Discussion continues from here.

the last post on V2:

how much per month for a 5 yr loan?
same interest rate?

if you convert to a 5yr loan any additional charges?
can you buy a "cheaper" insurance when without loan?

This post has been edited by yklooi: Oct 29 2013, 04:19 PM

Actually, if you do the math on the repayment amounts, the interest rate on that car loan is more like 3.18%

Hi all, may I ask for advice on how to settle finance problem that my family facing?

My father is pensioner so for now my mother is the sole breadwinner in my family. Her gross income around RM8.1K. The deduction around RM2.4K. So the net income is RM5.8K. The problem is the massive amount of debt that bear by my family. The debt breakdown is below:

RM76X.XX until 2017- Personal loan 1
RM1XX.XX until 7/2015-Computer loan from gov
RM735 until 2018- Personal loan 2

All of the above are portion of the RM2.4K deduction. There is more.

RM9 8XX.XX-Min payment is RM48X.XX (Credit Card 1)
RM13 3XX.XX-Min payment is RM7XX.XX (Credit Card 2)

Car loan-RM1016 until I don't know lol.

For the credit card debt let's just say it is because of unfortunate circumstances e.g: car breakdown etc since our family doesn't have emergency fund.

So how can we settle the debt so that in the of the month my family still have room to breath because now live is very tough for my family.

Additional infos:
I and 2 other sisters study in IPTA and all got PTPTN (loan again ) and maybe only need additional RM200 each per month.
My elder brother already works but still live with us.
3 younger brother still in primary and secondary school.
Utilities bill below RM500 and
3 cars

I have been thinking to settle the computer loan first and then balance transfer the credit card 1 debt and so on.
Another lazy way is consolidate all the debt into one giant personal loan which I don't want it to happen.

Any advice?

Thanks in advance

This post has been edited by jonniedebt: Nov 6 2013, 08:46 PM

5.8k - 1k (car loan) = 4.8k available

CC Debt 23k

What is the monthly commitment for living expenses?

Suggest you to look at balance transfer, few banks offer 6 months (Bank B will pay on your behalf to Bank A, you then pay your debt in equal within 6 months WITHOUT interest to Bank B). However this means that your mum have to commit 4k monthly for this and if you miss the deadline, all sort of charges which normally incur for CC will come.

For 12 months there will be fee or interest involved. (Example for public bank its 2% i.e. RM460 but it more much more affordable for you mum spreading the debt across 12 months / commit 2k per month only.

To be eligible you would need to hold a credit card from the bank (Bank B) and the outstanding / debt amount (23k) cannot be from the same bank. Another issue would be normally bank only allow you to perform Balance Transfer up to 80% of your CC approved credit limit.

For more info check out Balance Transfer thread.

https://forum.lowyat.net/topic/2275275

*EDIT: other more interesting offers;

Bank Islam - 12 months 1% fee only
RHB Islamic - 9 months 1% fee only

Please handle this with care, if your family is discipline enough you guys would get out of this just nice in a year time or less. If you are not and continue accumulating more debt - good luck.

This post has been edited by bearbear: Nov 7 2013, 02:41 PM

Thanks for the advice bearbear.

I'm interested with Bank Islam offer. Since the CC debt from AmBank and Maybank my mother can opt for Bank Islam. So she needs to apply Bank Islam CC first right? And then perform the balance transfer.

I'm bit confused about the limit of balance transfer. According to the Balance Transfer thread the limit is up to 80% of AVAILABLE credit limit i.e CC limit RM20K. Outstanding balance RM15K. Available credit RM5K and 80% of it is RM4K. So can balance transfer RM4K only. OR is it 80% of the RM20K so can balance transfer up to RM18K?

Another question is the fee is upfront payment or add to the outstanding balance?

Thanks in advance.

Hi,

If you apply for Bank Islam card and they approve 20k CL, you can BT up to 16k with them.

When they say available CL, it mean your card CL - any outstanding balance with this cc = available CL.

Example if i hv 20k CL, i already swipe 2k so available CL is only 18k. Thus i can only BT maximum 14.4k.

If you apply a new card by right your CL should be 100% per what is approved.

If you have issue with the credit limit then try with more banks to spread out the debt. But please be warned that you do not accumulate more as the debt will roll to become a even bigger ball with all the interest and finance changes coming in. Know what is the monthly commitment and make sure you pay them on time!

There is no fee up front based on my experience with AEON which offer 0% for 6 months, for Bank Islam please check with them but I suspect they will lump in the 1% fee into your monthly repayment.

This post has been edited by bearbear: Nov 7 2013, 08:01 PM

can we get this thread pinned up for the benefit of everyone?

to anyone can help,

my current income basic 2200 (paid by several company)+ rm300-600 (allowance)

is there anyway i can get a loan around or below 10k within 2 years. now current have hp loan around 900.

hp loan itself is already high appetite...

now you now another loan? what is the purpose?? need or necessary???

jonniedebt indeed!

the only wise solution is consolidate the CC debts into lower interest PL or better if can do BT* (save lotsa money here)

*do this if monthly expenses will not be affected

A good article on personal financial management

How to retire early — 35 years early How to retire early — 35 years early
http://www.marketwatch.com/story/how-to-re...17?pagenumber=1

This post has been edited by kinwing: Feb 14 2014, 09:20 AM

I've read his story before. How much do you think is sufficient for a family of 3 to retire comfortably in Malaysia?

Well, if take into account for the currency rate exchange alone.

600,000 X 3 = RM1,800,000

At least RM1.8mil needed to retire at age 30?

BTW, You can download the e-books for free from AKPK website to learn more on Personal Finance Management. Perhaps someone can pin all the PFM related articles for easy review.

http://www.akpk.org.my/learning/downloads

Other notable sites:
imoney
savemoney
money.msn

Cheerios~

In my opinion, the amount of retirement fund should be formulated as follows:
= Yearly Expenses / Expected Annual Return Rate (%)

Giving an example by assuming yearly expenses for a family of 3 (parents and a new born kid) to retire comfortably in Kuala Lumpur to be RM100,000 (approximate RM8,300 monthly) which include repayment of housing and car loans, and also the most prudent annual return rate of the fund for the family depends on fixed-deposit rate of 3%, then the family should accumulate a retirement fund of RM3.33 million, which is about 33 times of their yearly expenses (1/3%).

From the formulated I quoted above, should you be able either reducing yearly expenses or increasing expected annual return rate, then you would only need a smaller fund for retirement. Remember, the smaller the retirement fund, then the easier to achieve and retire earlier.

Hi sifus, need advise.
If I have a sum of money say 50k, do I dump it into my housing loan or settle my car loan?
Car loan outstanding about 45k, interest is at 2.68%, 5 years to go. If settle now can save around 5k in interest. All calculated by autoworld.com.my loan settlement calculator.

Housing loan outstanding 165k, based on latest statement from bank. Interested at 4.85%. 20 years to go.

I guess settle car loan is better cos HP is simple interest? And use the monthly installment saved from the car to put into house loan each month to reduce principal? (Semi flexi loan)

Pls advise!

This post has been edited by torres09: Feb 17 2014, 11:07 AM

Lets play a game. Say you have RM 7000/mth to invest.

How would you allocate your investment(s) and in what frequency?

Other info: You have house loan at BLR-2.4% and car loan at 2% p.a. Your family is well provided and don't ask you for anything else.

Lets see how you grow this cash! Begin!

FD would be the only choice I guess. You could choose for something like OCBCs smart savers account. By depositing
RM 700 a month you would be getting around 2.75%p.a.

Car interest is fixed rate.
While housing loan interest is varying when BNM change interest rate or OPR, further more the interest is calculated daily basic.

Best reduce the higher interest and volatile interest rate.

My answer in general...
After monthly repayment of the loans, the remaining cash
'Agressive':I will invest in a mixture of 10%fd, 30%mutual funds & 60%stocks.
If I have a business plan:I will save up enough capital in a fd/savings account to start the business.
Balance lifestyle: 5%fd, 50%vanguard etf, 45%stocks & mutual funds.

Just curious... Why want to pay for 4.2% house loan when you get 6% or more investing in other stuff (as you mentioned MF and stocks)

Separately, is it wise to pay off 2% car loan when it penalizes you when you opt for early settlement.

Others any comments on his choice?

It's 7000/mth bro...

no expert here yar, just curious.
When U mentioned "30%mutual funds & 60%stocks"
U meant 30% bond funds or equity funds?
IF U meant equity funds.. er. then one would be 90% into equities (30% +60% stocks)?
Very aggressive indeed.

that 10% in FD - what if market collapses within 6 mths or 1 year.
how would one take advantage with monthly i keep my Fixed Income (FD or Bonds IMHO) at only 10% monthly?


Based on Kaiserwulf's "game" criteria:
Say you have RM 7000/mth to invest.
How would you allocate your investment(s) and in what frequency?
Other info: You have house loan at BLR-2.4% and car loan at 2% p.a. Your family is well provided and don't ask you for anything else.

My personal additional assumptions: mortgage = FlexiMortgage +do NOT have EPF a/c +not a biz owner.
IF biz owner, i'd suggest own biz be part of "Equities excluding REITs or Properties" if my biz is in trading/services

I would:
A. $7K - channel 50% to build emergency buffer, 50% for investments.
Once emergency buffer hits 6 months expenses or 8% of my net worth (keep topping up bit by bit if it is too far from 8%), 100% will be channeled to investments

B. Investments
1. Asset allocation of:
a. Fixed Income: 1/3 - to hold dry powder for FEAR / major value buys
b. Equities excluding REITs or Properties: 1/3
c. Real Equities (REITs & Properties): 1/3

2. Sub-asset allocation:
a. Fixed Income:
11.11% to local cash equivalent in FlexiMortgage
22.22% to local developed bond funds. Heck if BLR goes up, may even move this portion into FlexiMortgage
Note: since FI is just to hold dry powder for usage, local bond funds & FD/MM is good enough. Dont want to complicate things

b. Equities excluding REITs or Properties:
20% in Developed Markets ETF like URTH (including US) or a mix of ETFs like VEA (dev mkt exUS) +SPY (US)
13.33% in Emerging Markets ETF like a EEM or mix of CIMBA40 (ASEAN) +CIMBC25 (China)
yes yes CIMBA40 has SG in it, which is a Developed Mkt.
Again - point is not too nitty gritty, "close enough"

c. Real Equities (REITs & Properties):
REITs: Based on value hunting in SGX (0% tax on dividends for individuals) & MY (local expertise mar)
Criteria: net DY% >=7%pa & Price/NAP <=0.9 & D/E or leverage <=33% (buy for DY%)
OR Price/NAP <0.7 & D/E or leverage <=33% (buy depressed price for flipping)
Properties: Based on value hunting similar to above reasoning.


3. Execution:
With the Asset & sub-asset allocation done +specific vehicles identified, i would execute once every 4 or 6 MONTHS.
Why 4 or 6 months?
a. More cost effective purchases of ETFs, yet "timely" enough as done at least 2 to 3 times a year
b. Forces a review of Asset Allocation & sub-allocation at least 2 to 3 times a year

If AFTER the new injection of funds, any of the Equity classes or sub-classes varies 20% or more, FORCE a rebalance.
eg. 20% is for Developed markets, thus
if Developed markets hit <=16% force buy to hit back 20%
if Developed markets hit >=24% force sell to hit back 20%

If AFTER the new injection of funds, both Equity classes varies 40% or more, FORCE a VALUE BUY - spend down Fixed Income % down to 10% and bump up Equities & Real Equities equally.
IF DONE - do not buy into Equities anymore until Fixed Income rebuilt back to approximately 33.33%, then Execute as usual

Why?
Approximately every year, about 10%+/- fall is expected
Once in 4 to 6 years, about 20%+/- fall is expected
Once in 8 to x years, major falls is expected (think 1997-1998 ASEAN currency crisis, 2008 credit crunch)
Statistics from statistical & equities company - sorry, can't recall which/where

Whew.. that's it.
All logical criticisms & suggested solutions are welcomed. The above is actually part of my "possible" Trust's asset management rules

Just a thought

This post has been edited by wongmunkeong: Feb 18 2014, 08:55 AM

Hi guys, i found this a good read for our personal finance management from Li Ka Shing, HK richest man. do read up

http://e27.co/li-ka-shing-teaches-buy-car-house-5-years/

Dear all, I have a scenario here and needs some advice.

Currently my outstanding home morgage loan amount stands in the region of RM185k, with IR of BLR-2.1%. As I'm expecting a lump sum of fund coming my way (around 400k), would I be better off :

1. To settle the loan in full;
2. Place a huge sum like RM100k into the loan account to save interest; or
3. Invest elsewhere but I am not convinced that it's a good timing to invest in risky assets now

Appreciate any opinion, thanks

Nice breakdown WMK. I am just curious why the percentages since we have the game case of RM 7000/mth. 11.11% = RM 770 approx. Any reason for this number?

I like your 8% guideline for emergency cash. RM 500k networth = RM 40 000. Decent but not overboard.

Networth is asset + EPF - liability?

Also... anybody else with their personal breakdowns?

Wong Seafood,

Care to comment a bit?

Just did a calculation of my investment portfolio...and the discovery...

Equities and equity funds: 82%
Bond funds (excluding MM and cash and FDs as emergency reserves): 18%

KLSE stock portfolio 2:1 diversified UT equity funds

Hey KaiserWulf (sounds like the old Spectrum48K game - my age is showing bwhahaah),

Reasoning for the %s?
a. the big pix asset allocation of 1/3 1/3 1/3: simple asset class diversification in equal amount.
+Also found in the Talmud though . I ain't Jewish but the tests done on such general asset allocation by statistical organizations are very encouraging - google it
+the 33% in FI allows for a "great save" / great lelong triggered purchase of the 2 types of Equities
+the split of Equity types into "business" and "real estate" is for big pix equity diversification
where biz can hit home runs OR gets slaughtered,
WHILE "real estate" has yearly rental yields +capital appreciation (assumed as rising with inflation) thus even if market crumbles the yearly rental yields feed me

Simple analogy - think soccer / football - this formation of equal weight to "Defense", "Mid-field" and "Strikers"


b. The % in the sub-classes within each Asset class
1. Fixed Income:
If i've a flexi mortgage - i may even forgo bond funds as long term CAGR of bond funds are about 5%pa, and my flexi mortgage is saving me (thus "making me") 4.x%pa at such low interest times. It can only go up.

If no flexi mortgage, 11% in FD/MM is derived from 1/3 of 1/3 and the balance in bond funds 2/3 of 1/3
Why? Generally bond funds get higher CAGR than MM. However, have to factor in that black swan thinggy of interest rate spikes.
Anyhow, didnt spend much time here coz FI is more of dry powder keeping for non-programmatic purchases (ie triggered by the 2 FORCED asset reallocation mentioned)


2. Equities exREITs & Properties:
Developed Mkt slight overweight due to longer term stability (think reliability) VS Emerging Mkts (higher frequency of dips). Statistically true though i can't recall where i got the few info from heheh . google = best friend.


Yup, net worth = assets - liabilities, where if one has EPF a/c it is part of assets
note though i generally dont count "fake assets" like cars, bikes, 100" tv, etc into the assets.

Looks good What's the annual return for 2013 following that if I may ask?

'i assume you are practicing that already' so its not too difficult to count.

Total investments (including EPF and EPF-invested into funds/stocks boh?):
Fixed Income: 18%
Equity: 82%

no right wrong thing wor bro Pink.
just opinions, like noses - everyone has one (unless surgically removed to spite face or accidents )

Thus IMHO for a 30yr+ old:
A bit on the aggressive side

a. visualize: If 1997 or 2008 happens again, how would U respond? (not react yar - react = auto fear/greed heheh)
If U want to respond by buying spree - yr 18% enough ka? to average down yr cost, where yr Equity lost 40% - 80%
yes yes - happens once a blue moon.. but blue moons seem to happen more often than 10yrs these past 2 decades heheh.

b. then again, to balance (a.) - how much U willing to "lose out" as opportunity cost to hold back for (a) and also for Fixed Income to be a ballast / stabilizing factor to your investment return?


bottom line = we ALL KNOW equities go up long term
problems:
1. can we hold and stomach the wild swings of being ultra heavy in equities?
ie. "fear selling"

2. can we OUT LAST the dips or market irrationality?
ie. not forced to sell to meet requirements, "need selling"

my apologies Pink - no clear 1 or 0 answer as each sees the above and have own thoughs + management
heck some dont even bother hehe

me - my personal approach is to manage it is by:
3. having emergency buffer + investment assets strictly separated, thus i can make my Fixed Income to ZERO or near that if necessary to buy ultra depressed equities

4. have equal weightage on major asset classes + use a programmatic investment as 1 of my approach,
coz i admit i dont have crystal balls to see future

5. the smaller % (Vs 4. above) approach of opportunistic investing is to satiate my known "tweak it better" nature which needs to be scratched on & off .

just a thought

i am currently doing the 1/3 1/3 1/3 and the programmatic + FORCED rebalancing.
+ started INTENTIONALLY moving into Developed mkts last year (as per shared game's response).

however:
a. i'm not doing ETFs yet (i dont have $7Kpm free for investment lar ), just stocks & funds +flexi mortgage.
b. i keep pumping monthly savings into "investment assets" monthly (Fixed income - flexi-mortgage until channeled into equities)
c. my tracking is per transaction-based with & distribution pro-rated into all holdings as at the ex-date

Thus, due to (a.) (b.) (c.), i can only easily share:
1. Each transaction's CAGR
2. Each group (Stock name or fund name) CAGR (ie. taking each transaction's CAGR into account per stock or per fund)
3. total net worth growth pm & pa

I think (1.) & (2.) is too long/complicated to list, thus my net worth or ROE growth?
note i didnt buy new home & i dont count cars, 100" TVs, etc. as assets:
2010: 37.05%
2011: 18.91% (index futures exploration soured, profits hit)
2012: 28.35%
2013: 15.20% (complicated pregnancy & birth cost impacted savings for investments since had to rebuild emergency buffer)

This post has been edited by wongmunkeong: Feb 19 2014, 01:00 PM

First of all, thanks for the long-winded detailed reply

This post has been edited by Pink Spider: Feb 19 2014, 07:55 PM

older ppl get longer winded mar
anyhow, no - i wont touch my emergency funds for investments.
when i said that i'm even willing to go "fixed income" 0% and up my Equities in extreme value, i mean "fixed income" portion of my investment assets.

Ok, let me recap, do correct me if I got your lecture points wrong...

- if emergency buffer are sufficient and clearly distinguished from investment assets, u can go gung-ho with your investment assets when ka-boom comes i.e. go 0% FI 100% EQ
- 18% seems like too low allocation to fixed income, I might not have enough dry powder to go firing all cylinders when armageddon comes

on the 2nd point - yes, time in market ... else miss uptick ..
U may also want to check the statistics IF bad drops were avoided how much more one will "make"
Then, knowing we CAN'T avoid for sure those bad drops... if one has enough $ aside to take advantage leh?

Simple view (may be wrong yar, pls poke):
33.33% Equities exREITs * 40%+/- drop ('ala 2008 KLCI) = 13%+ loss
33.33% REITs * 20%+/- drop ('ala 2008 KLCI) = 6%+ loss
Total loss: 19%+ to 20%+

If one has >20% +1/2 (ie 30%+/-) around & buys into extreme fear AND can hold (here's where Emergency Buffer comes in), imagine in 3 to 5 years time...

FYI - the above is one of the reasons i find it funny when ppl scream blood / cry when market falls 5% to 10%. No feel lar - not worth time & effort to force a rebalance, especially when i'm doing programmatic value averaging every 3 months or 4 (depending on vehicles).

Just a thought

This post has been edited by wongmunkeong: Feb 19 2014, 08:35 PM

Wokie seafood wongmunkeong!

*redo portfolio structure calculation to incorporate Cash Management Fund and cash in trading trust account*

Your CAGR each year is better than WB!

I will be starting rebalancing portfolio after my upcoming wedding. Your sharing is very insightful. Trying to keep cashflow and reserves right for this since I am paying for marriage solo!

bwhahaah - pls pls - when WB was small like moi, his CAGR was astronomical compared to mine.

Keep in mind, net worth or ROE is investments' returns + man at work, not just investments' returns
Keep cost low, profit higher - thus, i found that balancing both making & saving = turbo.
yes yes, i'm slow to catch-on that way

This post has been edited by wongmunkeong: Feb 19 2014, 09:37 PM

Just to share:

For those into value investing via ETFs, there is a webpage that shows ETFs' PE ratios. The below link shows for non-leveraged ETFs

http://etfdb.com/compare/lowest-pe-ratio/no-leveraged/

one quick question to u bro WMK ,

"Once emergency buffer hits 6 months expenses or 8% of my net worth"

Why 8 % and not other figure like 5 / 6 %of the net worth ? i thought normally is just 3-6 months of expenses. Care to elaborate more? Use percentage of networth as a guideline to build up emergency buffer is something new to me.

8%+/- (ranges from 7% to 10%) was the % on my net worth i calculated based on:
if i were to retire at 50 or 55 or 60
AND to have 3 years' living expenses in "emergency fund", which by retirement will be my living fund 1yr +2yrs emergency fund,
THUS i wont be forced to sell investment assets at the wrong time to fund living needs.

Note:
IF one's home (non-investment asset) makes up for more than 50% of one's net worth
AND one lives frugally,
then this % should be lower.

However by logic, if one's home is a big % of one's net worth,
one's expenses to maintain that home is also more,
thus need more emergency buffer if wall/roof/etc collapses or fly off.

Just a thought

This post has been edited by wongmunkeong: Feb 20 2014, 08:13 AM

Just sharing:
For those that likes "collecting" long term dividend paying stocks that has kept increasing its dividends payout for 25 years. Note - US stocks thus 30% tax on dividends for "aliens"

25-Year Dividend Increasing Stocks
http://www.dividend.com/dividend-stocks/25...sing-stocks.php

hint - wait for the prices to fall, thus DY% increase to hit your NET requirements before buying in (duh )

my calculations are based on RM7k monthly income but haven't deduct the loans yet.

[quote=wongmunkeong,Feb 18 2014, 08:52 AM]
no expert here yar, just curious.
When U mentioned "30%mutual funds & 60%stocks"
U meant 30% bond funds or equity funds?
IF U meant equity funds.. er. then one would be 90% into equities (30% +60% stocks)?
Very aggressive indeed.
My apologies, the 30% & 60% I mentioned could be mixture of equity, bonds, money market and ETFs. Also maintain a balance portfolio of 75% equities & 25% bonds.

that 10% in FD - what if market collapses within 6 mths or 1 year.
how would one take advantage with monthly i keep my Fixed Income (FD or Bonds IMHO) at only 10% monthly?
It should depends on individual risk appetite and investment skills. For me, with the 75/25 portfolio I mentioned above I will evaluate my investments whether to keep or sell. To put 10% in FD laddering is when I already have 3-6 months emergency funds in my savings account. Why FD for me? Treat it as "lock" savings and can earn more interest than savings account.

Other ideas on what to do with the cash:
1. Open PRS & enjoy tax relief at the same time
2. Open ASB/ASW account
3. Transfer into own EPF account
4. Save money for business capital
5. Learn skills & acquire knowledge/certification
6. Go for holiday for inspiration? Chinese saying: "Travel 10,000 miles is better than reading 10,000 books"

Be prudent, creative & discipline with your money

Thank you for sharing! I've read and I'm allocating my income & expenses now based on his teachings.

Based on % term from monthly income allocation by the HK tycoon:

30% - expenses
20% - treat friends/spend money on building network
15% - Buy books & attend courses
10% - go for holidays
25% - Savings

My expenses now is standing at 69%

If you're interested in statistics (CAGR, Sharpe, Sortino, etc.)


from:
http://mebfaber.com/2013/09/26/how-does-a-...rategy-perform/

Hi WongMunKeong,

Just finish reading through V2 and I must first say thank you for all you effort in helping others in such detailed manner. It has been a great help for me to gauge myself and help me learn.

I myself is a Wong . 24 this year. Now its my turn to ask for yours and other member's advice. Here are my latest expenditure.

Gross Income: 2600
Net (After EPF): 2300

Food: 350
Fuel & Parking: 200
Medical Insurance: 200
Entertainment: 50

Medical Expenses: 400
-This is killing my wallet atm. Had an accident half a year ago and have been undergoing treatment till now . Recovering and hopefully to clear this in 1 or 2 months time.

Total Left: 1100

I have 30k in FD atm (started last year Dec). 10k in Savings. 5k in ASB (Just found out about this last month). No house loan. 2nd hand car fully paid.

My plan now is to wait till this Dec and put all 30k into ASB. I saw you mentioned to have 6 months emergency in FD. However is it okay to put all savings into ASB? Is ASB liquid enough to be emergency fund? My plan is to hopefully max out ASB by age of 30. Then will look into stocks or property. Maybe marriage too.

Any advise to help me be better at my financial management? Any advise is welcomed.

Thank you!

sorry wrong thread

This post has been edited by max_cavalera: Feb 28 2014, 07:08 PM

Koniciwa timw90,

You're too kind - it's just an interest +killing time while growing my thinking by practice .

Anyhow, just quickies before i dive deeper yar (rushing quite a bit these days thanks to my bosses):
1. ASB is only for bumiputeras wor - U can invest into ASB meh? ASM?

2. Assuming ASB or ASM, 30K in FD - i'd suggest U split it between ASB/ASM +foreign equities.
AFTER U put aside >= 3 months' average expenses as emergency funds.
eg.
$30K less [ ($1200 mthly expenses -$400 coz this is just temp)* at least 3mths] = $27K+
thus, take $27K and divide into say
ASB
Developing Mkts like CIMBC25 (China biggest 25 listed in HK ETF), CIMBA40 (ASEAN ETF)
Developed Mkts like URTH ETF or VEA ETF or mutual fund like CIMB Principal Global Titans

The above is assuming U do have EPF yar - which, in my humble opinion acts as "bond funds", thus i didn't suggest bond funds above as investment asset allocation. BTW, if U want - U can even throw in some REITs from SGX (0% tax!) or KLSE REITs (10% tax) for dividends.

3. er.. $ in ASB as emergency funds? i'm unsure how fast U can get to that $ - if within 1 day, ok gua.
Personally, i've about 2/3 of my emergency funds in cash equivalent (flexi mortgage) +remainder in bond funds.
Why?
Coz my flexi-mortgage = immediate cashout if needed & its rates are at 4.x%, which is quite near average long term bond funds' returns of 5%-6%.
That 1/3 in bond funds is just "hope" to beat my 4.x% and yet can get out within 4-5 working days.
er.. note - i've 1+ year's emergency buffer, thus most probably wont even touch that 1/3 (touch wood )

Just a thought

ASB. Lets just say I have the privilege of being a sino kadazan.

All those foreign equities you mentioned above are stocks? cos I have no idea what you are talking about haha. I have just started reading up on stocks and have not master the language yet. Was introduced to Public Mutual. After reading about it, realize that their service charge is quite high :S so I thought why not read up on stocks yourself.

So even for ASB, you would not recommend putting all eggs into that basket? and I do notice the trend that people are investing outside of the country now. Is it true that the market in other countries are better atm?

Thanks again for your time

Ah.. so des ka. U are like my Portugese colleague - access to ASB

Those ETFs are stocks, listed on KLSE (CIMBC25 & CIMBA40) and US (URTH, VEA).
U can google about ETF to learn what are Exchange Traded Funds.
In a nutshell - ETFs are like mutual funds BUT
a. they are listed on stock exchanges, thus can be bought/sold like stocks

b. lower cost to buy - buying stocks cost about 0.5% or less of the "value" received if U buy >= RM2.xxx per transaction VS mutual funds' 1.5% to 5.x% on NAV (think ETF's price as NAV for simplification)

Note - the only downside i see is this, every purchase must be >=RM2,xxxx per transaction else the cost of brokerage is > 2%. However, there are some brokerages like HLeB that offers cash account (ie. U must have exact or more $ than purchased) 0.1% or $8, whichever higher - something to that effect. Poke around.
For US listed ETFs, whoa.. if i do via HLeB, need to buy about USD8K per transaction to make the cost as a % worthwhile. Using OptionsXpress in SG (can open from MY without going over) is cheaper

c. lower yearly management cost - about 0.5% to 1%pa VS mutual funds' 1.5%pa to 2%pa

--------
Ok, on to opining:
d. ASB - personally, if i can buy into ASB, i'd use the ASB loans from CIMB, MBB, etc.
Heck - free $ since i make the spread. Only have to be wary for the 1st year+ payments +if i need to take loans for anything else, this ASB loan will show up in CCRIS (watch out yar - may affect your home buying or biz loans)
Thus i'd use cash into over investments

e. On the item of "market in other countries are better atm":
To me? Yes - specifically BRICs (Brazil, Russia, India, China) +Indonesia +Thailand
Reason: Their market's index's PE, are 10 and below VS KLSE >15 liao.
Google PE - in a nutshell, it's the "Price U pay / Earning expected to get". U want this low if U want to buy lelong value - like when Tesco or Giant have big blowout sales on milk powder max /family 5 packs

Hm.. if U've just started in your journey, don't be in a rush to jump in
IF U really want to jump in & get your feet wet, pls do so up to 50% of your available funds for investments only.
I'd suggest U google /read up (books) on ASSET ALLOCATION, VALUE AVERAGING, EXCHANGE TRADED FUNDS VS MUTUAL FUNDS, VALUE INVESTING.

Good luck with your journey - keep in mind, it's a bloody marathon, not a sprint!

Even after reading through V2.. I still cant catch all the words you say.. :S any book you could recommend for me to start reading up on all this ETF, and stock stuff?

also, for ASB loan. is it like car loan? where by the longer i borrow the more interest I pay? I thought ASB loan wasn't that attractive. That's why I didn't opt for it.

Thank you again for your replies

oops.. my bad - which words unclear ar?
List them or part of the sentence - i can clarify. My bad, sometimes i forgot i took me several umpteen years of reading +hands-on to learn.

Books?
GENERAL
For investing as well as life in general
http://www.amazon.com/7-Habits-Highly-Effe...1800/ref=sr_1_3?
s=books&ie=UTF8&qid=1393666898&sr=1-3&keywords=7+habits

Simplify +Savings +Investing = Turbo
http://www.amazon.com/Secrets-Millionaire-...rds=T+Harv+Ekar

Cow sense investing
http://www.amazon.com/Four-Pillars-Investi...ds=four+pillars

ASSET ALLOCATION
http://www.amazon.com/About-Asset-Allocati...B6T1T1X7T07DC0R
http://www.amazon.com/The-Intelligent-Asse...B6T1T1X7T07DC0R

VALUE AVERAGING
http://www.amazon.com/Value-Averaging-Stra...s/dp/0470049774

ETF
http://www.amazon.com/Exchange-Traded-Fund...-3&keywords=ETF

VALUE INVESTING
http://www.amazon.com/Little-Value-Investi...value+investing
http://www.amazon.com/Value-Investing-Dumm...value+investing

BTW, pls note, IMHO investing <> trading yar.
Trading IMHO = biz where i buy product at low price & sell higher price, actively growing wealth.
Investing IMHO = systematically buying into companies or properties and passively growing wealth.

On ASB loan - i did a calculation for my colleague and it was worthwhile.. i gotta dig it out.
Did it for her a year back.. can't remember for sure whether flat rate (like car loan) or mortgage style (reducing balance or effective rate pa) - very highly likely = mortgage.
Anyhow, it doesn't matter what style as long as when calculated as "effective rate per annum" VS ASB's returns = makes sense with a spread of at least 2%pa
Note though on my worries if U intend to borrow for buying home, biz, etc as ALL borrowings show up on your CCRIS report and your loan office may think U have too high a monthly commitment / too highly leveraged.

Just a thought

This post has been edited by wongmunkeong: Mar 1 2014, 05:50 PM

All those stock words and acronyms. I see them as alien words haha. No experience yet.

Thank you for the list. I think I'm going to get the "Secrets of the Millionaire Mind" 1st. Seems like an interesting book.

I know about the ASB loan affecting house loan thing. Was about to loan 200k, then I punch some numbers and realize it might force me to settle down with my job. I still have plans to further study. Do update if you find the excel spread sheet. Maybe I missed out some stuff while punching those numbers.

Was great having your insight on these matter. Cheers!

*deleted

This post has been edited by turbopips: Jan 1 2015, 08:55 PM

lucky dude same like my chinese lady colleague who has some siam bloodline and considered as bumi officially.

by the looks of thing just dump what you have into asb keeping mayb few k as emergency fund. borrow the balance from bank to utilize your 250k quota. once u have more fund just replace it to your loan for asb. even with loan you are gaining something for free. 8% per annum or 2-3% with loan and relatively risk free, no brainer for me.

at the same time you can get yourself familiarize with all the investments.

Hi all, I hear a lot about emergency funds, in your opinion what is the best way to store these funds? Do you place them in short term FD or high interest savings account? Thanks

Good evening everyone. ...I badly need your opinion regarding - using ez payment (credit card) to pay for life/medical insurance..is it advisable?
An agent quoted me rm500/mnth (rm200 for my newborn son and and 300/mnth for myself)...thats 6k of debt...rite? I told him I preferred standing instruction, so I can pay every month..then he told me thats gonna cost me extra rm25..sure I'll save 25×12..but does it really worth it? Really dont like using my credit card this way... please advise from good personal financial management point of view....

Btw my total income 4k..b4 tax ...etc...tq for your reply...

What do you mean by ez payment? the insurance charge to your credit card only, make sure you fully settle it every month, what is the debt you mean???

ez payment - I mean the insurance company charge credit card total amount (12months) but the company charge us per month.(It is like buying electrical appliances at SenQ / Tesco / etc). That doesn't count as debt? Many people here advise not to buy things such as hp using this mode of payment...it is considered as debt....or it doesn't apply for insurance???

It is considered a debt.

Actually there is no reason for you to do this unless you are trying to earn more points for your credit card.

You can still pay your insurance monthly.

Insurance do this to past the risk of debt to the banks instead. Since they won't earn anything extra if you paid late or don't pay at all. So by letting you charge an entire year of payments in advance, they more or less done their job for the entire year.

Banks stand to earn interest from you if you pay late.

In the end, unless the points were worth it, you are actually putting yourself at greater risk.

You can't cancel you insurance if you can't afford it 3 months down the road. Instead you owe the banks now. And the interests will compound the more you don't pay.

Hi sifu and all members. I didn't managed to read anything yet but I will start soon as I'm in the midst of UAT for my company's app.

A short info about me:


Situation:
1. Will be getting married thus we need to find a new home (either rent of purchase). My thought would be find one nearby our working place as it will cut a lot of travel time and fuel cost. Problem being is that my soon to be wife would not want some maid to be looking after our child (if we are lucky and we are hoping to get a child as normal as a parent would get). So, what we can do is find one nearby Taman Melati and send the child to her mother to look after thus travelling everyday from Taman Melati to TTDI.

2. Car. I don't have car and I want to buy one. Suggest either we need to find a 2nd hand car or purchase a new one that wouldn't put much burden on our financial capability. My current thought is to not buy a first hand car which usually cost somewhere around RM 600++ per month for a 9 years instalment, instead just buy a 2nd hand car and pay RM400++ for 5 years.

3. Investment and paying PTPTN. Since both of us are working in private sector, we need to have pension scheme, investment, savings etc. I have one in mind which is investing is DANA EKUITI PRIMA FUND under ETIKA. It's a Protection + Investment + Savings plan. And we do need to pay our PTPTN too.

I will start reading and hopefully will get some insight myself on my current situation but I really appreciate inputs from sifus.

This post has been edited by alien9: Mar 25 2014, 12:28 AM

Hello,
Not very experience, still learning. I would like to hear what others have to say too but here's my .2c:

Since you're travelling with bike, i guess PA is good to keep. But for Hospital Income, the insurance company will pay allowance when one is admitted right? If yes i probably won't bundle it with my PA. You can get a normal PA policy for as low as RM1xx p.a.

If your company provide you with medical card, you can opt not to buy at the moment BUT i would strongly advice you to get at least a basic term medical card; dont take up bundle of investment + protection + saving. Get pure protection for insurance, FD for short-term savings and since you're bumi, you can always opt for ASB for investment fund. If you're looking for EPF alternative for retirement, check out Private Retirement Scheme (PRS), you can get more info in the forum or fundsupermart.com

Consider life insurance only if you have dependent. And again only buy pure protection, try not to bundle up with savings and investment.

If you plan to buy a car, can you afford a housing loan? With your combined income, you'll probably eligible for somewhere between RM500k-600k housing loan; just a rough estimation; no experience here. And you need to put some effort if you're serious about 2nd hand car; common issues with 2nd car is the maintenance fee which will cost you in long run.

So basically here's a summary of my view:
- Get only pure insurance for protection; you can cut down on insurance expenses. Forget about fancy perks and bundle!
- Short term savings, FD; Minimum to no-effort Investment, ASB; Retirement Fund, EPF and PRS
- If car is not a necessary, den that is your answer ;otherwise
- In your case, since you're getting married i think getting a home first is a better choice

And this is my view
Btw you have good savings!

This post has been edited by morning06: Mar 25 2014, 04:28 AM

There you said it yourself, you will be paid RM400 if you're warded means the rider pay you when you're admitted

So the hospital income, it depends on your need. If you want to cut down the premium expenses i would recommend switching to a basic medical card which will cover your medical fee and get a PA without the hospital income rider.

As of the ASB financing, i have 0 experience so can't comment.

Your current insurance
PA+Income Rider = RM768/year; cover accident and pay you income when you're admitted
TOTAL = RM768 ; RM64/month

Here is a estimated insurance charges (not agent so just an estimation)
Basic Standalone Medical Card: RM800/yr ,available from as low as RM400/year at your current age (premium increases on age category, nrmally every 5 years); cover your medical expenses
Basic PA = RM150/yr
TOTAL = RM950/yr ; RM80/mo
*If there is a need of Life Insurance, get a quote for term life from agent.

OR If you wanna follow the norm, you can always get investment linked bundle insurance (not recommended as of my self preferences)
Investment-linked bundle est. premium (common quote) = RM2400/yr ;and you get a bundle of medical, life, PA, investment/savings
TOTAl = RM2,400/yr ; RM200/month

Since you need a car den try to get one within your mean for now. Second hand car is good if you can get a good deal. Try don't spend so much for a car (liabilities), a local car is not that bad for starting

So you are planning to buy a house at Tmn Melati, at the same time rent a house near your working place? If you can get a good house deal den should be no problem but your savings will take a big hit if any left.

Your current saving/month
RM1200
+ RM140 (RM7/day at 20 working days est.) Motor fuel since you're using car now
+ RM64 ;your old insurance
TOTAL = ~RM1404

Est. new expenses
Personal
(A) Basic Insurance OR (B) Investment Linked Bundle
TOTAL = (A)RM80/mo (B)RM200/mo
* you can always get a lower quote on (B) from agent, if you insist to bundle

Personal/Share; halve the amount if share
Housing loan repayment for a RM300k property = RM1200/mo
Car installment = RM500/mo
Car fuel = RM250/mo ;lower since you renting near your workplace i assume
Rental = RM500/mo < can rent a house/unit within your working area at this price?
TOTAL = RM2600/mo ; halved at RM1300/mo

A basic calculation, might have missed out some of the detail or over est. some of the cost. Base on this est., you're going to be tight if you plan on getting a car, rent a house and buy a house at the same time now. Wait for the more experienced sifus to reply coz i have no experience



This post has been edited by morning06: Mar 25 2014, 03:50 PM

If you're worry about your dependent in cases where you can no longer work (Total and Permanent Disability,TPD) den a life insurance (health) and PA (accident) is more appropriate to pay for you and their expenses for 'n'-years/months depending on your plan. Rider is just a luxury that you pay more for EXTRA insurance benefit, of course like i said if you find it useful den it's for you. If your goal is to cover you and your family expenses in cases of TPD; being not able to work anymore, Life insurance is better than the hospital income rider.

Yes, medical card is the minimum in insurance.

For house, it's better to decide with your family; coz it's a big commitment. Different people different view on this, there are people who prefer renting a room instead and buy property to generate rental income. There are also people who will get a home first; which for your case since you'll be living with your new family. No right or wrong, so you'll have to discuss with your family and make the call yourself.

The calculation is base on property @RM300k, can you find any at that price range? If not den you'll have to review. Calculation haven't include any Life insurance (to meet your basic need which you said you do not wish to burden your family in cases where you can't work anymore) And if you still can save 46% from your combined income that will be a good figure. But you'll have to take note of some not-so-frequent expenses like emergency, car maintenance, repair etc. etc. and more importantly, you have to plan for your child since you'll be having one soon. Can the remaining amount pay for your child expenses ? If not den you're in big trouble...



This post has been edited by morning06: Mar 26 2014, 01:12 PM

Just want to add, try not to spend too much on your wedding. And don't take loans/debts for weddings.

Remember that it is just a 1 day event. Although it is a very important day, most married couples forget their wedding day after the 1st year. Reason being you will be dead tired on that day and probably glad the day is over.

As a married couple you still have the rest of your lives ahead, so don't spend your entire savings on a 1 day event when more life responsibilities are coming your way. House purchases needs a minimum of 10% down payments or fees. Don't forget minor renovations and furniture.

Car loans also need a down payments and don't forget future expenses for maintenance and servicing. Your fuel costs will go up as well.

Don't take the ASB loan first until you figure out the other loans you planning to take. Because if you max your ASB loan, it might affect your credit limit for other loan applications like housing loan and car loans.

Sometimes its the parents that's demanding on the wedding lol

Housing 10% dp for new property, prepare an additional 10% for legal and stamping fees for existing ready to move in property. Additional/luxury renovation and furniture can always sort out later if tight on budget, get the basic ;bed, shower etc.

And yeah, plan ahead of your commitment so your loan application doesn't get stuck. Get a banker to help you out with a exact calculation

How much does the safe range percentage for loan if you don't mind me asking? Is 46% of our combine take away pay is considered a lot for a normal people?

Thanks for your response. My current budget for the wedding is RM 10K where we just make 1 wedding instead of normal 2 and the number of guests are 400ish instead of normal 1K for Malay wedding. We tried to reduce the wedding cost as much as we can.

What I'm happy with my wedding is that both of us and our family understand the importance of living the day after the wedding thus all of us decided that the wedding will be simple

You have a very good understanding family.

I would advise you to postpone your hire purchase and insurance until you have settled your shelter. 46% of loan apportioned to your combined income is indeed risky to me. Here is why:

1. Since you just saved enough for wedding and new house, I assume you don't have much money left after that.

2. If one of you lose your job, the another one is not making enough to cover all the expenses.

3. Insurance is more useful when you have kid. Essentially nothing has change after your marriage until you have children, why bother to buy insurance at this point of time?

4. Your priority is beef up your backup fund. Keep at least 4 ~ 6 months of expenses before looking into car and insurance. Ideally 12 months of expenses if you want to have children.

Just my 2 cents.

This post has been edited by td00164306: Mar 27 2014, 07:01 PM

My advice:-

Take home pay for both H & W is RM5200.00

1) Since you are a newly wed and young, I suggest don't have kids first for the first year. Having kids to early puts a strain on both your finances and marriage.
2) Don't buy a car unless you have kids. Move nearer to TTDI. Look at Flora Damansara Apartment. Look at Block E,F or H which is medium cost. You can buy a bumi unit quite cheaply at about RM160K for 800sq feet. Auction units can be cheaper. From Flora Damansara it is just a 10 minute bike ride to TTDI using the Pencala link. Since its your starter home, don't worry as in 5-6 years time you will be able to buy a better place.
3) Get a medical card for both. There are some plans that are RM600-RM700 per year.
4) Calculate all your debt and determine its interest rate. If it is low like 3-4% per annum, then pay it slowly.

Suggested budget
1) RM2500 (ASB savings. Don't take ASB loan, your return on that is much lower. If you just pay monthly into your ASB you are getting 7-8% per annum in return)
2) RM800 for accommodation (rental or bank repayments)
3) RM250 for bike repayment
4) RM200 for petrol for bike
5) RM110 for medical card for both
6) RM500 for Food and other necessities
7) RM150 for tel and utilities
8) RM690 PTPTN loan (if your monthly is lower or higher adjust accordingly with your contributions to ASB)

In one year you would be able to save RM30,000.00 + interest. In one year you would be more prepared to have kids or in one year you will have the downpayment for the apartment. The point is don't try to do everything at once. If you buy car, buy apartment and have a kid all at once, you will find yourself financially strapped and will start resorting to credit cards and personal loans. Choose one goal and go for it. Take a short break and then the next goal.

If you and your wife's salary increases by 10% every year and you put most if not all into your ASB, in 3 years time you will have RM100,000.

good thread

would he not be better off taking ASB loan to fully utilize his quota?

Example if his nett return is 3% after deducting his 'cost' (loan interest and what not), 3% of 100k is 3k better than him not getting anything while saving up to fulfill his quota.

Insurance is more useful when you have dependants. In your case, I don't think your wife is consider a dependant to you, since she works and can self-sustain (this has been the way all these while, isn't it?). If riding a bike to work is the deciding factor to getting an insurance policy, then it should have been done much earlier. I am not sure about the price but if it fits in your budget well, you can still go-ahead. My point is this is not something essential yet; however this is very subjective.

I personally prefer to use monthly expenses as a unit of measurement for my backup fund because essentially this is the amount that I expect to spend.

There is no fixed formula of "comfortable loan amount approportioned to your combined monthly income". Let say, me and my wife have combined income of 250k ringgit a year and a combined liquid asset of 500k, we can afford to loan even up to 70~80%, since we will still left with adequote money.

In your case, your combine monthly income is only about 5000 with minimal amount of saving now. Loan up to 46% of that amount essentially leave you with less than RM 2500 per month. Taking into consideration of your daily necessities, how much you have left to put in the piggy bank? To me the priority is really:

1. Save up the contigency fund as fast as possible.
2. Get an insurance.
3. Then only buy a car.