adolph,

There is no single fixed formula or guide to gauge how well you are doing financially. The best advice, no matter how much you are earning, is never, never living beyond your means.

Do not be confused between the 2 types of 'investment', business investment and personal investment.

Taking loans for the former is fine; for business objectives such as cash flow and stock turnover, expansion of operation (purchasing tools and machinery) and expansion of business (new factory/outlet), etc. etc.

Taking on loans for the personal usage or 'investment', whether it is car loan or housing loan, is pure personal debt.

No matter how you slice and dice these 'investments' and how profitable they are, there are interests to be paid and the loan principal to be repaid. Until all loans are settle, you are indebted to someone.

As Personal Financial is more towards Wealth Management rather than Wealth Creation, one could do just as well with saving accounts and fixed deposits versus another who dabble in equities, properties, and commodities.

Personally and IMHO, 'investment' in personal finance means a way to cover inflation that is constantly eroding our savings. In this light, I'm more biased towards mutual funds. There are pros and cons on it versus other 'investing' instrument like property, gold and silver... and could easily be pages and pages if expanded on...

Cheers... and always be prudence on financial/money matters.

1st, I'm a lazy person who don't like to work too hard. So hat's off to you for being hardworking, doing part-work... and working not only for yourself and family, but also for the banks.

I am also lazy to do all the meticulous calculations on owning a property versus just putting money bit by bit every month into a FD (of 4% per annum) and calculate which will come out ahead in 35 to 45 years time.

But I'm sure you have already done the calculations as you have the experience and first-hand knowledge... how much is the interest on the housing loan and card, how much is the fixture and renovation on a new apt, how much is legal fees on the loans, what's the cost in transfer of the strata, what's the legal fees on the memorandum of transfer when the loan is completed, what's the monthly building maintenance fees, yearly quit rent, building and fire insurance, the length of time the apt would be empty before getting a tenant, and whatever else I left out here.

If the calculation tells you that the value of the property plus or minus any yearly rental/expenditure is way ahead of the principal plus compounding interest in the 4% FD in 35-45 years time, then proceed with the purchase.

As said, I'm a lazy person... you may be satisfied with any gains the property has (or will have) over the FD, it will not move my lazy bum off my chair unless it is triple or 12% in yearly returns. Anything less than 10% is too much work when there is a lot of "ifs"... if there is tenant, if the building will not be run down in 10-20 years time, if the building management do its job, if this , if that... and hopefully, if the tenant vacant the apt clean and safe without leaving any body in the fridge. (LOL. Sorry...)

Good luck.

This post has been edited by j.passing.by: Jun 24 2014, 02:00 PM

Wong Sifu,
Cannot be chicken in life leh... to win we must take risk... more risk more enterprising... more enterprising more successful... more successful more rich la.

I invest in gold... gold price go up or down, I make money... the secret is I pusing pusing the gold, I pajak and buy more, gold price go down, cheaper price and I get more grams, pajak again, and buy more. I started with only a few grams, now have many, many grams.

I invest in mutual funds... price go or down, I make money... the secret is I buy one fund and sell after distribution, buy another fund with cheaper NAV and sell after distribution to get more units. I started with several thousands units, now the units more than double and triple.

I invest in condo... I only put 20k as down-payment last year, now I have a condo valued at 800k. And that 20k down-payment, I only have 3k cash at that time. Yet I turned 3k into 800k.

What you talking.... you must be smart to take more risk when young lah. Then more successful and rich...

"Fools rush in where angels fear to tread."

Let's tell some truths before someone take everything in - hook, line and sinker.

Me and you know you can afford the gold and condos if you want to. And that the ways of creating excellent returns in my previous post was a joke.

What really puzzles me is this thread, version 4 and more than 200 replies... is there any replies with substance or are they mostly empty chit chat?

I meant how much is there to "Personal Financial Management" that one thinks his or her situation is so unique that he/she cannot find a answer from all the previous posts. Afterall, the situations are generally described... which beg general replies.

2 different emoticons because I don't know how to respond... whether you had swallowed the joke or pulling my leg!

I can give you the whole thing on gold... this is not the right thread... ask me in my favourite thread and will tell you more.

Better to hear your long rambling when it has a tiny fraction of substance than reading short but no substance posts that were a waste of time... oh hell, I got lots of time to waste.. just got some agents all rile up and defensive in a post! LOL.

And in case people think there was no substance in Wong Sifu's post, read his post again... one of his advice was 'if you know you are on the correct path, don't be afraid to follow through'.

This post has been edited by j.passing.by: Jun 25 2014, 04:15 PM

Too shy to do PM... but maybe you can help with this quick question: In your line of work (I'm think you are a loan officer or a bank staff, apology if mistaken), those that seek personal loans are mainly those:
a) people who think personal loans will aid their personal financing troubles, or
b) people who were already facing personal financing mismanagement?
c) none of the above, your view?

Isn't Malaysia your home turf? You will 'survive" just as you did so far in life, and you're doing more than okay too. You already got a head-start with house fully paid, and have 50% cash on hand for another property.

Everyone do 'suffer' in their early stages of their career, so don't feel too hassle by the wife's nagging. She should be feeling fortunate that both of you are together under one roof; as some husbands have to leave behind their family to earn a decent living away from home and maybe only be home during the weekends or once a month.

The salary back home would be lower; I would look more into the seniority of the post and comparable position in the new company to decide on the move.

You are doing a okay too; and you seems to be in a hurry to buy a house. Why? Is it a measure of success?

And you boldly state that you don't have a credit card. Why not? Afraid that you can't control your urges to spend? Don't be afraid to have a credit card if you are good in budgeting your monthly expenses. I found it useful to have a credit card even though I hardly uses it. I mostly uses it at places like Tesco and at the petrol pumps, and a few occasions like paying hotel rooms when on holiday and a emergency case once at a private hospital. The annual tax of RM50 is a small matter. The card I'm having has the annual fee waived for life. Get one... it can be a self-confidence booster.

You are a young career woman on her way up, don't depend too much on the boyfriend... be nice, 'belanja' him once in a while.

This post has been edited by j.passing.by: Jul 13 2014, 06:36 PM

I'm conservative and I would not advocate taking any personal loans. Had never, never taken any personal loans in my life - either from banks, friends or relatives. "Neither a borrower nor a lender be..."

If you can't afford something, you can't afford it. Period. Borrowing to spend will only disrupt your savings habit, then sooner or later, you will find yourself being 'boros' again... but by then you will have hutang keliling pingang.

Don't be too easily fooled by claims that houses are escalating in prices beyond our reach. Some of these claims are dubious and mostly spread by real estate agents. If there are lots of people like you who can't afford to buy a house (because you have not saved enough for the down-payment), who are the house sellers selling to?

Secondly, you need to check whether you will be paying more or less interest on the personal loan than getting a bigger housing loan.

Thirdly, don't government servants get cheaper housing loans from their boss?

Wong Sifu,
Life would be real easy if we can put a value to all things and rationally summarised the whole situation.

We can also ignore the politics of the country which is above our daily lives, but there are some politics which will greatly influence our actions - home politics and office politics.

Compromises have to be done, and some would even say that life is a compromise.

Wong Sifu,

bah... what's real and what's hypothetical?

A truer scenario would be both Saver A & B saves 10% of their wages. In other words, they both spend 90% of their wages.

Saver A continues to spend 90% (or maybe lower it to 75%-80%) of his wages through out his life. While Saver B increases his spending, but at the same time, increase his savings from 10% to 75%.

How is this possible? You figure it out...

This post has been edited by j.passing.by: Jul 17 2014, 02:30 PM

The thing is that I see Wong Sifu's "die die" opinion as some people tends to spend too much, with so little savings such that any unexpected expenditure will tip them over, had to resort to personal loans to tie them over the unexpected event.

Using the same figures you mentioned above, this is one of a likely scenario.

A has a 3k lifestyle. His wages is 3.5k at the beginning of his career. Meaning he's spending 86% of his wages.

He got older and earning more... still spending 86% of his wages. So he spend 8k/month while his wages is now 9.2k as he is now in his fifties. As you said, he can chopped it down to 5k... but did not.

Let's add in another element (as this is Personal Financial thread), he bought a house in his mid thirties, and his salary is somewhere around 4k to 5k.

Another person, B has the same wages and situation as A. But person B put more into his savings with each salary promotion/increment. Person B also adds some to his monthly budget, so he is also not spending less than 3k, but he's spending not as much as A.

Person B has more savings as down-payment on his house, takes a smaller housing loan, and also put more into the monthly installment for a shorter loan than Person A.

At their fifties, A is still paying his housing loan, while B has fully paid his. Even if B has not save much, maybe just saving as much as A, since B was paying a bigger monthly installment; but from then onwards B will eventually has more than A when they reached retirement.

1) B pay less interest on the housing loan than A.

2) B has no debts in his early fifties, no more installments to pay. So his non-discretionary monthly expenses is lower... and has more discretionary income than A.

Just my 2 cents.

--------------------

Over saving, under saving would not get one into trouble. His lifestyle... his choice. Over spending... is the thing to watch out.

Spending too close to the income is also risky... any unexpected expenditure could make one edgy... like buying a car so closed to the budget that allows no savings or little savings to handle an accident... some will rage, hitting the bonnet of the other car with a steering rod.

This post has been edited by j.passing.by: Jul 17 2014, 07:02 PM

Hello Navink,
So you're in the forum seeking advise again.

No need to wait the dividend la... just clear the 14k debt out of the 30k in ASB. Still got balance of 16k. Then re-built the savings again...

But to be careful, you got to know how you got into the cc debt in the first place. Among the top rules or advise in personal financial management is paying the credit cards in full. If not able to do so, this means living above the monthly paycheck.

If it was a one-time big purchase/expense, this is what the savings are for. No point having savings, but using credit card instead of the savings.

This post has been edited by j.passing.by: Sep 10 2014, 01:02 PM

I was shaking my head, because I read that reply (in blue) to me first.... and then need to edit and re-write this post after reading the first sentence.

I wonder how much interest the cc debt had compounded over the years.


============
FOLKS,
The first rule of using credit card is ALWAYS PAY THE BALANCE IN FULL.

Dreamer


(Dreamer-style)
LOL.

I think one of the most misused and abused term in this thread is 'emergency fund'.

One site, Investopedia, defined it as:

An account that is used to set aside funds to be used in an emergency, such as the loss of a job, an illness or a major expense. The purpose of the fund is to improve financial security by creating a safety net of funds that can be used to meet emergency expenses as well as reduce the need to use high interest debt, such as credit cards, as a last resort.

http://www.investopedia.com/terms/e/emergency_fund.asp

And from the Oxford Dictionary site, on 'emergency':
A serious, unexpected, and often dangerous situation requiring immediate action.

First, let's put aside the false notion that it is any emergency situation that you need to have cash in hand to meet the expenses. You may use credit card to 'pay first'. Or even negotiate that the urgent, immediate action to be done first... payment later... in a lump sum or in stages.

In short, an emergency fund is for meeting the expenses in an unexpected situation.

So, the important discussion point is (in this financial thread): How much should we set aside into an emergency fund?


Investopedia suggests 'enough money to cover at least three months of living expenses'. While I often heard Suze Orman talks about '8 months'.

Anyway, they are rough thumb-of-rule figures, because how do we really know how much the unexpected situation will cost? 3k, 30k or 300k? If we can expect it to cost this much or that much, it is NOT an "unexpected" situation!

So how to go about this whether we have adequate emergency fund or not?

Say in case of unexpected illness, or an accident that will have a hefty medical bill.

In my opinion, there's nothing much to worry unnecessary about when it is futile to do so. You do the best you could do, and save as much as you could for the rainy days. And if you can afford to, maybe buy some insurance.

If in the unexpected situation of losing one's job and income, the emergency fund should cover your monthly expenses till you get another job. In this case, I would say roughly about 6 months of your gross salary.

Of course, when you're unemployed and seeking new employment, you should trim your living expenses; and try to stretch the savings further as far as possible.

Some of the expenses are fixed and cannot be trimmed; such as installments for car and housing loans, and house or room rent.

Some may opined that living expenses such as food and drinks should take priority over the loans when the emergency fund is running low, and inadequate to meet all expenses... but why get into this sort of situation when we should be financially prudence over our expenditures and purchases?

Yes, we should be clear what is an emergency fund... and not go blindly into a mistaken idea that we must, to be financially secured and prudence in our spending, that we MUST have this amount X set aside in liquid savings/investments.

I'm not sure how ASB calculates their dividend, or how much the dividend will be, so I'm not going to comment further what Navink should or should not do. Maybe he need to have that amount to stand-by...

It is up to him to resolve and find his way out of his dilemma... and us to share our 2 cents opinions.

And here's another 2 cents... or maybe not worth 2 cents.

Generally, my financial 'principle' is "Spending first, then savings, then investments". (Somewhat copied off Suze Orman's "People first, then money, then things". )

So it does not really matter, to me, how much is the emergency fund, or how much would be left in the emergency fund after paying off any debt.

I would rather have zero savings and emergency fund if I have to used up all my savings to clear off a credit card debt or a personal loan. (Otherwise, how to achieve 'financial freedom' when you're not debt-free?)

We should take care of the 'spending' first, and let the savings will take care of themselves... by taking care of them with safe and sound 'investments'.

Always try to keep any concept as simple as possible; and avoid creating confusion to ourselves, such as how much we could saved or gained by having such-and-such investment by borrowing from such-and-such loan.

It could wrongly lead to thoughts that we have such-and-such amount of money in in Investments A, B, C while conveniently forgetting that we have also Debts A, B, and C.

It could creates a false illusion of having more wealth than we otherwise have.

When an unexpected situation finally arrived, we would then had a false budget of how much we can really spend. And more often than not, there's always room to bargain or negotiate or options to opt for a lower cost and expenditure... but since we started off with a false budget, we could end up overspending, and spending beyond our means.

ANOTHER RULE in personal financial management: Never spend and live above our means.





==============


Btw, taking a loan to invest into ASB is not going against the usual financial principle of 'don't borrow to invest'. Let's this be clear...

And it is a rare example where "Spending first, then savings, then investments' don't apply, since you don't need to have 'savings' to initiate the investment.

Credit card has the highest interest rate... that's why we should try to convert any credit card debt to a personal loan, if the loan has a lower rate.

(Not too sure whether there's any fees or extra charges when applying the loan.... so need to take this fees into account if any...)

Looking it in another way, the flat rate in a personal loan would have to be about 10% to be higher than the credit card rate of 18%

To pay a balance of $10,000 on a credit card, by paying a monthly sum of $650, you will pay it off in 18 months, and had paid a total interest of $1,455.13.

Using an online calculator, a comparable monthly installment is:
10% flat rate, 18 monthly payments of $647.22, total interest of $1,500.00, and effective interest rate of 18.17%.

The flat rate conversion calculator at this link: http://loanstreet.com.my/calculator/flat-t...h.ewuejaEb.dpbs


I think you mean to say it is not worth to take a personal loan to invest.

(.... and misread his point... the minimal payment of a 10k balance is only 5% or $500, and will take 89 payments and a total interest of $4,054.96. This is stated on the back of my cc statement... a sort of required notice by bank negara?)


===============

FOLKS,

NEVER USE CREDIT CARD as a sort of AUTOMATIC PRE-APPROVED loan.

This post has been edited by j.passing.by: Sep 12 2014, 03:01 PM

So what's the normal PL, higher than the 10% flat rate I shown as an example?

Had never taken any personal loan (yet)... but always got calls from the bank people offering to credit cash into my account, and the offers were getting lower and lower from about 6% down to less than 5%.

===============

Okay, let's say you can pay on time every month... and the interest rate is 15%
Again using the online calculate, we need to hit 8.2% to get 15.01% effective interest.


I think the person you reply to was on another topic already...

good... now, I have to turn back one page to see what's what.

It was not you, but that person with strings of numbers I was referring to. I was in agreement with him on Pink's general blanket statement about some stupid thing to do, without qualifying it with what's the flat rate PL that will make it higher than cc rate.

Now reading back your initial post, I see that I did not touch on the 2nd cc that you intended to convert to PL. Well, you will need to calculate the effective rate of the PL to know whether it is worth to do so or not...