just a question:

currently due to some commitments my savings have dropped to 10%, monthly excluding any extras.

whitin the next few months a lot of these commitments will lapse and i have the option to go as high as 40%

i was thinking to drop this down to 30% and get a 30-30-30 approach of which 30 i use for daily life, 30 fot savings and 30 for whatever shit i want to buy.

the issue here is the long run, my projection using this approach will result to me having a small sum of money not enough to do anything. but i could survive easily 1-2 years without income.

if i hike it up to 40% i think in the long run i will be better by 20% but i dont have any purpose for that extra monies.

any ideas?

I think you have to crunch the numbers. Unless he has zero in his ASB account, he is better off saving his money in ASB on a monthly basis. Furthermore, if he takes 100K, that 100K is taken as a debt load in determining the amount of loan he qualifies next time.

If he has 10K in his account and he saves RM2500 per month with interest rate of 8% per annum he earns more than if he has 100K and he earns only 3% per annum and he pays RM2500 per month to pay the ASB loan.

If his loan repayment is 40 months for 100K the interest he earns at 3% per annum is RM10,354.68
If he has 10K in his account and pays RM2500 per month for 40 months and earns 8% per annum then the interest he earns is RM17,288.22.

Another disadvantage of ASB loan is that the RM2500 installment that he pays per month will be taken into account by any bank in determining the debt to income ratio.

Dear all,

Need your independent opinion on my financial status and how can I improve further.

Basically, I'm 26 this year and working at a Bank.

My Incomes:

Net Salary: RM4,500
Rental income: RM1,250 (1 year contract starting April 2014)

Total: RM5,750

My expenses:

Housing loan: RM1350
House rental: RM360 (inclusive utilities)
Car loan: RM450 (Preve)
Food & Groceries : RM600-RM1000 (Let's take RM1000 to be prudent)
T&G: RM100 (Use LRT to work)
Insurance: RM250 (Medical and use the insurance to cover housing loan if anything happen instead of taking MRTA. Hence, need higher limit and therefore higher monthly commitment)
Phone & Astro: RM100 + RM60
CC installment: RM480 (will end in August and September this year.)
Car Oil, Maintenance, Parking: RM300

Total: RM3,990

Surplus: RM1,760 roughly

Savings & Investment

RM10,000 in shares (only in UMW Oil & Gas counter) and RM1,000 in UT (Kenanga Syariah Growth Fund, put in last week with annual return of 23.12%)

Background

I can do saving but I'm bad in managing my expense. I always use my saving or CC to buy gadgets. I was in huge debt of around RM11K last month. As my priority is to rid off CC debt first, I have used my EPF and deposit from my tenant of RM3K to settle the CC debt.

Now, I'm almost CC debt free. So, I can now focus to build up my saving and investment portfolio.

My target

I prefer to put my money at places that force me to save/invest or hard for me to withdraw out my fund. That is why I invest in property, UT and shares.

At the moment, I'm in the process of applying another housing loan but it will not cause any CF constraint coz the interest will be capitalized for 4 years i.e. during construction period. Have to pay around RM2200 starting from Year 4. I want to invest into this property coz besides no significant impact on my CF, the construction period is pretty long which allows me to save on RPGT if I want to flip it once it is completed.

I can't put my money in ASB (I'm Malay btw) coz my dad is using it for his retirement fund. It has reached the allowable limit.

Btw, I may get married next year. So, may require significant sum of money for that of around RM15-20K. The makan-makan side will be sponsored by parents fortunately.

What's now

So guys, what do you think should I do with the excess fund of around RM1,760? Should I put everything into investment and withdraw the fund when I need it for my wedding?

Or should I put separate fund for investment and wedding?

And on the investment, what kind of investment should I focus on? I am leaning towards UT though...

This post has been edited by hullabaloo_bard: Apr 7 2014, 04:54 PM

even ASB2 quota is fully utilized?

Tq. That's an option. So, should I put everything in it first or based on proportionate basis?

You can consider options below:
1. Keep 3-6 months of your monthly expenses as your savings,more if u r planning to get married n buy a new house
2. Invest in PRS, private retirement scheme
3. Reduce your expenses
4. Pay more into your housing n car loans to reduce interest paid
5. Pay off your debts first then transfer your income to another savings account which u will unlikely to withdraw
6. Aim to save more every month
7. Do your own research online. Check out bfm ringgit n sense podcast
8. Wish you all the best

HI hullabaloo_bard,


UT written 23% annually didn't mean reflect last week you invested will return such amount after 1 year.
UT report using certain of formula and date of NAV to promote their fund. The return didn't minus 5% service charges. Be caution and awareness to be UT savy.

Basically investing in UT equities is good idea of investment but not as saving, becoz there risk stock downturn during crisis. You may need understand more investing UT, which it require investment period let said 1-3 year to see the result.

Since you going to marry next year, it not advisable to save wedding money in UT for less than 1 year.
Which any time you require to spend it rather holding it for few year.

Wedding require certain expenses incurred event we budget tight, there still time it will overshot the amount we plan. Therefore the best keep every penny in FD for the wedding funding and never spend more what we hv.

Secondly CC is a killer when come to interest repayment, always remember plan your wedding less than what you hv save. You can bring 1 day happiness during wedding day but you carrying a long life debts to settle.

A good financial savy is CF available for future.
Must remember there a such different saving rm1k yesterday and few year later the same rm1k, even your salary has increased. My suggestion not fixing a fix amount to save but percentage to save accordingly your income.
You can google around the best ratio to save and how to save. More your save % must be greater the expenses is the best.

A rich person can earn more than rm10k but only hv saving habit of 1 year compare , middle income of rm5k with saving of rm2k. Yesterday grocery item my not the same price but expensive for the quantity of item after few year due to inflation.
What i want to highlight when your salary increase your saving also must increase parallel with inflation.


Once you settle your wedding, then another phase is keeping/investing the money.
Forget of honeymoon and other outing..try to get budget event to spend time with your future wife.

This post has been edited by felixmask: Apr 7 2014, 11:55 PM

A good idea

Is a good idea to investing is PRS, but always caution PRS has guideline only can take out after retirement. So becareful if didn't allocated to investment which not available to catch out when time need.
I also invested in PRS provided i hv allocated emergency money, investment (non PRS) in UT Equity or BOND and stock.

Its important to understand type of category early of investing, to avoid get caught in middle.
This also know as diversity the investment rather putting all the egg in single basket.
It applicable to UT and even stock, to avoid the risk of loosing all the investment in single basket.

Knowledge Bank Interest, also one key saving. Car loan using fix rate while housing loan is calculated daily, varying every quarterly by BNM revise the OPR.

If you hv debt of car loan rm50k using fix rate and housing loan rm50k using daily interest, Borrower must know more loan repayment at daily interest able to save/avoid paying more or longer term to the bank.

Juz my 3sen to addup the point above...which a good idea to save and invest. (Saving and Invest carrying different terminology)

This post has been edited by felixmask: Apr 7 2014, 11:47 PM

Tq for the suggestion.

Would it be wised if I use the surplus of RM1,700 according to below approach:

Saving: RM700
UT: RM1,000

*Will not invest in shares anymore coz of my trigger happy attitude.

So, by let's say by May next year, I will have:

Saving: RM8.4K (So, the remaining wedding fund will come from other sources like bonus)
UT: RM13K (inclusive existing UT of RM1K)

One more thing, should I rather use fund for UT for ASB2 first or maybe split 50/50?

This post has been edited by hullabaloo_bard: Apr 8 2014, 10:28 AM

if you are BUMI and ASB2 is more capital protection compare other UT.

50/50 is spliting total saving or split etc other investment ?

50/50 on investment.

No use I put my wedding fund/savings of RM700 in ASB2 when I will still take it out next year.

oic...

So, based on your opinion, will it be good? Or should I park the my saving/wedding fund into ASB2 first?

i dont hv ASB2, the only concern is their service charge ?

Let said ASB2 deduct 5% and didnt get any profit less than 1 year withdraw , then you lossing more than 5% to park there...

I didnt study ASB, but what i understand ASB less volatile compare external UT fund.

Sorry and forgive me..i dont hv knowledge of ASB service charge now, i need time to check up.

I would not advise buying another property. When BLR goes up your monthly payments will also increase. You should use the surplus of RM1760 to pay off your credit card as soon as possible as any return you receive from ASB will not cover the interest that you are charged on your credit card.

My advice is that you should double up your payments on your credit cards for the next three months so instead of August/September, you will finish paying up your credit card debt by June. After that you will have freed up an additional RM480.00. Then you will have a surplus of RM2240. If you reduce your expenses further especially in items like food and groceries (RM1000 is excessive for one person. You should be spending less than RM500 per month for one person). Why are you paying for a car but using LRT? Transportation costs alone is RM850 per month. My point is that if you can reduce your expenses by another RM600, you will have a monthly surplus of RMRM2840.00. If you save RM2840 per month into your ASB2 and assuming that you get a return of 6% per annum, at the end of twelve months you will have RM38,000.00 ++

RM38K is enough for you to have a simple wedding and with extra left over. If you continue to save like this for 3 years without withdrawing, you will get RM115,000.00 in 3 years. And this is not even including any bonus or increments that you may have received in 3 years. If you are the type that need to be "forced to save" just get the bank to autodeduct it from your salary every month to ASB. I think RHB has that facility.

On the property, it will have no installment to be paid for the first 4 years and it will not eat up my RM1760 until Year 4. So, by the time the installment starts to kick in, I may able to cover it with my salary increment or just sell it off.

About the CC, it is not a outstanding sum. It is under CC installment for scheme for my laptop and hp. So, still has to service the installment of RM480 every month.

On the groceries, yes I know it is on the high side (roughly RM33 per day or RM11 per meal). The lowest I have tried is RM600+. Will try to drop it lower.

On the transportation, I still use car during weekend and sometimes go back to kampung in Melaka. And, one more thing, Preve drinks fuel like nobody business specifically during traffic jam. Need to figure ways to reduce this transportation cost.

About the ASB2, it can be done using simple standing instruction to Bank.

This post has been edited by hullabaloo_bard: Apr 8 2014, 12:55 PM

Assumptions made are: i) You get enough increment over the next 4 years to maintain the same cashflow even started the new property loan repayment. ii) You will be able to sell it off at a good price. The next question you need to ask yourself would be: Can I manage it during a bad time? Say retrechment or any critical event in life. From what I read, you basically have zero cash now and you are planning to get married soon. What is important now is to bulk up your bank account before looking into any investment option. Investment comes with risk and are you sure you want to invest your wedding fund? In the worst case (and unlikely) event that your money got locked in, what can you do? Cancel your wedding plan?

Is the property that you intend to purchase under DIBS? As far as I know from 2014, no DIBS is allowed and you will need to service the interest.

IMHO what you intend to do is risky as you are buying base on what you think you can afford in 4 years time. What if you lose your job? What if you don't get the increment you are hoping for? What if the project is abandoned? What if you can't find a buyer to buy the Property after the end of 4 years? What if you can only make less than RM50K if you sell it? If you have at least 12-24 months salary saved up with no credit card debt, that is risk you can afford to take. Looking at your savings now if any financial setback happens, you are ill equipped to weather the storm without family help. Even now looking at the Property you bought your return on investment is negative. Your monthly repayment is RM1350 but your rental is RM1250 and it is only for a year. What if the tenancy is not renewed? At the moment you barely have enough to pay back the security deposits you got for the unit (as you have used it to pay your credit card). Always buy what you can afford now.

Installment for your HP and Laptop? Is there a reduction in interest if you pay early? The point is you should pay it early to reduce interest and increase your surplus savings now.

Reducing your food cost is simple. Just eat 2 out of 3 meals at home. Healthy meals can be prepared for a much lesser amount.

If you only use on weekends and occasionally to Melaka, the car is not essential. Get rid of it or discuss with your fiancee as to how you can be a one car family.

About the house, it is not under DIBS. Its under bank package where the interest during construction will be capitalized during construction period.

On the return on property, yup, it is negative now. It is a landed actually and the yield for landed not as good as condo. Now the value is plus minus RM100K above the purchase price. The value still does mean anything CF wise coz it is just a paper gain.

About the food, I'm have under weight issue. My weight is just 48KG. So, need to consume food at above average level. Will figure out how to replace current consumption with cheaper replacement.

About the car, still have to keep coz I still need to use it occasionally for work purpose. Not feasible to use only one car in future coz different working hours most probably. I work in the Bank and she works in hospital.

About CC installment, will get penalty for early settlement if not mistaken. Will continue to pay it monthly coz as long I pay on time lump sum every month, it is interest free.

So, I guest I need to focus to buck up my savings first.

And the next question is....

Should I:

1) Stop investing first and solely focus on bulking up my savings until it reaches certain limit; or
2) Do investment and savings on 30/70 basis with favor towards savings; or
3) Do investment and savings on 50/50 basis.

And I guess the best place to do saving is through ASB2. Right?

If you can access to ASB2, then just go all in once you have some backup funds for your living (minimum 3 months of your monthly expenses, ideally 12 months).