A few simple rules I abide with,

A. A car is to get to point A to point B, so you only need to get the cheapest car that can do the job with enough safety features is good enough. Buying to show off is not good investment. I rather get a cheaper newcar than a second hand car. Reason? Maintenance, resale value and car loan (more expensive for 2nd)

B. Buy your house rather than rent, if you rent your money goes to someone's else pocket. If you buy house the money pays back to yourself and property is also one form of investment/savings. Also property is good for inflation.

C. I never touch the money designated for savings, investment because thats they are for. If you keep taking it out you can never get to your objective. Use a 6 month's emergency fund for these purpose. Also if you think you save more than your peers, just use this rule of thumb to count. This is just a rule of thumb, so don;t take it as a guide!

Gross income per year for both x age / 5 = Assets that you should have. ( Assets = cash +EPF+investment+properties -liabilities)

If you earn 6,000 x 12 x 26 / 5 = RM 374,400 assets required.

But still different people have different style, the above are just my rules nd might not be applicable to you.

This post has been edited by gark: May 2 2010, 12:42 PM

It's just a rule of thumb i follow, the original calculation uses 10 to determine if you can have enough assets to retire. The rule of thumb is created by Dr. Thomas J. Stanley which write the book Millionaire Mind and Millionaire next door. good book if you want to read it.

If you have double the amount with the original calculation (hence 5), then you can assured that you are on your way to a comfortable retirement.
If you have less than the amount of the original calculation (using 10), then you need to accumulate more.

It's just a personal benchmark i use, so if you want you can use 10.

This post has been edited by gark: May 2 2010, 12:53 PM

Bandar Utama is definitely not a 'normal' place, in fact it is an area full of high income earners. I have lots of freinds around the area with 5 figure incomes. If you want normal around the area you need to go to 'kota damansara' instead. Anyway there are much trappings there to spend your money with 1Utama, the curve, Ikano and Tropicana so close by.

But if you can stay for free, why not? Just don't compare to the Jones next door.

This post has been edited by gark: May 2 2010, 11:28 PM

If you are determined enough you can, anyway if you feel rich, it does give you more incentive work harder to be rich? No?

This post has been edited by gark: May 2 2010, 11:45 PM

It may surprised you that I am married for a couple of years and my spouse is much more frugal than me. She never asks for anything thats cost lots of money. Maybe it's due to our rags to middle class family background where we both come from.

This post has been edited by gark: May 3 2010, 12:08 AM

You calculate with your new salary, so that you have a higher target to achieve to befit your new earning power. This formula actually encourage you to save and invest.

Well I do, since rentals form a large chunk of my income, so I included it. Basically the income is as per reported for income tax. But there is probably a lot of formulas out there, this happens to be just what i use to motivate myself.

This post has been edited by gark: May 3 2010, 05:07 PM

Nah not yet, I believe in asset diversification, remember to minus off the cost of interest and maintenance from your property income when you are using this formula.

Well education is only going to get more expensive, so one day it will be like housing where it will hardly be affordable. Also you must remember that the standard of education can only go up, you cannot assume the same standard of education that can provide for a comfortable family is also valid in the future. Basically the cost rises with the standard of living.

Anyway I don't know what you are planning, but I am prepared to fund my children until tertiary eduction and then they have to earn their own keep. Not a single cent after graduation (or get kicked out of school) Can hardly rely for government support.

I am assuming inflation of 80% in 20 years time, so I estimated that I will need 150K now, which means I will require at least 270K equivalent in 20 years time. Also I am using a conservation investment return of 6% p.a., I will need to invest RM 600 per month for 20 years and the total fund will be equal to RM 280,000. I will be starting with 100% equity then re-balance 15% to bonds every 5 years. In 20 years the holdings will be 40% equity and 60% bonds.

That's my plan above, but it depends on everyone's budget so it might not be suitable for everyone.

I use a measure of inflation rate to keep the amount in focus, if i ignore inflation rate, then it will be quite hard to plan for a target in 20 years (since investing month by month basis). Real returns matter, but if you can account for inflation rate (and beat it) it keeps the target realistic. Anyway everyone have different style of calculation.

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Added on May 3, 2010, 9:44 pmYes, I also follow this 4% rule, assuming your investment stays above the inflation rate. To achieve this, I still have a while to go as the asset required number is 7 figures... in 20+ years time.

This post has been edited by gark: May 3 2010, 09:44 PM

Dreamer,

Well I tend to invest in chunks in different portfolios, I have a retirement portfolio, investment portfolio and children education portfolio. I tend to manage these portfolio separately as they have different time scale and targets.

Newbie99,

After I reach the 4%, i might not go ahead and retire as it is too boring. Maybe i will then leave the current stressful job, and take a more relaxing role, albeit with less pay or i can manage my investment full time. We will see when we get there.

Well congratz another expatriate, working overseas has it's perks, free housing, free car, tax free income and overseas allowance. With your overseas experience, you will be on the fast track to upper management. Take this opportunity to save to the maximum, since you don;t get EPF you need to invest your money diligently.

This post has been edited by gark: May 4 2010, 08:35 AM

That means your salary is paid by a Malaysian company and you are working in China. Not a good arrangement for expatriate work. At the very least your company should adsorb your PCB deductions.

For the company I am working for the standard remuneration for expatriate work is Salary+Overseas Allowance+15% EPF equivalent+Tax Free (they pay all taxes) and 6 tickets back home per year, + free housing + free car and driver. Been working overseas in many places for the past 10 years already.

But sigh.. it does take a heavy toll on family life, I got a gut feeling I will regret it when I am older, but the perks are just too good to forgo.

This post has been edited by gark: May 4 2010, 09:03 AM

If you are saving 5k nett, you should be able to afford a medium-high cost housing/apartments. What is stopping you to purchase them?

Also keep your job and look for another one on the meantime. Trust me, the grass is always greener on the other side.

Taking off time just to learn investing is a mistake. Treat it as a hobby. And learn along the way... it is not difficult, just need some time.

Umm.. start your financial education? There are loads of books that you can start reading to enhance your knowledge of investing. Here is a list of couple books I started with, before learning how to invest. Go buy one and read .

1. Random Walk - Burton Malkiel
2. Investor's Manifesto - Lowenstein
3. Fooled By Randomness - Nicholas Taleb

Then after you have completed these, and have a general understanding of investment, you can proceed with more academic books.

So hard work = more pay, the world is always like this, you work less you get paid less. There is no free lunch in this world.

During project or commissioning period our team occasionally works 16 hours a day, 7 days a week for like 2-3 months. Everyone tend to look like zombies during this period. But we work hard and then we play hard.

Go take a long vacation if you think your work is getting into you and de-stress for a little bit. Put a small portion of your income as your 'luxury' money and let it accumulate month by month. This way you will have some funds for enjoying yourself but will not feel guilty about it. Life is about balance.

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Added on May 4, 2010, 12:08 pmThere is no right or wrong investment, everyone have their own styles or risk tolerance. Every investment has it's place and time, sometimes certain investment will perform for a certain period and then fail for several period depending on it's risk factor. There is no bad or good investment.

Sounds like you are impatient to invest yet you do not know where to go and wants everything. This is the easiest way for you to lose your shirt. Investment must start with a plan and target and then you will need to see through with your plan for the longer term. Do you want capital appreciation? Do you want Income? Do you want interest?

Before you venture into any investment, you must know yourselves first, especially on your objectives and risk tolerance. Read up on the investment you are interested in and do extensive research before you buy, never be greedy and follow the crowd, have an original thinking of your own. Once you are ready and confident to invest you will know. Good Luck.

This post has been edited by gark: May 4 2010, 12:12 PM

Corrected.

If I were you, i rather go for properties rather than a new car. I bought a property way before I bought a new car. Buy a cheaper car (<40k), pay off in 5 year installment and 10% d/p, use the rest of your cash to invest. Isn't that a better financial solution?

Anyway all my property loan installment are currently fully paid by my tenants every month, I don't have to cough up even 1 sen.

This post has been edited by gark: Jun 9 2010, 11:43 AM

Current property,
condo, damansara, d/p 30%, monthly installment = rent
commercial, subang, d/p 20%, monthly installment > rent

Beware of low cost flats, many risk involved, late payment, no payment, run away at night also got. Make sure you get a good yield.

This post has been edited by gark: Jun 9 2010, 10:37 PM

But don't aim too high, I have found out that condo's about rm 1,000-1,500 per month rental is the easiest to rent out hassle free. Target young working professionals, usually will at least take care of your property and pay on time. High cost condo is harder to rent out cause, you will need to make the condo very nice and only expat will rent from you.