the same till now

Only start saving by Sept 2007 (try to rise up after hit rock bottom, zero saving throughout 2007)... start investing in ASM at the end of 2008 and subsequently in AS1M the following year... can generate at least additional income of around RM2k PA by now

Start my FD account early last year only... Can generate at least RM600 PA (3% for 1 month tenure)... not much, but better than nothing, i think...

Start my investment in UT late last year only after my colleague introduce a consultant to me. Have been wanting to invest in UT but no knowledge about it... Also learn more about investing with a lots of sifu here...

If u wanna know how I have that kind of $$$ in less than 5 years... Sorry, I also not that sure myself how i really manage to save that kind of amount
1) Mostly is due to own determination to have a proper saving (cannot live on a life where I spent more than what i can really earn)
2) Kick out my old habit & desires (no more hardcore gaming for me) - seldom spent on games nowadays
3) Try to spent wisely & adjust my lifestyle... start keeping record of my daily expenses (want to know where the $$$ is gone to)... mostly I spent more (food, entertainment & stuff) when I go out with my gf only

Btw, my net salary is excluding my bonus & annual leaves buy back... and also when i just start my saving, my salary is less than RM1k at that time

I think what I practise here is a norm for most people, rite? Correct me if I'm wrong...

Need advice !

Income in RM:
Monthly Salary = 6,700 after all deductions
Rental Income = 500
Part time = 550

Expenses in RM:
Food = 600
Transport = 300
Entertainment = 100
Phone Bills = 100
Electric & Water = 100
Insurance = 200
Streamyx = 110
Give Parents = 500
MORTGAGE = Paid Off
CAR = Paid Off
Credit Card = Paid Off

Asset
Saving = 10,000
House = 200,000
Car = 5,000
Stock = 10,000
KWSP = 150,000

Liability
Zero

Extremely Frugal Guy here, when can I retire ?

This post has been edited by pipking: Mar 8 2012, 10:57 PM

ok, so how old were you?

This post has been edited by alwjmonster: Mar 9 2012, 03:52 AM

Net Salary pm (ignoring investment returns rental income as it is a % of yr investment returns): $7,250
Total Expenses pm: $2,010; 27.72% of net salary, great job 70%+ savings?!
Accumulated Investment/Investable Assets: $170K (88% from EPF)
Note: Excludes car (unless U intend to be a taxi driver after retirement) & house (i ass-u-me it's yr home, thus no income from it)

In my humble opinion:
Excluding inflation, U should be financially free in 2 to 6 years time, depending on yr investment assets' returns.
Note: Since 88%+ of yr Investment / Investable Assets are in EPF, it depends on yr age now.
eg if U are 25yrs old now +15yrs = 40yrs old only, NOT enough to withdraw from EPF.
Possible solution:
Drain EPF A/C2 into yr pocket with yr mortgage (go refinance it with a Flexi-mortgage or fixed % mortgage) - assuming U've not touched EPF A/C2 for yr mortgage settlement


IF the house is a rental investment:
Accumulated Investment/Investable Assets: $370K (41% from EPF) (still excludes car)
Excluding inflation, U should be financially free now to 4 years time, depending on yr investment assets' returns.
Note: Since 41% of yr Investment / Investable Assets are in EPF, it depends on yr age now, as above


This post has been edited by wongmunkeong: Mar 9 2012, 06:48 AM

TQ Sifu for advice !

my age is 35 this year! yes, I'm saving roughly 70% of my income... hope can do 80% but nowadays cost of living expenses is impossible

My car is just a proton and I do regular maintenance to keep it healthy, My house is rented out so consider an investment (My company provides accommodation)

My EPF a/c 2 I nor touch before ! good idea to withdraw and invest a 2nd home !!!! tq for advice

hope i can reach my 1st million soon

Whoa... 35 only?
U the Sifu leh, can save 70%+/- of yr net income (excluding asset returns). I can only hit about 46%+/-, thus i need another 8 yrs +/- to be "free" and have great options

BTW, it's not just about the millions we have/hold in assets, it's also our ability to keep/not spend crazily, that affects our personal economy.
Thus, a person with $4M, with yearly expenses of $500K, will destroy that accumulation easily within 10 years, EXCLUDING inflation

Bro, being frugal is good, just ensure yr physical and mental health + relationships are as strong as your financials too.
Just sharing an experience - a relationship that soured nuked my net worth when i was younger and dumber. I was "supposed to be" financially free in 2012 / 2013 before the nuke

Wow, same with me... i had a NUKE too...

I just feel sick about Debts and Liabilities, I had a NUKE years ago (age 23-28)

Spending like crazy and no tomorrow on Cars, Nightlife, Alcohol, Woman & Gadgets !

After a while my health & mental problem comes up !!!! (admitted hospital)

Thinking back myself is so stupid those days... lucky to have a supportive wife and my life starts 360 all over again at age 29!!!

Now i track every single penny going in and out !!! even 0.01 cents... must respect money, if not it will not respect you and go away !

Let me do a simple math for your retirement plan with some simple assumptions:

- Monthly income = 6,700+500+550 = 7,750
- Monthly expenses = 600+300+100+100+100+200+110+500 = 2,110
- Monthly savings = 5,640
- Yearly savings = 5,640 * 12 = 67,680
- Assuming you invest all savings into stock markets of which can reward you 6% return every year (same as the rate of return of EPF)
- Current equity portfolio = 10,000 (also assume this equity portfolio will grow by 6% every year)
- Since you want to retire earlier, so KWSP is not very important to consider as you cannot touch this money before the statutory retirement at age 55
- Saving 10,000 will not take into consider for retirement, instead I put this as an emergency fund
- Your yearly expenses will be inflated 3% each year

9 years later
- Your yearly expenses = (2,110*12)*(1+0.03)^(6.25) = 30,457.65
- So you need a portfolio size with a return 6% return to support your retirement expenses at 6.25 years later = 30,457.65/0.06 = 507,627.46
- Your portfolio size at year 6.25 = {67,680*[(1+0.06)^(6.25)-1]/0.06}+{10,000*(1+0.06)^(6.25)} = 509,962.37 > 507.627.46
- With a portfolio size of 509,962.37, this will generate an annual income of 30,597.74 (=509,962.37*0.06) which would be able to cover the inflation-adjusted living expenses of 30,457.65 at year 6.25

Conclusion is that you would be able to retire 6.25 years later if you can meet the assumptions stated above. Good luck .

Note: Sorry for the previous wrong calculation. Have ractified the numbers .

This post has been edited by kinwing: Mar 14 2012, 10:21 AM

Hi munkeong,

If you have RM4 million portfolio that reward you an inflation adjusted return of more than 12.5% every year, spending RM500k should not be a problem lah.

True, but can get 12.5% inflation adjusted returns on average, every year boh?
That's like 12.5%+3%inflation (minimum) = 15.5% average return pa? Whoa...
Pls correct if i'm mistaken ar with the above calc., me maths aint me strong point = just simple logic & Excel

Get 8%pa inflation adjusted returns also dang good liao (assuming inflation is 3% to 6%pa) for an average Joe like me.

This post has been edited by wongmunkeong: Mar 9 2012, 01:13 PM

8% inflation adjusted returns are achievable through investing KLCI Index Fund. Indeed, there are quite a number of equity funds can give you return of more than 10% to 15% one, not to mention certain specific good companies' shares can have annual compounded return up to 20%.

If really cannot achieve a 12.5% inflation adjusted annual return to preserve the purchasing power of the RM4 million portfolio, then don't spend that much up to RM500K, simple as that.

This post has been edited by kinwing: Mar 9 2012, 04:40 PM

Yar lar, bro - that's what i was sharing with the other bro lar. It's not JUST the amount of investment assets we have, it's also our spending/keeping of returns that's important. The whole paragraph/posting, in context

This post has been edited by wongmunkeong: Mar 9 2012, 05:03 PM

I'm 26 years old married aiming for
1. Financial independence
2. Education for kids


We both are still studying and have been living frugally thanks to my dad advices and reddit /r/frugal. I'll be starting working life early next year. No car, home or credit card yet. If you guys have some time, please advice us for financial planning.

We are studying overseas on gov's allowance. Below is the February expenses

Income combined:
about RM4400

Expenditure
Electricity: RM60
Internet: RM66
Groceries: RM508 (This is actually a lot - fish, chicken, crab, squid etc). Although living standard is cheap in bangalore, we cook everyday since it is healthier.
Petrol & Bike service: RM30
House rent: RM421
Phone: negligible, since I hardly use them. Communicate through internet only.

Net = RM4400 - 1085 = RM3315
- I'm proud that I am able to save better than when I was single when I can save about 50%
- I've been pouring excess cash into ASB when I go home to Malaysia.

Cash: RM10.8k in bank
My ASB account is around RM125k - should max out in 2015 if I consistently save RM2k every month when I start working.
Debt: RM125k to be paid when I'll start working next year.
Emergency fund: None yet
Insurance: Father's insurance counts or not?

Below is the projected budget for next year when I will start working
Budget

Salary
Me & wife: RM8000 (as housemen)

Expenditure
Car Loan: none
Food :
Rent :
Phone:
Life Insurance + Medical Card : No idea
Broadband :
Credit card:

Parking :
Petrol :

My concerns:
A) House
Seeing houses in klang valley scares me because they are so expensive. A good neighbourhood and school is a must. But does the rule of annual salary x 2.5 holds? That would be 240k only.

B) Car
Looking for a second hand car. Safety is top priority so I'm not inclined on local cars. No Idea how big the budget should I allocate for this.

C) Kids
We are planning to have a kid by next year. Also, no idea how much belanja is for the first 5 years. I heard raising a child can take up to 1 million. 3 kids, 3 million?

D) Investment
This is where I have little clue on doing it. I think I should start slowly so shall I max out ASB and then start with FD? Or maybe invest in FD first for a year before starting working? I may gravitate towards share market investment later because I have my father for advice. Not so keen on property.

So back to my aim,
1. How do you achieve financial independence?
2. Raising kids & education. 3 million for them, 1 million for us. Achievable?

Hi skywater,

Hard to comment till we know your estimated expenditure on essential stuffs (food, utilities, rent or will you be living with your parents?)
Rm8000 is a reasonable income, i suggest you save up at least 6-12months worth of our estimated living expenses before thinking about taking up a home loan. Dont forget to factor in that if your wife is pregnant, she will be off work for a period of time as well. + you will have to save up for postgrad courses/exam fees (MRCP,MRCS,Mmed etc) which is essential for career advancement.

A decent apartment for 2 adults + kids in klang valley would have cost something like 400-500k, unless our parents are happy to help out with the downpayment, otherwise i dont think its a good idea to buy a property during your 1st/2nd year as junior dr. The property market is at its peak, so there is no rush, just watch and wait for a good time to jump in.

You are still young, most importantly is to concentrate in your career and studies first. Once you have completed your postgrad studies (if you are planning to do subspecialty med) then all the money will come to you eventually. Having a child when you are studying can be very difficult, so you will have to prioritize and manage your time properly then.

Good luck.

Perhaps I'll buy a property in my third year since if we were posted in rural areas, we can stay in the quarters. If I'm posted in KL, we can stay with my parents.

Coming back to investment options, shall I max out ASB first? I have a quick break this April and I was thinking of starting with FD first or maybe jump straight to share market investment.

Howmany baskets should one put his investments in?
At least 6?
Mutual funds, fixed deposit, property, currency, shares, business, commodity and what else?
Antiques?

IMHO, depends on your definition of BASKETS

If baskets are:
Fixed Income class (FD, Cash, Bonds, etc.)
+ Business Equities (Stocks excluding REITs, Equity Funds excluding REIT funds, businesses, etc.)
+ Real Estate Equities (Properties, REITs' stocks, land, etc.)
+ Alternatives (Gold, Silver, Antiquities, Commodities, etc.)
then IMHO 3 to 4 cukup

If baskets are SUB-CLASSES within each ASSET CLASS above, then banyak banyak also not much use if >=80% is from one ASSET CLASS
eg some folks think that Asset Allocation is holding Public Bank, LPI, DiGi, Nestle, etc. stocks + Equity Funds
er... all these are sub-class of Biz Equities and are generally correlated to the same economic shakes/risks, even though they are in different sectors

another eg: Cash, Savings A/C, this ForEx FD, that ForEx FD, Annuities (all in Fixed Income class)
yes, within the Asset Class, one is diversified BUT it is still MONEY per se.

Just a thought - no right/wrong. As usual, it depends...

This post has been edited by wongmunkeong: Mar 12 2012, 11:59 AM

Hi, just a quick heads up. Mr. and Mrs. Robert Kiyosaki will be coming down to Malaysia for this years National Achievers Congress and will be talking about his new book "The Unfair Advantage" (2011)

Was just wondering if anybody would be interested?

Hi,

We really need your advice to re-built our financial wall. My wife and I really not good in manage our wealth. Both of us are 30 now and end of this year will welcome another family member, so we really hope to built a strong financial background for our future .
The following are out detail,

Husband:-

Income in RM:

Monthly Salary = 4,400
After Epf =3800

Expenses in RM:

Car Loan = 570 (16 months to go)
Housing Loan1= 820 (current stay)
Housing Loan2= 700 (interest, completed end of 2013)
Phone Bill= 30
Insurance= 190
Food= 500
Parking= 120
Petrol= 250
Utility Bill= 250
Groceries & else= 300


Wife:-

Income in RM:

Monthly Salary = 3,500
After Epf = 3000
Allowance= 250
Freelance= 1000+ (Average, Not consistent, max can reach to 5k per month)

Expenses in RM:

Car Loan = 1000 (5 years+ to go)
Phone Bill= 100
Insurance= 300
Food= 450
Petrol= 200
Groceries = 600
Parents= 800
Others= 500


Our Asset in RM:-

Saving = 20,000 (Cash)
House = 2 units
Car = 2 units
UT= Invest deduct from my KWSP account + (RM1000+RM100/month)
KWSP =RM41,800(-RM13,500)Husband+ RM24,500(-RM7,000)Wife

Last year we just bought a new house as for the investment purpose. We withdraw the money from our EPF account for this house investment. I am notice that our savings backup is very bad, which means we are not suggest to invest again in the market? How do we re-structure our financial management? How to generate more savings backup? Should i change my job to higher salary range?

Hope you all can give us some idea, thanks.

87% of your combined net income is paid out as Expenses
+$1,570 Bulk of it going to cars (not an asset unless U are a "transporter" )
+$950 Food is the second highest - i assume eating out?
+$900 On top of eating out, Groceries that high too?
er.. $950 for 2 people to eat out (whoa.. U guys must be eating high street or more food than me)
+ $900 groceries.. IMHO unless U have 6 people to feed.. and this is on top of $950 eating out?

10% of your combined net income is saved & Invest (excluding EPF)
Good start - try to hit 20% to 30% at least (thus, cut down lar on your "necessities" which i dont think are really necessities - just a thought)

My humble suggestion:
a. Tap both your EPF A/C2 yearly (which pays directly into your loan account) OR monthly (which pays into your bank a/c, thus U can use it to invest in REITs and other stuff) for your mortgage
b. Reduce your "living to eat" - my bad if i'm assuming. $1,850 per month for food & groceries for a small family (1 to 2 children now?) seems a bit extravagant compared to your combined net income. Just a point of view yar - U may want to "live to eat", like some people live to collect Pradas, LVs & Coaches. That's your right/choice

Investment Assets Held
Cash is just enough to cover 3 mths+ expenses, THUS not considered investable asset
Home + cars arent investment assets IMHO
Your investment house can sell for value = ?
Unit Trust god knows how much
heck - I just noticed no worthwhile info shared

This post has been edited by wongmunkeong: Mar 14 2012, 07:21 PM