Thanks for the advice, I think I still need to learn a lot about finance management.

I had some certain health condition and the doctor suggest me to become a vegetarian, so I think RM300 would be enough for me.

some points i have on my mind..

1. save money for 30%-50% down payment house
2. buy house with with loan tenure of 5-7 years. Buy only house at price max 2.5 x annual salary
3. continue saving and plan to start your business, learn how to sell during mortgage tenure. aim 25K savings every 5 years.
4. after 5-7 years u are now debt free.
5. buy 2nd property or start-up a small business for passive income with the 25K savings.
6. aim to increase passive income until u succeed and dont need to rely on your job.. aim for financial independence as fast as possible.
7. rinse and repeat.

using unit trust/investment can get u rich by the age of 50. thats a waste of time and opportunity.
better seek to set your own business and seek 100%200% ROI.
life is too good to waste on cutting coupons and being thrifty all the time.

This post has been edited by myvi5949: Jun 30 2011, 01:10 PM

Wow, too conservative for me.. it's like buying a car. Personally for me, 30% DP, loan period 15-20 years. Make sure the rental is able to cover the loan if you get the right location. Results = free house financed by your tenant.

This post has been edited by gark: Jun 30 2011, 01:26 PM

I AM cik Nor, i work at TxKx, sarawak. My salary is RM 400.
My daily expense is RM 15. i always worry for my futures. Any idea on how is the financial planning to help myself??

15 * 30 days = 450...over expense....

find a new job?

Actually, it's quite interesting, but I do have something on my mind,
1. Where should I put my money on the period of saving money for house down payment? I think it's a waste if I just put my money on savings account.
2. Why did u advise me to only buy house at price max 2.5 x annual salary? why max 2.5 x annual salary?
3. Is it possible to save up to 25K while I also have to pay house loan for 5 years? (If there's no tenant that rent my property)


I think 15-20 years is quite a long period, thus I'll get the house for free after 15 years, why should I choose 15 years loan period instead of 5-7 years period?

your salary is RM400?

time to move to the city and find a new job..

1. Put in a conservative investment account like FD, sukuk, asw, asb. this is saving not investment. think of investment only AFTER u are debt free and have enough emergency money.

2. Most good financial adviser use 2 - 2.5X annual salary to determine affordability. if you go higher than 2.5x you are risking defaulting on your loan. Back in the 80s they use this figure and they dont ask people to have put zero down on their down payment.

3. let say your income is 2.5k, with house loan 6 years at 30% down payment you aim to buy 50K house. the monthly payment will be RM600. assuming you can save RM800 a month for 10 month for 6 years (800x10x6=RM48,000). Thats already MORE than RM25k. Use the rest of the saving for business capital or to increase your education or buy a second hand car. Can you live on RM1000 a month? I dont know about you but I could.

This is just my way of doing things. This plan is for financial independence. Meaning you aim to be debt free first and work out your way to financial freedom. Using leverage to get a "free" house is risky for me..why?

1. It is a plan under many ASSUMPTIONS and RISK. assuming u can get tenant. assuming your tenant pay the utility bills. assuming tenant wont make stupid business in your house. assuming you can still pay your house 15 years in the future. assuming you still have a job in 15 years. assuming you still healthy and not dead in 15 years time, assuming property price will continue move up... well u get my point.

2. there is no actual "free" house. you are paying interest to the bank. youre slave to the bank and to your employer for 15 years.

3. opportunity cost.. losing the opportunity to accumulate capital and start a business. Most people dont start a business because they are tied to jobs and loans.

4. losing TIME. Time is your biggest asset not money, who wants to be millionaire by the age of 60 or 70? I certainly dont. Why not be rich and do what you want in your 30s or 40s? Getting rich slowly using compound interest is a waste of time and opportunity.

This post has been edited by myvi5949: Jul 1 2011, 06:45 AM

Because.... at loan of 7 years, you cannot breakeven with the rental rate. Below is a example of a "real" property.

Example : Apartment Price RM 400,000 (furnished) paid with RM 120,000 d/p and 280,000 loan @ BLR-2%
Gross Rental : RM 2,800 / month
Net Rental : = (2,850-300) * 10/12 = RM 2,125 / month

If you choose 5 years loan, loan repayment per month = RM 5,176 (how to cover loan???)
If you choose 7 years loan , loan repayment per month = RM 3,847 (also not enough... )
If you choose 15 years loan, loan repayment per month = RM 2,093 (you don't need to pay a single cent. )

Multiple up, and you can get as many 'free' apartments as you can afford to loan. Well, it depends where you are staying in the klang valley, 2.5x annual salary for someone starting to work, can't even get you a cheap low cost (but not subsidized) apartment/flat.

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Added on July 1, 2011, 10:16 amCorrection, my tenant is the 'slave' to the bank for 15 years.

This post has been edited by gark: Jul 1 2011, 10:18 AM

Property is a form of investment. But i dont like people with no homes who just started their first job to directly buy three RM100K house. Thats reckless. When everyone want to be a "property investor" this will create the illusion of demand. Price doesnt reflect demand in some segments. Its a game of musical chairs, the rich getting richer poor gets poorer.. we have seen this before. We all know what will happen eventually.. I only get into an investment when there are blood on the streets not when everyone rushing to buy property at these ridiculous prices.

and it is assuming u can get tenant. assuming your tenant pay the utility bills. assuming tenant wont make stupid business in your house. assuming you can still pay your house 15 years in the future. assuming you still have a job in 15 years. assuming you still healthy and not dead in 15 years time, assuming property price will continue move up... well u get my point.



This post has been edited by myvi5949: Jul 1 2011, 11:12 AM

So far I am ok, 1 property already rented out >6 years, so far they all still paying the bank for me. I am not speculating with the property prices, as I am looking for stable income, and not likely to sell them off. Even the price stagnate or crash, as long as the rental is reasonable it is ok for me. Even of anything happen to me, I can pass on these income producing assets to my loved ones as the mortgage (loan) is insured via MRTA, which the insurance company will settle the loan.

Yes blood on the street is good, I bought those properties during poor economic times so I am getting good yields on them. Also I am offering the rental at slightly below market value to ensure I get quality "professional" tenants.

But not all my investments is in properties, they are more diversified. In case of emergency, I can liquidate some of my other assets and can still pay off my loan 100%. So I am more conservative than you think.

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Added on July 1, 2011, 11:40 amI do agree with you, I saved and "slaved" for 5 hard years before i could get reasonable amount of DP for the 30% down payment. You should not over extend yourself, but there are opportunities everywhere. Properties since 2007 is not interesting because speculation has made the current rental yield are quite ridiculous.

This post has been edited by gark: Jul 1 2011, 11:42 AM

Good day sifus. I've been following this thread for quite a while and thanks a million for the many tips. I have a question here. Let's say that I have a savings for about RM30K, and I have a car still on loan left about 5 years. (I took a 9 years loan. I know it is not the best decision, but I had my reasons). With rebate from the bank, the car can be settled at around RM30K++. My question, should I settle the car using the savings, or should I just continue servicing the loan? The car is RM600 per month, and after full settlement, my cashflow should be better and I can save a lot more than now.

I think it depends on what you going to do with the extra cashflow if you settle the loan. If you can invest in something that generates higher return compared to the car loan interest then it would be logical to settle the loan. But it all goes back to your priorities in life and your financial goals.

Why not: if you can invest in something that generates higher return compared to the car loan interest then it would be illogical to settle the loan.

The 30k intended to settle the car loan, should be used to invest rather than the monthly extra cash.

Sorry ask in wrong section, anyway nice thread here!

This post has been edited by psychodize: Jul 5 2011, 09:45 AM

Do you mind elaborating on how the rebates are calculated? I'm facing a similar situation as you and the rebate method will probably determine whether I settle or not.

As for your situation, you need to make a decision here. Basically, profit from investing vs savings from settlement. Which is higher?

If you want to invest rather than to settle, you have to make sure you have the discipline, knowledge and initiative to do something. Not let the money rot. If you wind up doing nothing, then it doesn't matter how much you can potentially earn, because you did nothing with it. This would be a lose/lose situation for you. You lose cash flow and you lose on interest.

I don't know the exact calculation mechanism, but I will ask the officer if I have the chance. That day, she just showed me a screen from her terminal showing the total settlement amount and the rebate automatically calculated by their sustem. The rebate calculation differs from bank to bank, so it's best to consult with your bank. Mine is MBB.

I see. Care to share how much you stand to save with 5 years remaining? How much was the original interest?

Please do share the formula if you happen to find out.

Hi guys,

I'm 24 years old - Employed since May 2009.

Salary: RM4300
Savings: RM2600

------------------------------------
Total savings in cash form: RM1,000.00
Total savings invested: RM35,000

Total returns on investment = 32% (since Aug 2010)
Total months I can live without an income (upon liquidating all investments) = 30 months

Just want to share the lessons of personal finance I have learned so far:

1. Constantly increase your personal income.

2. Constantly increase your returns on investment.

3. Increase your spending at a rate (pace) slower than your income increment.

4. Increase your savings at a rate (pace) faster than your income increment.

what job? 2 years graduate considered very high pay! congrats