Category Archives: General Finance

This section covers finance related topic for both personal and in business perspectives

7 Best Stocks Investment Strategies To Minimize Risks

Just when the year was closing to it’s end last year, I managed to attend a stocks investment strategies class. It was held by none other than a market leader in it’s field (investment) – Kenanga Investment Bank.

It was a full seminar to find the best stocks in the Malaysian market. More importantly, the seminar fully focuses on ways to find stocks that gives the best dividend profits for it’s investors – for short and long term period, which also touches on companies that can sustain in the next 10 years.

Do have a brief read on stock investing for beginners as a start if you find this a bit technical.

Before we start, our minds must have answers to the queries below:

“What is your mission?”

“What is the return you need?”

Generally, people invest and invest more to make more money – but for what purpose?

Is it to fund your children’s education?

Is it to buy your new house? be it for property investments or your dream house.

Let’s say you want to reach $1 million. You have to work backwards to calculate how much percentage of return on stocks investments you need to achieve to obtain the $1 million by the period you want.

An investor can only improve and track their investing performance by having a set of NUMBERS that they want to ACHIEVE. Bear in mind that – what you can measure, you can improve!

To cut short, here are the steps to find the perfect stocks~

1. Understand the business

When we invest in a company, we must know the ins and outs how the company generates their money. We must visualize how they make sales – this what we call sales funnel. When we have an understanding, ask this question, does the way the company generate sales make any logical sense?

When we discuss about stocks investment strategies, this is important to avoid investing in scam companies who only wants to steal your money, or worst, companies controlled by bad syndicates.

Here are examples of companies with reliable sales strategy:

a) Nestle

  • Sales funnel : food products
  • How do they generate money : Through retailers (hypermarkets, small retailers, etc.)

b) Poh Kong

  • Sales funnel : Buy gold, design it, and sell them
  • How do they generate money : Mark up the gold they made and sell it

Noticed how the companies mentioned above have clear ways on how they make money. Those are the companies encouraged to invest, not some WOW business model that sounds too good to be true.

2. Does the company have decent track record?

When it comes to stocks investment strategies, an investor should invest in a company with well known business background. A reputable company normally would have been with the characteristics as below:

a) Been in business for minimum 3 to 5 years

b) No unfair deals to shareholders especially minority shareholders (Didn’t pay back investors’ dividends for more than 2 times)

We can do a round check from news articles or the web if ever the companies have questionable histories. If they do, it’s advisable to avoid investing in them.

3. Is the company making profits?

There are 2 ways to look at this, the company:

a) Is at least profitable, be it in that year or for the last 5 years average

b) Even if they are making loss during the year, at least their revenue is growing – this is better if the company is making profits during the year

4. Does the company have good profit margin?

A good indicator on a company performing good is that, they are making at least 10% profit margin.

Here is the formula:

Profit margin ratio = Net Profit/Total Revenue

Say for example, Company Z is making 10% profit margin ratio – what does that mean? is that good or bad?

What this means —>

For every $1 sale, the Company makes $0.10 cents profit. A low performing company normally makes 5%, average companies makes 10%, while great companies makes 20% and above.

A good company have high profit margin because it has high pricing power. Hence, the company can demand higher product pricing in the market. This means higher returns (dividend income) for investors!

5. The company have good balance sheet

A general rule of thumb of a good business has the following 2 traits mainly:

a) A lot of CASH and ASSET

B) Low DEBT

We can analyze this by ensuring the following criteria:

  • Net debt to equity advisable to be less than “1.0”
    • Formula: Total liabilities/Total shareholder’s equity (This formula indicates whether the company’s total wealth can support/cover the company’s total debt) – we won’t want to invest in a company that have more debt than it’s total wealth now, do we?

A high cash and asset but low debt-bearing companies are super great as it would normally have excessive cash to pay debts, get more loans for business expansion, and better yet – pay you your dividend incomes!

6. Good Return on Capital

This is one of the major part in the stocks investment strategies. Most investors would look at their return on investments they made, rather than the total sum amount of returns that they received.

A good rule of thumb when we invest in stocks is —-> 10%

A key way to find companies that can reach 10% are normally companies with POSITIVE operating activities as presented in their cash flow statements (CFS). This means that the company have sufficient cash to cover for their monthly or yearly business operations.

However, if the investing activities in the CFS is NEGATIVE in amount then it is alright as it may also indicate that the company is currently heavily investing in other assets. This is one of the financial statements normally produced by a company in its annual reports by their accountants.

P.S: its okay if you do not know what the term “cash flow statements” or “balance sheet” means because those are normally accounting knowledge related, I had a rough time myself understanding those reports. Click the links in green down there for more information on this.

Company financial statements/reports normally comprised as below:

a) Balance sheet

b) Cash flow statements

c) Income statements

7. Are the major shareholders reputable?

Normally a good business has highly reputable people working in the company. People who really go to work and to build the business – not just sitting idle waiting for their paychecks to come in.

It is highly encouraged to invest in companies where the major shareholders are the ones who have stayed to build the company through it’s ups and downs in uncertain economic conditions. People who have sweated through the years to raise the company like their own baby.

By doing so, we would be putting our money at the hands of the right people – key people who will ensure returns for the investors who put their money to grow the company, expecting profits from capital invested.

Conclusion

With most of the factors combined above then we may be able to at least minimize our risk of losing money on capital invested in stocks – that’s one less thing to worry in life.

Again, if you find it a bit challenging to understand this article then you can also start by reading stock investing for beginners!

On a side note, be aware to invest only the amount you are willing to lose. Sometimes it is better to save than to invest. And, there are also times when it is the best time to invest rather than saving. It depends on your risks appetite. But then again, if your money is enough to cover only your basic needs then maybe some considerations need to be given whether to invest or not.

A good rule to simplify this is to “spend money on your basic needs, commit to save a certain portion of it every month, then invest the difference“.

5 Core Things Needed To Retire Early

It was a casual saturday and I’d normally stop by my favourite bookstore to top up my family’s weekly groceries.

It was then that I come across this amazing book called “Your Way to Financial Independence”, authored by Yap Ming Hui. He’s been helping a lot of people planning out their life and achieve financial independence – his company (Whitman Independent Advisors Sdn Bhd) helps people to achieve this. Check their page out if you are keen to restructure your life plans at https://whitman.com.my/.

I only imagine the idea of financial independence and retire early in life so that I can do things that I deem much more important than working around the clock and have no time to do the things I’m really passionate or care about in life such as spending time with my loved ones.

Hence, I believe it is vital for me to get my notes into other people’s notes. Knowing key knowledge in life earlier in life will help reduce your stress in future to come. Just like Jim Rohn said, ignorance is not bliss – ignorance is pain and tragedy.

In this article, we’ll be going through 5 very simple cores to take note if you plan to become the master of your money. I believe this will pose as an important turn around in reader’s life if people know these infos early in life.

1. Spending

Knowing where you stand in life is important. This is the same in spending, knowing how much you spend every day or every month determines your financial standings for that period.

An important note from the book, very simple –

The more you spend, the less savings you have.

The more you spend, the more money will be needed to maintain your lifestyle.

Spending relates very closely to our wants and needs, being aware of your wants and needs will help you steer your way to a more controlled spending life.

2. Return on investments (ROI)

The main idea here is that wealth will work for you better when your ROI is higher.

How do you get high ROI?

Well…

There’s ROI from properties, stocks, bonds, businesses, dividends, compounded bank interest and so on – we only need to get a good research before getting our hands on those investments.

But be alert to get ROI that is above the inflation rate. Otherwise, your money will lose its value across time. It’s as if we didn’t invest at all.

Read more at the links below to know a little more about investments you can start!

3 Surprisingly Creative Ways To Make Money From Properties

Stock Trading For Beginners

Making money while you sleep – the compounding bank account (ASB)

Now let’s continue..

3. Savings

Savings and spending are like yin and yang – they are closely associated with one another.

Just like mentioned previously, the more you spend means the lesser you save.

When we retire, the money we saved will be utilise for our daily wants and needs. But the best way to use that big chunk of money upon retirement is that we invest it and earn dividends in return.

This is where big savings are important so that we only need lower “Return on Investments (ROI)” to sustain our daily life after retirement.

Take an example,

Josh who saves $16,000 a year would need to achieve ROI of 18.3% to accumulate $1million in 15 years time compared to the same Josh who saves $36,000 a year that needs only 8.3% ROI to accumulate $1million in 15 years.

Which Josh do we choose to be?

The point is that saving money consistently bears high result financially and save you more time to buy your financial freedom in the future.

Have a read at…

How You Can Save $1300 A Month With $3000 Salary

and find ways how you can save your money better!

4. Time

When it comes to time, it means to forecast the period where certain of our wants and needs will appear in the foreseeable future.

For example, the time when:

1. We send our child into their tertiary education

2. We drawdown our retirement funds

3. We will marry or our children get married

And so on.

It could be a cash inflow or cash outflow depending on our needs and wants but normally big events in life. This is so that you can roughly estimate how many savings you must have or maybe a certain ROI you need to have to ensure your financial independence goals are still in check when the time comes.

5. Inflation

When it comes to investing, always take into account inflation rate.

Why?

Because your ROI might be lower than the inflation rate. This will result in your investments losing out money whether short term or long term – and we don’t want that.

We expected a return on the money we put to work – what if after 5 years you discovered that your financial status is still the same?!

That’s a nightmare.

Hence, make an effort to check the current inflation rate and which investments whether individually or aggregately are able to beat the inflation rate.

How To Achieve Financial Independence

Now that you have clicked on this title, you must have been wondering what is financial freedom? Or…

You have already set yourself up for financial freedom in future to come but you haven’t figured out how.

That’s great! It means you have successfully gotten out of the rat race way of thinking – at least from a state of mind.

Now it’s time for action. Now it’s time to see how you will set your new life direction so that you can arrive at a new destination.

Before we start, know that different people have different meanings for financial freedom.

Does it mean being debt-free? Does it interpret as being able to travel other countries twice a year? Does it mean living your daily life without worrying that your money might run out one day or another? That depends.

What is your meaning of financial freedom?

To cut things short, this is the general outline that I learned from attending financial seminars and meet people who already obtained financial freedom and those who are already charted to that destination.

Assume we are doing this in order of sequence:

1. Work

Yup! That’s the reality of it – you have to work and by saying work it means the job you earn your main income. It’s the job you work to pay your monthly living expenses like utility bills (electricity, water or phone), housing and car installments, as well as other monthly legal obligations.

This is where it all starts – it is the first stage.

The key to this stage is when your salary comes in, who do you pay first?

Yourself!

That’s right, yourself.

You will have to allocate a certain portion of your salary aside for yourself. This leads to the next stage…

2. Savings

This is where the warm up begins – you will have to be disciplined and set your goals.

You will have to save every month until that money accumulate into a huge pile of resource. You need to calculate how much you need to save before you believe that huge resource can help you achieve that freedom.

Have a read at 5 Simple Ways To Save Money and How You Can Save $1300 A Month With $3000 Salary to get wider ideas of how you can save better!

When we already have that huge chunk of money, you might asked what happens next?

This is the point where you make money work for you.

When the time comes, when you believe you are ready to get to the next stage – whamm!!

You invest that money!

And that leads to the next big part which is investing.

But before we go any further, we’ll have to consider another important part to achieve financial freedom and this is applicable to the massive people out there.

This is simply because having a single income from a single work may not be enough to accumulate that huge chunk of money. You will need a second source of income or maybe a third or fourth.

And that leads to our 3rd step….

3. Side hustle income

Many times we’ve heard people working 2 jobs at a time to sustain their life – well you are probably right.

But the idea is that the money used from your main work to pay your loving expenses. Your daily work is used to settle your daily expenses such as basic bills (electricity, water and phone) and other recurring expenses like rents and daily foods.

On the other hand, your second job is what you use to build your fortune.

It can be any jobs, you can start by selling stuffs online, become an insurance agent, open a business, become a beekeeper or even a painter – anything that you love.

Then you save your money and build that huge chunk of money that you can invest and in return, get you that recurring income.

Or…

Without investing, you can simply get recurring income from the people’s demand provided that your service to the society gives value.

Value. This is one of the secrets that Jim Rohn, a great motivational speaker once shared – to attract the world’s wealth, we must become the people that can create and give value to the society.

And I think that’s wonderful information.

Now that you know how to accumulate the huge chunk of money, step 4 plays an even vital role.

Step 4. Invest

Invest – It’s a big meaning for a short word.

Money will lose it’s value in time to come. Things like inflation will inevitably be one of the major cause. Money will not grow unless we put it to work, now that we have worked hard enough to get money.

This is why we need to invest.

We invest to sustain our wealth. To make sure that the money grows more while we are occupied with other matters.

We have traded our time much enough that it is now time that the money will work for us and saves us more time to do the things we really want to do in life.

I always like to invest in things I already know well, and not invest into blurry confusing things. I still prefer the traditional way of investing.

This brings us to step 5.

Step 5. Passive Income

While there are many other forms of investments in this world, I will highlight the most common yet effective investing instruments that are still relevant till today.

It’s none other than by investing in properties. With this, you’ll get recurring income from renting. Imagine if you have 10 houses that each gives you $800 a month – that’s $8,000!

Can you live off with that? I know I can.

You might wonder how to start investing in properties – have an overall understanding by reading 5 traits of a good property to invest and get good rental and 7 steps guide to buy a house – the complete guide. This should help you get that booster understanding about real estates in general.

If you are still young and having fun in your 20s but are getting prepared to settle down – you’ll be ahead of your time by knowing the top 5 tips to buy a house in your 20s.

Better yet, boost your investment income by knowing the 4 unbelievable ways you can maximize your rental income!

Imagine you get yearly dividends from 20 types of stocks that each gives you $200 a month – that’s $4,000 a month!

You might be wondering how you would begin this great journey through freedom by learning stock trading. Have a brief understanding here!

Wow…

How about making that monthly commitment to save a portion of your income into the compounding bank account. Let’s say you save $600 a month for 35 years – that may grow to around $1 million after 35 years.

This is where you will be able to see how to make money works for you! Even when you are sleeping.

It’s just amazing. You can either use that money yearly – though you might lose the benefits of compounding or you can just wait for it to grow big. If you can’t benefit from it then maybe your family can!

We’ve already worked hard to get that big chunk if money and we should not risk it by investing in things we do not know – in things that may not exist 10 years to come.

And that brings us to the final step.

Step 6. Dream

Now that you have worked your ass off, you can now live your life without worrying about money!

Your debt is settled and no one have any claims on you every single day because now you are free.

Free to do what you want and free to live how you want it to be.

This is where you can do the really significant things in life because you have solved the money problem.

This is where you can buy your dream.

It can be anything.

Spending time with your wife and kids. Innovate something creative and beneficial to the society or even as simple as helping/coach other people become financially free – just like you did.

You can also opt to help poor people when you are free. Help them escape poverty and coach them the ways of attracting wealth. In return, you will feel what it means to truly live. You will only gain more when you give more because giving to charity makes you richer.

a quote by Tony Robbins from one of his greatest books, “Money: Master The Game” –

The secret to living is giving.

It’s a noble cause.

This is why financial freedom is important. You’ll be able to chase matters beyond any money concerns because you are now free. Upon achieving financial freedom, you can now chase a life purpose that is bigger than just making money and meeting ends meet – with financial freedom, you will be able to create a more meaningful life.

Stock Trading For Beginners

So you have been thinking a lot about earning money from the stock markets. Going through all the dilemmas and risks associated with investing in the stock market – fret not! It is true that investing in the stock market has its risks but it also has its own perks.

This article will mainly talk about how you can start your investing experience in the stock market but most importantly – how you can get a great start!

To start off, we will go through the basics.

Here is the first one!

1. Choosing your trusted remisier/dealer

Who’s a remisier?

He’s like a middleman between the investor and the company you want to invest in. A remisier earns commision from every transactions of stock trading that takes place.

These are the things you need to ask before choosing your remisier:

a) Are they licensed?

b) Do they have wide knowledge of stocks investments?

c) Can they advise you well in stock investments?

d) How experienced are they in the stock trading field? 10 years? 30 years?

If you think all the 4 questions above gives you a confident nod then you are good to go!

Do check on the link below to ensure that your business representative/ remisier are registered with the Securities Commision Malaysia > https://www.sc.com.my/

This is to help avoid unnecessary losses or scams at the start of your investing journeys 🙂

2. Registering your Central Depository System (CDS) Account

A CDS account is just like your bank account but a CDS account keeps the shareholdings of companies you invested in the form of stocks.

How do you create a CDS account?

Here are the general things (or at least applicable in Malaysia) :

a) A copy of your identification card (IC)

b) RM 10.60 to open a cds account with the Malaysian Central Depository Sdn Bhd

c) Finally, that is, opening a trading account with your trusted remisier

Normally you can just inquire your remisier and they’ll guide you through the whole registration process – it’s really simple and straight forward.

3. Don’t trade stocks yet – join a class!

That’s right, you don’t want to put in $10,000 and end up with a loss – you will need reliable coaches to teach you how and which stocks to invest. You can start by looking into the social media (facebook, twitter, or instagram) for reputable classes organized or ask your friends who have traded stocks before and how they go about it.

However, most classes may require you to pay – just make sure its not a scam!

Here’s some tips before you decide to attend any paid classes:

  • Attend the free classes initiated by Securities Commision known as the “InvestSmart” series, check this out > https://www.investsmartsc.my/index.php/
  • Better yet, you can also get free basic stock trading knowledge from Bursa Market Place, have a visit at > http://www.bursamarketplace.com/mkt/learn
  • Or, you can try and find great mentors/coaches that have been in the stock trading industry in a long time – people like Faizal Yusup or Dato’ Dr Nazri Khan are corporate people who are still working in investment companies and at the same time still organize classes.

Also, a great advice I received from a good friend of mine,

“Avoid trading stocks using your bread money”,

meaning – invest using the surplus money that you have and not the money you use to run your daily routine. What I would advise is to invest using money that you are willing to lose. Also note one of the benefits of stock investing is that you can accumulate cash faster than investing in properties due to its liquidity characteristic.

With that said, you will be able to accumulate your capital faster with stock investing to proceed with purchase of a much stable investment which is property investments. Have a look on 7 steps guide to buy a house – the complete guide, 5 things you should consider before buying your first house or 5 Traits of a good property to invest and get good rental for starters.

Now that you have read until the end, I believe the above should suffice for you to have a general idea on how and where to start. Have a great investing exploration ahead!

How You Can Save $1300 A Month With $3000 Salary

I am no expert in this but I am very much aware of the importance when it comes to savings. Why is this crucial?

Opportunities or emergencies may arise surprisingly at any time. There will be a time when out of a sudden someone would want to sell their business, a company is looking funds to grow business, or there is that hot property going on auction way below market value!

Hence, It is up to us to ensure that we can grasp the opportunities when the time comes or at least prepare ourselves financially in event any emergencies arise. Here are the ways you can save $1,300 a month with $3,000 of salary.

Travel Cost

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We all have places to go each and every week. Like many, we would have to incur costs to travel to work. I’m staying on a suburb far from the city center, Kuala Lumpur.

It would normally take me more than 1 hour on busy days to work – that is about 28 kilometres (km) per trip, a total of 56 km one day. Below are the costs I incurred per month:

Fuel = $400 ($20 per day)

Toll = $200 ($50 per week)

That would be a high $600 a month! And I ain’t liking it.

Solutions?

I opted to use public transport instead. Since then, travelling cost was cut approximately half! Which is roughly $400 a month now for both car fuel and toll fees.

Not only this help save a lot money but also help to save my travel time and reduce stress of going through traffic jams.

Food intakes

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Another way to save is that I chose to cook my own meal – most of the days normally costs me around $100 – $150 for a month worth of food stocks or ingredients.

Aside that, I would simply buy my daily lunch supplies at cheaper price at a petrol station selling cheap cooked foods where I normally pass through everyday when I go to work – that is if I have too packed of a schedule. Costs me $3.50 per lunch box containing fried rice, an egg and a bit of gravy – pretty cheap and neat right?

But then again, there are days that we have that friends night out or Friday night outings so I wouldn’t mind spending a bit for that particular session since I have already saved a lot of margins on other areas. In total, food supplies would cost me around $150 – $250 a month.

Education loans

Yes, you read that right – education loan payments. I’m still actively repaying my education loans every month. That would cost me $100 a month which is not too high of a burden but still a great obligation to meet.

Phone bills

This would normally costs me $120 for my phone bills and I think that is still quite high for me.

I believe you can try and minimize your phone bills by finding better phone plans. If you can reduce your phone bills by $20 a week, that is $200 extra savings a month! and I’m quite sure there are way more awesome phone plan deals out there.

Home installments

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This would costs me $800 per month inclusive of maintenance. However, now that I rented it out – the rental income I generated with the right strategies gave me an extra boost of $200 – definitely great! Check out 4 Unbelievable Ways You Can Maximize Your Rental Income and 5 Traits of a good property to invest and get good rental for greater knowledge of how you can boost your property investing game.

Life insurance

I focused on life insurance because if ever I am faced with a critical sickness and I am unable to work any longer, my insurance would be able to settle all my bank loans pertaining my debt on properties owned. Not only that, the insurance package would also allow the accumulation of cash value where it would have a certain amount I can withdraw as extra money after certain period has passed – you can say that it is like investing while insuring yourself.

By doing so, I would not have to burden my family members to pay the housing loans if I am cripple and not having enough capabilities to work any longer. It costs me as low as $100 a month and it helped cover so much trouble for me in future to come. So if you find yourself still young and just started your career life, take up an insurance but be careful of scams and take up insurance coverage on areas you deem only important for the coverage you want.

Let’s say if your company already have unlimited coverage for your medical expenses, then maybe you can opt not to take medical insurance – for example. I would suggest you to take up insurance from reputable companies.

Have a read on “MRTT vs MLTT? Get yourself insured before buying a property” to get a good glimpse of general insurance knowledge that can settle all your housing debts in event you can’t work anymore. However, this condition will only work if your insurance coverage is more than your full housing debt.

Be mindful that insurance companies find it hard to consider your insurance applications after you are critically ill because it would be a loss to the company – sad truth unfortunately. So take advantage of your good health and ability to generate income now and apply one before the aforementioned happens alright! :))

Costs breakdown:

Car fuel and toll = $400

Food intakes = $150

Phone bills = $120

Education loans = $100

Home installments = $ 800

Life insurance = $100

Total expenses = $1,670

Amount saved = $3,000 – $1670

= $1,330! 

“A penny saved is a penny earned” 

~ Benjamin Franklin

So what can you do with these much savings?

1. Apply an auto-debit (Standing Instruction) from your salary account into your compounding bank account. Doing this will help you Making money while you sleep – the compounding bank account (ASB) just like Tony Robbins advised in his greatest book, “Money: Master The Game”.

2. Invest the money in stock market.

3. Save all of them as your next home deposit.

4. Give to charity (help people in need). Always bear in mind that Giving to Charity Makes You Richer!

5. Provide some money to your parents or family members as presents.

6. Gather enough money and be ready to launch or buy a potential business.

7. Put it in your flexi-bank account to reduce your monthly home loan interest (yep, that’s what it’s called in banks, flexi-bank loans).

And the list goes on….

But whatever it is, always bear in mind that for every dollar you saved would give you better chances of grasping the opportunities when it comes. Have a read at 5 Simple Ways To Save Money to get bold ideas to save money better.

You can’t simply start saving when the opportunity or emergency happened right there and at that time right? That is insane! If you start saving at that very time, the opportunity would have gone into other people’s hands.

You need time to save money enough to be able to take advantage of the opportunities that falls before you. Never the less, knowing that you are reading this article till the end would mean that you care for your financial securities and your future – that YOU want to make that change! Good luck hustlers!

5 Simple Ways To Save Money

Financial opportunities are everywhere and it may come at anytime of your daily life – be it when you are ready or not ready. How do you take advantage of this? Sometimes you may be faced with great inconvenience – you needed medications, car broke down, or annual education fees. How do you prepare for this? It’s not rocket science, you have to prepare your savings – cash is king. Here are the 5 simple ways to save money.

1. Apply auto debit/ standing instructions

Every month I have set an automatic debit or as known as standing instructions (SI) which takes away a certain portion of money from my bank account. You would have to arrange the SI service with your associated banks. The best thing is the service have no fees at all! Simple right?

You can have the banks to take away your money at a specific date. So if your salary will come in every 29th of every month, you can have the bank to debit your bank account on the 1st of every month – just make sure you have enough money in your bank account. I would normally have the bank debit my bank account and transfer those amount directly into my compounding bank account. Why is this great? Not only does it feel less painful to save (because the bank’s do the savings for you) but you will be able to save and invest at the same time. Your money is growing every month in your bank account through compounded interest, you get yearly dividends, and to top it off – you make money while you sleep!

2. Withdraw only what you need at start of every month

This is a type of control I set for myself everytime I received my salary every month. I will withdraw fixed amount of cash that I deem necessary for that month – based on my monthly budget. For example,

Car fuel – $ 300

Families – $ 300

Foods – $ 300

Total = $ 900

Hence, based on the example, every month I withdraw $ 900 beforehand and stick very hard to the cash I have withdrew. The balanced money in my bank account will be splitted into savings and the other portion will be maintained in my salary bank account in case if I needed extra cash.

3. Have a piggy bank

Everyday I have allocated the maximum amount of money I can spend. Let’s say one day the maximum I plan to spend is $ 15 only and at the end of the day I still have $ 2 – I will put that $ 2 in my savings box.

This strategy actually helps as another filter on top of other saving strategies I have applied. At the end of the day I will deposit all the money in the savings box into my bank account. Well, it’s actually up to you – you can also try and buy good foods for your family or even give to charities. As the saying goes, giving to charity makes you richer. Do not wait till you become rich to start giving, give until you become rich.

4. Be your own chef, cook your own meal

I have been applying this for one year now and guess what? It is unbelievable how much money you can save! I try hard to cook my meals at home and bring it to office the next day.

I noticed that cooking meals that consists common ingredients saves lots of money and time – it’s a good time management technique. For example, cooking meals that have chicken and broccoli or fish for straight 3 or 5 days and switching ingredients every 1 or 2 days. Imagine if you can save $ 200 every month, that’s $ 2,400 a year!

5. Buy what’s necessary, spend little on wants

Sometimes you need that caramel frappe from Starbucks or that banana buzz from Boosts – go for it, buy it! It’s always alright to spend an extra something each month to make you happy, something that helps motivate you to work harder. Consider it a reward for yourself. However, try as much as possible to limit yourself and avoid overspending on things that can cumulatively cause financial leaks to yourself. You may not need to eat at that luxury restaurant every week, try around once a month. Another way to look at this is to buy on things that won’t burden you such as buying a house that is within your comfort financial zone – not a property that caused too much strain on your financials. All and all, save as many as you can while you can and leverage the savings into assets that can grow you money.

What’s the difference between master title, strata title, and individual title?

Whenever you are purchasing a property or you went for a property purchase inspection, people always say things like, “don’t worry this unit has strata title issued already” or “this unit is great but it is still under master title” – why is this so important? It’s important to know as it affects your property purchase process especially in terms of time. In this article we will discuss on master title, strata title, and individual title.

Master Title

Having a master title means one thing, the property is under a major/parent grant which is usually the property developer themselves. The master title will eventually be released as an individual title (normally for landed properties) or strata title (normally for high rise buildings). However, the title release will depend on the property developers in terms of how fast they settle their land purchased from the government through self finance or banks using bridging finance. In Malaysia, it may take 3 – 10 years on normal circumstances.

Strata Title

Unlike master title, strata title is issued for high rise properties. Having a strata title means you are now the rightful owner of that small unit up the apartment – finally! This implies that the land lot has been split evenly to all respective owners. This also means that it will be easier for you to purchase or sell the property without consent from the property developers.

Individual Title

Similar to strata title, individual title is normally issued for landed properties. Having an individual title means that the property is under the ownership of the individual who purchase the property. The issuance of individual title is normally much faster compared to strata title. Sometimes, even though it is a landed property but in a gated housing areas with guards and facilities – the property can be considered as strata title (as it is in a shared areas, similar to the concept of a serviced apartment) and not an individual title. Hence, do ask your developers whether your property is under which title as each title has its impact on your whole purchase process.

The links below might interest you~

https://hustlerinvestor.wordpress.com/2018/11/18/3-surprisingly-creative-ways-to-make-money-from-properties/

MRTT vs MLTT? Get yourself insured before buying a property

Any other people should be aware and act to include themselves with an insurance coverage once they are able to afford one. You can consider yourself lucky if you start paying at a young age because the younger you are – the smaller the insurance premium you have to settle. I have heard many stories where people buy a house then suddenly – wham!! They got into a major accident and unable to work again. What happens next? He couldn’t pay the loan installments, banks put his house on auction (lelong), and the poor fellow lost his home – all because he didn’t get himself insured. Maybe you are thinking it’s too early to get insured or maybe you are concerned that it would take huge financial impact on you. My advice is get yourself insured while you are still healthy because insurance company would have high chances of turning you down if you apply when you are critically ill. Believe it or not, you can get yourself covered for RM300,000 by only paying RM 100 a month, small sum for a big life changer. Here are two types of insurance for starters:

Mortgage Reducing Term Takaful (MRTT)

MRTT basically will only get you covered on a single property and it acts as a safety mechanism for the banks in the event that the borrower (us) gets a total permanent disability (TPD) and could not work anymore to make the bank loan settlements. However, with MRTT – the banks will still be paid in full by the insurance company on the whole property price if the borrower faced TPD.

These days MRTT are made mandatory by banks in Malaysia because there have been many cases years back where borrowers make MRTT as an optional matter and in the end faced TPD. Resulting their properties to be auctioned and banks consequentially have to sell the property at lower price. MRTT will normally be included as part of your bank loans during your loan application process. Have a read on “4 Great Tips For Getting your Loan Approved” for better insights to have a successful loan application. For MRTT, you may get covered for only one property and that the monthly payments reduce over time (which is good, maybe?) – but so does your coverage (covered only in specific period) gets reduced and the coverage will no longer be available to you after the contract period ends. MRTT is especially beneficial for people with less dependents/ family members.

Mortgage Long Term Takaful (MLTT)

Unlike MRTT, MLTT covers you forever but you will have to pay forever until you pass away. Well it does cover you forever but it also requires you to pay forever? how do you take advantage of this? The answer is to start as early as possible! The earlier you start paying your insurance, the cheaper the premium you will pay. Also, the amount you pay monthly will be fixed forever – unless you are willing to increase the amount of  insurance coverage when your salary increased. You can decide whether or not to top up your coverage anytime in futures to come.

Finally, the best thing about MLTT is that if you are faced with TPD – your house will be fully settled completely. Let’s say your property loan is RM 200,000, your insurance stands at RM 300,000 – your house will be fully paid and the balance of RM 100,000 will be distributed to your family members 🙂 This way your family won’t suffer too much of a harsh time in your death and you  can rest easy knowing your family members are in good hands.

Key Notes:

  • You may fall critically ill anytime and when you do, you may not able to work, when this happens – you can’t pay your bank loans
  • In the end, you will lose your property to lelong (auction) – you may have no place to stay anymore, family members will be in hard times.
  • The younger you start paying the premiums the better, because the premium paid is determine by your age, the younger you are, the lower your premiums will be.
  • In event you can’t pay your loan due to critical sickness, the insurance will help settle all your loans, provided you take an insurance that covers the property price your purchased. Start young and get protected fellow hustlers!”

4 Great Tips For Getting your Housing Loan Approved

1. Usage of credit cards

There is nothing wrong with having 10 credit cards but you must pay on time. The problem with credit cards is abusing the given credit amount – you swiped your credit card one time.. and then one more… and another swipe.. and at the end of the month you found out you have used more than you can pay – yikes!

I attend a talk by a professional bank officer regarding credit cards and it was an eye-opener. I found out that bankers will see you as having little money the more you use your credit cards. It is also recommended that you use a maximum usage of 75% of your full credit amount – recommendably 50% for better chances of getting your loan approved.

It is also recommended that you use a maximum usage of 75% of your full credit amount –

recommendably 50% for better

chances of getting your loan

approved.

It was also discovered that if ever, there is a record that shows you paid your credit cards late – there is high likelihood that your loan applications get rejected. To sum up, high use of credit cards equals high chances loan applications gets rejected.

So what’s a good credit card practice to get most of your loan applications approved?

  1. Maintain good track record of credit card payments
  2. Maintain credit card usage approximately 50% of total amount

2. Status of work or company

Lets say if you are a creditor or a bank yourself, would you be concerned what your debtors are working as? – of course you do!

From bank’s perspective, they do not know how credible you are and whether or not you are able to meet your commitments. This is why what you work as and who you work for are important.

Banks would normally opt to lend to people from companies with credible backgrounds and track records. A company that always pay their employees’ salaries or EPF fees late are excluded from being reliable.

The lenders would also need to have a job that can proof to the banks that they can ensure a continuous income to meet their monthly commitments to the banks. Banks would normally see contract-based workers as risky lenders because their work contract can be terminated at any time. But then again, in this situation maybe you will be able to convince the banks by your high savings amount – that may work.

3. Savings

Having a certain amount of savings is an extra point you get from the banks. It would be much easier for banks to assess your risks and behaviour from the money you saved. The best amount of savings is around 6 months of your salary – why so? This is because in normal circumstances people are able to settle down and look for a job or to restructure their short term plans within 6 months – I call this the calm down period.

‘The best amount of savings is around 6 months of your salary’

Savings can come from anywhere such as bank accounts, asb, tabung haji, or an investment account. However, savings are not income. Incomes are money that comes in your bank account on regular basis with an estimated amount each period unlike savings which you don’t earn on them.

What if you own company shares or you act as a shadow director for a company and receive dividends on it? Is it considered as income?

Yes! It is an income and I urge you to save the dividends as banks would see the dividend incomes as part of your earnings. Save around 30% to 40% of your income as this will help banks to determine your capability and credibility to meet your commitments with the banks – remember, every dollar you save is a dollar you earn.

4. CCRIS records

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The Central Credit Reference Information System or commonly known as CCRIS is a system that helps gather credit information from borrowers who participates in financial institutions – banks, insurance brokers, or private companies in normal circumstances and produces credit reports (contains outstanding loans, special attention account, or bankruptcy status of a person) that will be utilise by the financial institutions. CCRIS record is important to gauge our financial capabilities.

So, what is a good CCRIS record?

  1. Your credit report shows 0:0:0. This is the ideal record because the higher the number means no months having outstanding loan. PTPTN, housing, and car loan is normally included as part of CCRIS assessment.
  2. No 12 months outstanding credit payments.
  3. No outstanding amount in your special attention account. Take note that you may thought that the card can cancel itself after you have used up all your credits with the intention of not using it anymore and you think its okay not to manually cancel it – this is where it gets scary. The credit you didn’t pay will be transferred into your special attention account and it will be there forever until you manually call the banks to cancel and pay the outstandings. Whenever you want to apply for a housing loan, make sure to clear any outstandings you may have due for a long time.

To sum it all, you will be able to obtain higher chances of getting your loan approved by applying the 4 main tips as aforementioned. Also, you may need to take into consideration of what you can actually own. Sometimes the banks may approve of your loan but you may face difficulties to pay the banks’monthly installments – so don’t bite more than you can chew. Take things slowly and enjoy your wealth growing process.