tag:blogger.com,1999:blog-87076208354733125592024-03-22T02:38:29.387+08:00Henry Tan - Your Finance DoctorYour finance doctor will share everything related to personal finance.Henry Tanhttp://www.blogger.com/profile/11927168352621516247noreply@blogger.comBlogger54125tag:blogger.com,1999:blog-8707620835473312559.post-66104114255955220122022-08-03T10:22:00.002+08:002022-08-03T10:30:15.792+08:00Are You Doing the Exact Opposite of What You are Supposed to?<p style="text-align: justify;">I came across one of the top trending articles from CNBC where it says 65% of Americans are doing the exact opposite of what they’re supposed to. Although I do not have the exact percentage for Malaysians but I supposed it applies to everyone and I thought it is interesting to share with you too.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhNYiCJx1e2ACdg_3GvozPqH9cWpE_6W2eYtubDn22B7DL_H6LpAZlnPFZgKqiNQiftbCNDAq5JR0IhxXMDOeMF-MVVDZhJZStzsaC_xNDQMg41yEcHNP8eZyx3erUBJGPUrfA1dl-KRrOpInjGqJfcvqlKMV7T59jSo5USf0TgK_q1Pa1Z4Ba91U3s/s900/1.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="480" data-original-width="900" height="342" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhNYiCJx1e2ACdg_3GvozPqH9cWpE_6W2eYtubDn22B7DL_H6LpAZlnPFZgKqiNQiftbCNDAq5JR0IhxXMDOeMF-MVVDZhJZStzsaC_xNDQMg41yEcHNP8eZyx3erUBJGPUrfA1dl-KRrOpInjGqJfcvqlKMV7T59jSo5USf0TgK_q1Pa1Z4Ba91U3s/w640-h342/1.png" width="640" /></a></div><br /><p style="text-align: justify;">The author used a good analogy to demonstrate the case, so I will keep it simple for you here as well. Imagine if iPhone 14 Pro Max is having 14% DISCOUNT (the actual release date will be end of this year, most probably Sep 2022!), would you buy it right now? </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgPbWVkLB3JB_zexquwbcWJak1YhTZPWg7Zu_EDjE4v8VSGz1KY3p8fQo2HcP7yjIeT8jaxRuSNLSKvVxp3skWuelaFmbJp7pCNLAYva4QxK1eozEMJhODqtwwYNv7KeEE16m1N9XbXMKVaLTJqhLMXwQDWyDU8VDLA_LmI_ly2xyxumyo6Fk9TH7lK/s900/2.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="480" data-original-width="900" height="342" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgPbWVkLB3JB_zexquwbcWJak1YhTZPWg7Zu_EDjE4v8VSGz1KY3p8fQo2HcP7yjIeT8jaxRuSNLSKvVxp3skWuelaFmbJp7pCNLAYva4QxK1eozEMJhODqtwwYNv7KeEE16m1N9XbXMKVaLTJqhLMXwQDWyDU8VDLA_LmI_ly2xyxumyo6Fk9TH7lK/w640-h342/2.png" width="640" /></a></div><br /><p style="text-align: justify;">Most likely you will. Even if you are not Apple fan and you don't plan to use it yourself, you can easily sell it right? After all, it is the pleasure of getting something cheap. Psychologically, discount creates <b>urgency</b> as well as the <b>fear of missing out (FOMO)</b>. This applies to everything else, such as airplane tickets, hotel discount and all sort of promotion that you frequently found on your social media. When there's discount, you are most likely to buy. </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjl_t9NPF_G-5IALkMs_D3ryJkFtNfYN--59lCtbvTrGaXJ042nc-h_jOIOd7NLyijOI7n3nAwMm6kZJe4_YND5FfukB3qlg_v02yiBAmim3fQtQFnHvVNa4KqKH_wsPcCuVOmdA3fgCGPOGiKs2D0AxoOzzAIUxoDo80G90XEwkhSlpkCDwrMCAYi3/s900/3.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="480" data-original-width="900" height="342" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjl_t9NPF_G-5IALkMs_D3ryJkFtNfYN--59lCtbvTrGaXJ042nc-h_jOIOd7NLyijOI7n3nAwMm6kZJe4_YND5FfukB3qlg_v02yiBAmim3fQtQFnHvVNa4KqKH_wsPcCuVOmdA3fgCGPOGiKs2D0AxoOzzAIUxoDo80G90XEwkhSlpkCDwrMCAYi3/w640-h342/3.png" width="640" /></a></div><br /><p style="text-align: justify;">Unfortunately, that is not the case when it comes to stock market. You may not be as enthusiastic about the markdown on stocks. As of 1st Aug 2022, S&P500 year to date is down about 14%. Not just S&P500, <b>NASDAQ</b> <span style="color: red;">-21%</span>, <b>EURO STOXX 50</b> <span style="color: red;">-15%</span>, <b>HSI</b> <span style="color: red;">-15%</span>, <b>KLCI</b> <span style="color: red;">-5%</span>. But will you be buying (investing) at cheaper price now?? Probably not. </p><p style="text-align: justify;">So according to the article, 65% of the Americans say they are keeping money out of the market due to fear of investment losses. I do not have the figure for Malaysians, but most likely you might be the same too. If I am wrong about you, then let me know in the comment down below! 😏</p><p style="text-align: justify;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi6IqJEh2BNqXAMW_nn7ZAxXzITjEUtq9HRLczZSQBkUzJAiqxmJKctI4fv9fZ3dEdqaSW2DUVIn7rST_X4_9DRHzJfERdH2-8CylkHGlAA-_vHygg-1It1klzFrRH0J-8PUjHZlZb0YlKdWx8VnJnHQbC2ZzoGUcfXDmB9SElljOZ3WKP9GnzyIxsa/s900/4.png" style="margin-left: 1em; margin-right: 1em; text-align: center;"><img border="0" data-original-height="480" data-original-width="900" height="342" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi6IqJEh2BNqXAMW_nn7ZAxXzITjEUtq9HRLczZSQBkUzJAiqxmJKctI4fv9fZ3dEdqaSW2DUVIn7rST_X4_9DRHzJfERdH2-8CylkHGlAA-_vHygg-1It1klzFrRH0J-8PUjHZlZb0YlKdWx8VnJnHQbC2ZzoGUcfXDmB9SElljOZ3WKP9GnzyIxsa/w640-h342/4.png" width="640" /></a></p><p style="text-align: justify;"><br /></p><div style="text-align: justify;">Isn't it amazing on how our mind works? That when it comes to stock market, most people see it as a drop (hence fear of loss) but not as a discount? You may say that what if market drops further? If is so, shouldn't you be worried that iPhone 14 Pro Max will drop further too? You see all we have to do is just to tweak our mindset! </div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg8lnf7YYbzQM0cMklekPb86M1a6cLLcYKjExqr59tmrfFUU3J9DDQOuqK6kv6LrOvWV453ao79Ol52va_RM139RTVJQ24Yvmt_FScw_7wQvRUHDUL6SqJtg12wKlFKfaz0GgnLpC3jUlqZqUdHzep1riZ17xxmnD5UwW7tAo9h6d70LriwuOZfgBAe/s900/YFD%20Blog%20(8).png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="480" data-original-width="900" height="342" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg8lnf7YYbzQM0cMklekPb86M1a6cLLcYKjExqr59tmrfFUU3J9DDQOuqK6kv6LrOvWV453ao79Ol52va_RM139RTVJQ24Yvmt_FScw_7wQvRUHDUL6SqJtg12wKlFKfaz0GgnLpC3jUlqZqUdHzep1riZ17xxmnD5UwW7tAo9h6d70LriwuOZfgBAe/w640-h342/YFD%20Blog%20(8).png" width="640" /></a></div><br /></div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Psst! On a side note... do you know Apple stock price down by 11.26% year to date too? You can <b>buy 6 shares ($972) now with the price of 1 iPhone 13 Pro Max ($1099)</b>. So why not 6 Apple Shares? Being a shareholder (even just a tiny) of Apple Inc certainly deserves the bragging right more than owning 1 iPhone 13 Pro Max (which soon will be outdated when 14 is out) right? 🤔</div><div><br /></div><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg82Z_uA7CS28rsPf1UGTTiJiiUM5CQtmz0xbBU_JJjI7qNt5q4G2rF5pZsdHrkZsYbXgubvvdRXRSnrWlf1paGdnBxySZO6YBHEYQUH7Q7LBN5oPVsQ1Niu6fLdwFcz2_W8yiyGw4TkK3r2WhiFa83CuyUOHrWd0PFApMScYshqC4wRB5C3pmTFfu9/s900/YFD%20Blog%20(9).png" style="margin-left: 1em; margin-right: 1em; text-align: center;"><img border="0" data-original-height="480" data-original-width="900" height="342" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg82Z_uA7CS28rsPf1UGTTiJiiUM5CQtmz0xbBU_JJjI7qNt5q4G2rF5pZsdHrkZsYbXgubvvdRXRSnrWlf1paGdnBxySZO6YBHEYQUH7Q7LBN5oPVsQ1Niu6fLdwFcz2_W8yiyGw4TkK3r2WhiFa83CuyUOHrWd0PFApMScYshqC4wRB5C3pmTFfu9/w640-h342/YFD%20Blog%20(9).png" width="640" /></a><br /><div class="separator" style="clear: both; text-align: center;"><br /></div><div style="text-align: justify;">It is normal to be fearful when the market is in red, we are human after all. So you may be thinking perhaps to wait for the bottom, which people always try to do - to time the market. But unless you have a crystal ball (yes even Warren Buffett cannot tell you when will bottom), otherwise it is always best to stay invested, not fully and not all in, just stay invested. </div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Don't believe me? Look at the study from JP Morgan, if you missed out 10 best days from a 20 year period, your <b>Annualized Return dropped from <span style="color: #274e13;">9.52%</span> to 5.33%</b>! Most people adopt the "KIV" (Keep In View) approach, but usually they ended up buying at high or selling at low already. Then there's where they got burnt and just make a conclusion to others that stock market cannot earn money!</div><div><br /></div><div><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhSngDvD9ujwP9xB_PUcYej_M1Rwhv99f0paFV6N8IlDueZz2KPw-tPO8Oq9sPXu4WmIyw_52XdduWfHbGhwYuWCg_wIusm5bOzQFPXAbPfZwk941bWChmfr_2oYGFUOcINpV3os_m34ADoNuPa6EJhtN-LfufYyw9vIEnZH0krOVHt9I8rdA4_V7H4/s900/5.png" style="margin-left: 1em; margin-right: 1em; text-align: center;"><img border="0" data-original-height="480" data-original-width="900" height="342" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhSngDvD9ujwP9xB_PUcYej_M1Rwhv99f0paFV6N8IlDueZz2KPw-tPO8Oq9sPXu4WmIyw_52XdduWfHbGhwYuWCg_wIusm5bOzQFPXAbPfZwk941bWChmfr_2oYGFUOcINpV3os_m34ADoNuPa6EJhtN-LfufYyw9vIEnZH0krOVHt9I8rdA4_V7H4/w640-h342/5.png" width="640" /></a></div><div><br /><div style="text-align: justify;"><br /></div><div style="text-align: justify;">I remember there is a saying like when you hear the taxi driver or the most unlikely person to be investing, to talk about investing in share market, then maybe it is time for you to sell and run far far away! Trust me, too late to enter by then. No offence to the taxi driver or the 小白 friend, but these people usually ended up <b><span style="color: red;">BUY HIGH</span></b> because of <b><span style="color: red;">GREED</span></b> and <b><span style="color: red;">SELL LOW</span></b> because of <b><span style="color: red;">FEAR</span></b>.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">So we have to be disciplined, be conscious and stay <b>RATIONAL</b>, which I think it is the utmost important one, not just to stay invested but to invest consistently through down markets. Nobody likes the feeling of seeing big red numbers in their portfolio, but if you are invested in a well diversified portfolio for a mid to long term financial goal, you really do not have to worry at all. </div><div style="text-align: justify;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg3PVrNs5KCciyOE8cd0-2wCnFEcdWuHWfuS1i04VrmiaK8h8Hrk6GqqRDuS9kW_rBN_hOzoUwPPugPu3WRoRLVNZ8VOHLSSbAlpyTYyMIkodp0xYZFOQQjpIvIoYz3ykHlvD8WSAKyUgFrpMybaUjwaoHDpZlkMuHJu12saBx53YBKO5ebaiCSyAr5/s900/6.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="480" data-original-width="900" height="342" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg3PVrNs5KCciyOE8cd0-2wCnFEcdWuHWfuS1i04VrmiaK8h8Hrk6GqqRDuS9kW_rBN_hOzoUwPPugPu3WRoRLVNZ8VOHLSSbAlpyTYyMIkodp0xYZFOQQjpIvIoYz3ykHlvD8WSAKyUgFrpMybaUjwaoHDpZlkMuHJu12saBx53YBKO5ebaiCSyAr5/w640-h342/6.png" width="640" /></a></div><div><br /></div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Treat the investment like your favorite brands, you will want the price to go down so that you can buy at low price. Adopt <b><span style="color: #38761d;">cost averaging strategy</span></b>, where you invest in a consistent intervals, buy more shares when they are cheaper and fewer when they’re more expensive. </div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">If you read until this part and still isn't convince to invest now, then you must be really conservative.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Fret not, if you...</div><div style="text-align: justify;"><ul><li>Do not know what stocks to invest and do not have the time to research and manage</li><li>Do not have the discipline to invest by yourself</li><li>Sick of looking at your big red negative numbers in your portfolio</li><li>High allocation in MYR and want to diversify some to USD </li><li><b>Participate in S&P500 stock market growth without downside risk</b> (principal protected)</li><li>310USD per month (RM1400 per month) is affordable to you</li></ul></div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Then I have something for you. <a href="https://wa.me/message/V6ARFGBRCJCAF1" target="_blank">Click here!</a> </div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Prefer to invest in MYR? No worry, I've got you covered too! </div><div style="text-align: justify;">As Licensed Financial Advisor, we have solutions for your every needs.</div><div style="text-align: justify;">Most importantly, you are making a well informed decision. </div></div><div style="text-align: justify;"><br /></div>Henry Tanhttp://www.blogger.com/profile/11927168352621516247noreply@blogger.com0tag:blogger.com,1999:blog-8707620835473312559.post-23619466210351062822022-07-28T14:24:00.011+08:002022-07-28T14:34:33.614+08:00Li Ka-Shing Teaches You How to Buy Car Buy House in 5 Years<p style="text-align: justify;">I first saw this article in Mandarin whereby the topic caught my attention. I supposed you are the same too to click into this post, after all, who does not want to learn from the Hong Kong billionaire right? Whether or not this is real from the master himself, we can always get something out of this inspirational five-year plan to improve one's life. </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiCFoBQZ0wmH11R1HZV9vF60jD1CyvMwvVzsezDO8AcS0TNnvEJQqYo8yyM7RA5t-Ro3LrvOS3f5R6hX_TUSjSivsTIkc5yfEuglh7nBMcbCj4EKpps6btPf-r_6oM8NRYX7qGZDxllmsweW4jpGAm9EgwD3NLUQ0f4SU-FVf9jmcWA7fTxiQpAiydo/s900/8.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="480" data-original-width="900" height="342" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiCFoBQZ0wmH11R1HZV9vF60jD1CyvMwvVzsezDO8AcS0TNnvEJQqYo8yyM7RA5t-Ro3LrvOS3f5R6hX_TUSjSivsTIkc5yfEuglh7nBMcbCj4EKpps6btPf-r_6oM8NRYX7qGZDxllmsweW4jpGAm9EgwD3NLUQ0f4SU-FVf9jmcWA7fTxiQpAiydo/w640-h342/8.png" width="640" /></a></div><div class="separator" style="clear: both; text-align: center;"><br /></div><p style="text-align: justify;">In the article, the assumption for your monthly income is only $2,000 when you just started out. He splits your money into five portions of funds according to the allocation of 30-25-20-15-10. The first portion $600 (30%), second portion $500 (25%), third portion $400 (20%), fourth portion $300 (15%) and lastly fifth portion $200 (10%). </p><p style="text-align: justify;">Here are the direct translation then follow by <i><span style="color: #2b00fe;">my own interpretation</span></i>, as Malaysian for Malaysian. </p><p style="text-align: justify;"><br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiOA37eFFv4mKjLKi3WR28XrJztaSAJ0LlCg6DTkgQJTa2fW0F02LyRsECsbAWFIOxv63LNRS51LZQhAgl3g_jf2JvStt7F3403DZBut4KMN8-k3nqSc1qbQKJfjQyfy4jBTGmKw9zcUMbBj4ukDhUO5IENASwXKzFbsqIObXvnnGbOTYRFvQBlZIss/s900/9.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="480" data-original-width="900" height="342" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiOA37eFFv4mKjLKi3WR28XrJztaSAJ0LlCg6DTkgQJTa2fW0F02LyRsECsbAWFIOxv63LNRS51LZQhAgl3g_jf2JvStt7F3403DZBut4KMN8-k3nqSc1qbQKJfjQyfy4jBTGmKw9zcUMbBj4ukDhUO5IENASwXKzFbsqIObXvnnGbOTYRFvQBlZIss/w640-h342/9.png" width="640" /></a></div><p style="text-align: justify;">The first portion which is the biggest $600 at 30% - used for living expenses. It’s a simple way of living and you can only be assigned to less than twenty dollars a day. Eat simple. According to the article, when you are young, the body will not have too many problems for a few years with this way of living. </p><p style="text-align: justify;"><i><span style="color: #2b00fe;">I supposed the article also assume that you stay with parents and probably use parents car too. But you get the gist of it, live minimally. You can only spend maximum of 30% of whatever you are earning and break it down into daily budget. If that 30% in monetary term is too low then you must get a part time job. Not just any job, but preferably sales job so that you learn the art of selling. </span></i></p><p style="text-align: justify;"><br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi7Jkh2mRJBcDRHD7v5gAfmGQ5q41i1CHfSoPmBuzQ5Bvtllm3M-KQwQiQWhx751mtxdx1q-EAtTqf-hh648h2LgK-e4iyFFwivTi877KUqmybdmuW4l7_qMU4vUakxxqvEwuJomwZezyxvM_GhRREeYZL8joKBFTOMDFnDSKSzBjk92kqREfxD7euu/s900/10.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="480" data-original-width="900" height="342" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi7Jkh2mRJBcDRHD7v5gAfmGQ5q41i1CHfSoPmBuzQ5Bvtllm3M-KQwQiQWhx751mtxdx1q-EAtTqf-hh648h2LgK-e4iyFFwivTi877KUqmybdmuW4l7_qMU4vUakxxqvEwuJomwZezyxvM_GhRREeYZL8joKBFTOMDFnDSKSzBjk92kqREfxD7euu/w640-h342/10.png" width="640" /></a></div><p style="text-align: justify;">The second portion of funds - Investment. Save the $500 in your bank and accumulate it as your initial startup capital to do a small business. Go to wholesalers and look for products to sell. Even if you lose money, you will not lose too much money. However, when you start earning money, it will boost your confidence and courage and have a whole new learning experience of running a small business. </p><p style="text-align: justify;">Earn more and you can then begin to buy long-term investment plans and get long-term security on your financial wealth being of yourself and your families. So that no matter what happens, there will be adequate funds and the quality of life will not decline.</p><p style="text-align: justify;"><i><span style="color: #2b00fe;">I agree that a portion should always be allocated for saving/investment. A quarter of your salary can really help achieving your financial goals faster. As for the small business, I believe it is feasible too such as starting an online store in Shopee/Lazada/TikTok. You can even start with drop-shipping so that you can minimize the risk of stocks piling. In Malaysia, you can also start</span> <a href="http://yourfinancedoctor.blogspot.com/2015/05/start-invest-as-low-as-rm100-now.html" target="_blank">invest as low as RM100</a>. </i></p><p style="text-align: justify;"><br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEimazHbn_sKPLfJnlnXAIXnt2teRj7H9zl8ZfQS9H1FL7HwgrhYmvsEXxbpU9OZcPetJHhg7Cnh_ch3Oi5ZskDs2bCdTYokN0ltjFiZ07NY9gDp9MFl-eOhYcbpF0SvijSTseTJGuxKHJ29En19pov4lAXjtwsJAvISHb5z55dtI_vnVJEdXVuM7uML/s900/11.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="480" data-original-width="900" height="342" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEimazHbn_sKPLfJnlnXAIXnt2teRj7H9zl8ZfQS9H1FL7HwgrhYmvsEXxbpU9OZcPetJHhg7Cnh_ch3Oi5ZskDs2bCdTYokN0ltjFiZ07NY9gDp9MFl-eOhYcbpF0SvijSTseTJGuxKHJ29En19pov4lAXjtwsJAvISHb5z55dtI_vnVJEdXVuM7uML/w640-h342/11.png" width="640" /></a></div><p style="text-align: justify;">The third portion of funds - $400: To make friends, expand your interpersonal circle. This will make you well off. Your phone bills can be budgeted at $100. You can buy your friends 2 lunches a month, each at $150. Who should you buy lunch for? Always remember to buy lunch for people who are more knowledgeable than you, richer than you or people who have helped you in your career. </p><p style="text-align: justify;">Make sure you do that every month. After one year, your circle of friends should have generated tremendous value for you. Your reputation, influence, added value will be clearly recognized. You’ll also enhance your image of being good and generous.</p><p style="text-align: justify;"><span style="color: #2b00fe;"><i>This purpose is not common in any standard budgeting methods but I have to agree it is important. It is also aligned with Warren Buffett's advice to "pick your friends wisely" and also Jim Rohn's famous quote - </i><span style="text-align: left;"><i>“You’re the average of the five people you spend the most time with.” </i></span></span></p><p style="text-align: justify;"><br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh9U2hHHshtptqAZCAwE1w-llkYTCLkipAN9DT_zEsCnGnDXvVof1ApEI45BBSV6U7ssuX5X84hmpNYKcVoewiWHu-LYwXsBl3tWf5RF-2WfEI2sbCPQyAjFGz1USbMPwtKqqZeYCxm-rDXDsWHSSdu3Nk-3DApJtflSdWKm7vz2veDLb6WExl2B5ZQ/s900/12.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="480" data-original-width="900" height="342" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh9U2hHHshtptqAZCAwE1w-llkYTCLkipAN9DT_zEsCnGnDXvVof1ApEI45BBSV6U7ssuX5X84hmpNYKcVoewiWHu-LYwXsBl3tWf5RF-2WfEI2sbCPQyAjFGz1USbMPwtKqqZeYCxm-rDXDsWHSSdu3Nk-3DApJtflSdWKm7vz2veDLb6WExl2B5ZQ/w640-h342/12.png" width="640" /></a></div><p style="text-align: justify;">The fourth portion: $300 to learn. Monthly spend about $50 to $100 to buy books. Because you don’t have a lot of money, you should pay attention to learning. When you buy the books, read them carefully and learn the lessons and strategies that is being taught in the book. Each book, after reading them, put them into your own language to tell the stories. Sharing with others can improve your credibility and enhance the affinity. </p><p style="text-align: justify;">Also save up $200 per month to attend a training course. When you have higher income or additional savings, try to participate in more advanced training. When you participate in good training, not only do you learn good knowledge, you also get to meet like-minded friends who are not easy to come by.</p><p style="text-align: justify;"><i><span style="color: #2b00fe;">Most people rarely set a budget for this purpose but it is crucial regardless if is related to their career or not. I like how the article recommends to learn and share as I am a strong advocate of learning is not complete until you apply!</span></i></p><p style="text-align: justify;"><i><span style="color: #2b00fe;">If you are working in any corporation in Malaysia, fully utilized the Human Resources Development Fund (HRDF) by attending trainings. After all your company is compulsory to pay 0.5% (5-9 Malaysian Employees) or 1% (10 and Above Malaysian Employees) </span></i><span style="text-align: left;"><i><span style="color: #2b00fe;">of the monthly wages of each of their Malaysian employees.</span> <a href="https://wa.me/message/V6ARFGBRCJCAF1" target="_blank">Psst! #YourFinanceDoctor provides HRDF Approved training courses too!</a></i></span></p><p style="text-align: justify;"><br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjAkb2WRhp5isHdMxAstDzI_l9pf0QhhNwxfMymKFLkxUBTwLqua8dzt1zy95WWrKlspFm0fSSp7xphej58Y-NGVQ60OXD5coSMi0gdN0smRJVrMENWTbGhtET8I-1aBlBX7QEJYY0evCk3olECctszxaXw62Xgh_ZzoqwCVGbBQw6IKTYTtC1jnP9b/s900/13.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="480" data-original-width="900" height="342" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjAkb2WRhp5isHdMxAstDzI_l9pf0QhhNwxfMymKFLkxUBTwLqua8dzt1zy95WWrKlspFm0fSSp7xphej58Y-NGVQ60OXD5coSMi0gdN0smRJVrMENWTbGhtET8I-1aBlBX7QEJYY0evCk3olECctszxaXw62Xgh_ZzoqwCVGbBQw6IKTYTtC1jnP9b/w640-h342/13.png" width="640" /></a></div><p style="text-align: justify;">The last portion of funds $200: Use it for holidays overseas. Reward yourself by traveling at least once a year. Continue to grow from the experience of life. Stay in youth hostels to save cost. In a few years you would have travelled to many countries and have different experiences. Use that experience to recharge yourself so that you’ll continually have passion in your work.</p><p style="text-align: justify;"><i><span style="color: #2b00fe;">This is the one expense that financial advisor does not need to ask you to add as you would have already done so! I would say that most people, youngsters in particular, could have overspend on vacation. So yeah, keep it below 10%! If you are envious of your friends' overseas travel, then learn to increase income first.</span></i></p><p style="text-align: justify;"><br /></p><p style="text-align: justify;">~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~</p><p style="text-align: justify;"><i>The article continue to go on and on which I find it way too long so I will just pick some for you. </i></p><p style="text-align: justify;"><i><br /></i></p><p style="text-align: justify;">"Well, after struggling for a year and if your second year salary is still $2,000, then that means you have not grown as a person. You should be really ashamed of yourself. Do yourself a favour and go to the supermarket and buy the hardest tofu. Take it and smash it on your head because you deserve that."</p><p style="text-align: justify;"><i>🙊 <span style="color: #2b00fe;">That is a bit dramatic, but you get the point. You should be better than yourself from last year.</span></i></p><p style="text-align: justify;"><br /></p><p style="text-align: justify;">Try to buy minimal clothes and shoes. You can buy them all you want when you’re rich. Save your money and buy some gift for your loved ones and tell them your plans and your financial goals. Tell them why you are so thrifty. Tell them your efforts, direction and your dreams.</p><p style="text-align: justify;"><i>👍 <span style="color: #2b00fe;">Yes, people around you may not understand so communication is key! </span></i></p><p style="text-align: justify;"><br /></p><p style="text-align: justify;">Life can be designed. Career can be planned. Happiness can be prepared. You should start planning now. When you are poor, spend less time at home and more time outside. When you are rich, stay at home more and less outside. This is the art of living. When you are poor, spend money on others. When you’re rich, spend money on yourself. Many people are doing the opposite.</p><p style="text-align: justify;"><i>👆 <span style="color: #2b00fe;">Start with planning and get it started.</span></i></p><p style="text-align: justify;"><br /></p><p style="text-align: justify;">There is nothing wrong with being young. You do not need to be afraid of being poor. You need to know how to invest in yourself and increase your wisdom and stature. You need to know what is important in life and what is worth investing in. You also need to know <a href="https://yourfinancedoctor.blogspot.com/2022/07/top-5-most-common-financial-mistakes-to.html" target="_blank">what you should avoid and not spend your money on</a>. This is the essence of discipline. Try to avoid spending money on clothing, but buy a selective number of items that have class. Try to eat less outside. </p><p style="text-align: justify;"><i>👌 <span style="color: #2b00fe;">On point! </span></i></p><p style="text-align: justify;"><br /></p><p style="text-align: justify;">Famous theory from Harvard: The difference of a person’s fate is decided from what a person spends in his free time between 20:00 to 22:00 . Use these two hours to learn, think and participate in meaningful lectures or discussion. If you persist for several years, success will come knocking on your doors.</p><p style="text-align: justify;"><i>✋ <span style="color: #2b00fe;">The article continue endlessly beyond this, which I will stop here as I find it irrelevant to the main topic of budget allocation. It looks like someone just copy all the famous lessons on the internet and just dump it all at the end of the article. </span></i></p><p style="text-align: justify;">There are many people who are struggling to make ends meet. It doesn’t matter if you are rich or poor. There are lessons for all to learn from Li Ka-Shing. <i><span style="color: #2b00fe;">In case you have not notice, I am also applying the teaching of Li Ka-Shing -- sharing with you all what I learned! </span></i></p>Henry Tanhttp://www.blogger.com/profile/11927168352621516247noreply@blogger.com1tag:blogger.com,1999:blog-8707620835473312559.post-7112916330970423572022-07-27T14:39:00.006+08:002022-07-28T08:56:32.469+08:00Top 5 Most Common Financial Mistakes To Avoid<p style="text-align: justify;">Throughout the years in personal finance industry, here are some of the most common financial mistakes that I have seen. This is especially true for those that just started to work and finally get a taste of having money of their own. These financial mistakes often lead them into endless loop of living paycheck to paycheck, and an unforeseen circumstance can easily turn into disaster without any emergency fund. </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhUJQ-JCoKXmxq2rU41se5JlU_hULAHW0_EvTzNDxb5AaHWRkiK3QOndlHDFvlDtEYZIKGjuDyHnhzg-bfSj-2qwBXhafgkwT9NsQtLjXv-VVQVzK5kap49Kh56_zGR0cOOm0NkhXLmZsuC2mWNCDfocqjzZpcPGfYZXjozELuHpGWCtMAkgz57av6v/s900/YFD%20Blog%20(6).png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="480" data-original-width="900" height="342" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhUJQ-JCoKXmxq2rU41se5JlU_hULAHW0_EvTzNDxb5AaHWRkiK3QOndlHDFvlDtEYZIKGjuDyHnhzg-bfSj-2qwBXhafgkwT9NsQtLjXv-VVQVzK5kap49Kh56_zGR0cOOm0NkhXLmZsuC2mWNCDfocqjzZpcPGfYZXjozELuHpGWCtMAkgz57av6v/w640-h342/YFD%20Blog%20(6).png" width="640" /></a></div><br /><p style="text-align: justify;"><br /></p><p style="text-align: justify;"><span style="font-size: medium;"><b>1. Overspending on Unnecessary Expenses</b></span></p><p style="text-align: justify;">Overspending is the most typical scenario that I found when my clients filled in the Income and Expenses tracking sheet. They got to realized that even though it may not seems like a big amount when they order that bubble milk tea, or dinning out, or even those monthly subscription to movie streaming or audio streaming, eventually every little items add up. </p><p style="text-align: justify;">"Sedikit-sedikit lama-lama jadi bukit," this phrase is commonly used to encourage money saving. But like a double-edged sword, it works the same as to expenses too! So if you are living paycheck to paycheck or can barely save up any money, the first thing to do is to look into your expenses! </p><p style="text-align: justify;"><br /></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjdbILf8WwNui7FXItU1j_GjY7w-HsWwoS6ceBVD2cJ1DqZzgdkNwuU1-YG702-IrnKinRSQyrJLCjSbiBh3neUZdp1WSYTnN5jFBMivzwS3uzVbacR9FOmnfaMFAPru80UwjSABQ7wbe4rFOLqYaR4L9s-EsL2jLNl2HQh7qgV07S4yiljYVVjX74e/s900/YFD%20Blog%20(2).png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="480" data-original-width="900" height="341" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjdbILf8WwNui7FXItU1j_GjY7w-HsWwoS6ceBVD2cJ1DqZzgdkNwuU1-YG702-IrnKinRSQyrJLCjSbiBh3neUZdp1WSYTnN5jFBMivzwS3uzVbacR9FOmnfaMFAPru80UwjSABQ7wbe4rFOLqYaR4L9s-EsL2jLNl2HQh7qgV07S4yiljYVVjX74e/w640-h341/YFD%20Blog%20(2).png" width="640" /></a></div><div><span style="text-align: justify;"><br /></span></div><div style="text-align: left;"><span style="text-align: justify;">Tips: Avoid or using lesser on physical cash. This is the best way to track on expenses. Then take a look at your bank account statement frequently, look at where are all those money go. Cut out those unnecessary expenses, especially those on subscription basis, such as gym membership (that you rarely go anyway), music services or video streaming (just wait for the ads), and some other subscriptions that you forgotten.</span></div><div><br /></div><br /><p style="text-align: justify;"><span style="font-size: medium;"><b>2. Paying the Minimum Amount for Credit Card</b></span></p><p style="text-align: justify;">Should you use credit card or not is a highly debated topic. But let's face it honestly, the only reason for one to be paying the minimum amount every month is simply because he/she cannot afford to pay back in full and is living on borrowed money. </p><p style="text-align: justify;">"Bank lend you money" with 15% to 18% annual interest rate (some banks offer 8.88%) on your credit card bill. But when it is on the opposite side, where "you lend your money to bank", you are only getting less than 1% annual interest on saving account and 2-3% on fixed deposit. Isn't that crazy?</p><p style="text-align: justify;">This is why banks always entice you with all the sign up offers and some even guarantee RM600 into your e-wallet or shopping vouchers. This could be also why you always hear bank staffs getting 6 months bonus! 🙊</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjkE7xv2tG4DarAN5MTLX4urx-gjKbVOP4uAuwA9NNjLBAT728oU5yRh_wncwZM80J_VkpHCOudRx4g30lynEMwaTAOPFDTIxcmqt2t0_yutwf6xwk9CKABxPQlucObAxumNDmka7ND31R_7OuzoGNqPHBXUlSokvMvTEX5Q_mB_0ZL4mAJcbA_tySs/s900/YFD%20Blog%20(3).png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="480" data-original-width="900" height="342" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjkE7xv2tG4DarAN5MTLX4urx-gjKbVOP4uAuwA9NNjLBAT728oU5yRh_wncwZM80J_VkpHCOudRx4g30lynEMwaTAOPFDTIxcmqt2t0_yutwf6xwk9CKABxPQlucObAxumNDmka7ND31R_7OuzoGNqPHBXUlSokvMvTEX5Q_mB_0ZL4mAJcbA_tySs/w640-h342/YFD%20Blog%20(3).png" width="640" /></a></div><p style="text-align: justify;">So yes, if only you can afford and discipline to PAY IN FULL every month, use by all means to help track expenses and to earn all the cashbacks and points. Otherwise, stay away, no point using credit card as you ended up spending a lot more. Having said that, it doesn't mean you should not own a credit card as it can still be helpful for emergency use. </p><p style="text-align: justify;"><br /></p><p style="text-align: justify;"><b><span style="font-size: medium;">3. Buying a New (Expensive) Car</span></b></p><p style="text-align: justify;">This is especially true by borrowing money to buy a car and pay interest on a depreciating asset. Do you know, according to Malaysian Automotive Association (MAA), total passenger vehicles sold in <b>2020 was 480,971</b> and in <b>2021 was 452,663</b>. For the first half of the year, total passenger vehicles sold <b>up to June 2022 was 293,540</b>, compared to first half of 2021 was 223,805. Despite MCO and all the complaints on increasing in prices, people are still buying new cars! </p><p style="text-align: justify;">Generally as a rule of thumb to gauge, if one unable to pay cash for a new car then it could also mean he/she cannot afford the car. After all, being able to get a car loan is not the same as being able to afford the car as there are other expenses incurred such as maintenance, petrol, toll, car insurance and road tax.</p><p style="text-align: justify;">Regardless if you are buying a new car or used car, be sure to do all your homework. Cars are expensive and depreciating, so if you are buying more of a car than you need, the opportunity cost is missing out on saving or investing for other financial goals or even simply just paying off other debts.</p><p style="text-align: justify;"><br /></p><p style="text-align: justify;"><b><span style="font-size: medium;">4. Buying Too Expensive House </span></b></p><p style="text-align: justify;">Similarly to car, just because you can afford to get a house loan does not mean that you are able to afford with all the hidden costs! So when it comes to buying a house, bigger is not necessarily better. Unless you have a large family, buying a 4,000 sqft house will only mean more expensive maintenance and utilities. Oh, and also gotta clean a lot more spaces that you probably rarely use. </p><p style="text-align: justify;">Buying a house is like buying an appreciating asset. But unlike a car loan with tenure up to 9 years, housing loan can be a very very long commitment. Do you really want to commit to such a big and long dent in your monthly budget? </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjAi2wcKXfVepLVqk2mv1Q_y2tDi1wuawlxEkKSQfe3QhcQ5mML0tTUz3UaU96aSdjNfaDXJ7yG1pEK9F-VGIedcxuuVQx2KHhWbZiCqL4R3V1Cu7KPOchUevuGjXCaBMML0Wu8fNHdpHu06tGlLt4bc43MOwPhXtXaacRSK6rP6RrTIbuIRXdnPZY-/s900/YFD%20Blog%20(4).png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="480" data-original-width="900" height="342" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjAi2wcKXfVepLVqk2mv1Q_y2tDi1wuawlxEkKSQfe3QhcQ5mML0tTUz3UaU96aSdjNfaDXJ7yG1pEK9F-VGIedcxuuVQx2KHhWbZiCqL4R3V1Cu7KPOchUevuGjXCaBMML0Wu8fNHdpHu06tGlLt4bc43MOwPhXtXaacRSK6rP6RrTIbuIRXdnPZY-/w640-h342/YFD%20Blog%20(4).png" width="640" /></a></div><br /><p style="text-align: justify;"><b><span style="font-size: medium;">5. Not Having a Financial Plan</span></b></p><p style="text-align: justify;">All the 4 common financial mistake above are a result of not having a financial plan. When my client engaged me for comprehensive financial plan, the first step is always to gather all their information which include income, expenses, assets, liabilities and most importantly, their financial goals. </p><p style="text-align: justify;">Guess what? The most frequent scenario that I came across is that most people do not know their financial goals and they do not track their income and expenses (they do not know their current financial situation!). Surely you know how important it is to do goal setting and follow it thru!</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEifVF7JQ0rCh9AX3P1i_9sos5sjzigSjBBHrzk1SswVRZf9-Q_Wy9P9QEV9JZ1SMFER9E-KjyxGlkOfPNV9okYavSQN4m2lM-iWN4KemWaswYxV2dc9U1NXkCtP64hAATkRE4SCzdgUCRnezEoFsC3rzG8USTbHVlVHblXoPvkVIoDEYeGxWNU-uhuN/s900/YFD%20Blog%20(5).png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="480" data-original-width="900" height="342" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEifVF7JQ0rCh9AX3P1i_9sos5sjzigSjBBHrzk1SswVRZf9-Q_Wy9P9QEV9JZ1SMFER9E-KjyxGlkOfPNV9okYavSQN4m2lM-iWN4KemWaswYxV2dc9U1NXkCtP64hAATkRE4SCzdgUCRnezEoFsC3rzG8USTbHVlVHblXoPvkVIoDEYeGxWNU-uhuN/w640-h342/YFD%20Blog%20(5).png" width="640" /></a></div><p style="text-align: justify;">Your financial future pretty much depends on what you do right now. Most people spend countless hours on binge-watching or scrolling through their social media feeds, but rarely anyone would spend a bit of time going through their personal finances. The reason behind that is that you do not know you need to do so or probably you know but you do not know where and how to start right? </p><p style="text-align: center;"><a href="https://beacons.ai/yfdhenry" style="background-color: white; color: #15c869; font-family: "Open Sans"; text-align: justify;" target="_blank">Start your comprehensive financial planning NOW!</a></p><p style="text-align: justify;"><br /></p><p style="text-align: justify;"><b><span style="font-size: medium;">The Bottom Line...</span></b></p><p style="text-align: justify;">To avoid all these financial mistakes, start by monitoring all the little expenses that can add up rapidly and quietly, then move on to the big expenses. Having a budget would be the best solution so that it helps you to decide better before adding new debts to your long list of payments. </p><p style="text-align: justify;">One key takeaway from this article is to keep in mind that being able to make a payment isn't the same as being able to afford the purchase. Finally, developing a sound financial plan can better determine the success of your financial future! </p><p style="text-align: justify;">Any other financial mistake that you find it common but crucial to avoid? Let me know down below!</p>Henry Tanhttp://www.blogger.com/profile/11927168352621516247noreply@blogger.com0tag:blogger.com,1999:blog-8707620835473312559.post-43725209776895848192022-07-14T13:38:00.000+08:002022-07-18T10:30:35.601+08:00What is FIRE? Financial Independence, Retire Early! <p style="text-align: justify;">Through out my financial planning career, I came across many clients where more than half of them do not have a specific financial goals. Mind blowing? Perhaps not. It is more common than you could ever imagine. All they ever wanted is just to earn more money. Sounds familiar? You might be one of them too. Well, no worry, in this post I will share with you the most common financial goal that you can set for yourself too:</p><p style="text-align: center;"><b><span style="color: red; font-size: large;">Financial Independence Retire Early (FIRE)</span></b></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEheAOL1CmKYLt2LiT7jkLDuviotXO--lJCnViRjf1VLrv3rpZ0s9MnSj9_z3eKtZ2D9AtBrVqkyqfUeLLhwVaE8bLx9tEkEWFACoB5bWaDj_yPi8duMkAP69ZkG8zBGv0yYJ7HRuk4z3-LvAGp1G0WJWIzUZBf2_49lTvO5emnnrh9tnOFEaYOk66L5/s900/YFD%20Blog.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img alt="Financial Independence Retire Early" border="0" data-original-height="480" data-original-width="900" height="342" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEheAOL1CmKYLt2LiT7jkLDuviotXO--lJCnViRjf1VLrv3rpZ0s9MnSj9_z3eKtZ2D9AtBrVqkyqfUeLLhwVaE8bLx9tEkEWFACoB5bWaDj_yPi8duMkAP69ZkG8zBGv0yYJ7HRuk4z3-LvAGp1G0WJWIzUZBf2_49lTvO5emnnrh9tnOFEaYOk66L5/w640-h342/YFD%20Blog.png" title="What is FIRE" width="640" /></a></div><br /><p style="text-align: justify;"><b><span style="font-size: medium;">What is FIRE? </span></b></p><p style="text-align: justify;">FIRE is the short form taken from <b>F</b>inancial <b>I</b>ndependence <b>R</b>etire <b>E</b>arly. </p><p style="text-align: justify;">As per the wordings, literally, it is a movement where people have the goal of gaining financial independence and retiring early. The basic idea was to having enough saved or enough passive income to cover the expenses, in order to retire early. </p><p style="text-align: justify;"><br /></p><p style="text-align: justify;"><b><span style="font-size: medium;">What does Financial Independence means?</span></b></p><p style="text-align: justify;">Different people might have different interpretation. But personally, having enough without a day job.</p><p style="text-align: justify;">At this point, you might think "Yeah, I want this too." I believe everyone would want this too, otherwise what is the point of working right? But a financial goal has to be measurable or quantifiable. So this is the part where my clients hire me to do all the calculations. </p><p style="text-align: justify;">Yes, you need to know your number. It could be the retirement number to cover the expenses for the rest of your life post-retirement. It could also be the passive income required to cover the monthly expenses. The passive income could be coming from investment's dividend, rental income, business income and so on. </p><p style="text-align: justify;"><a href="https://beacons.ai/yfdhenry" target="_blank">Hire me to calculate for yours too. </a>😉</p><p style="text-align: justify;"><br /></p><p style="text-align: justify;"><b><span style="font-size: medium;">What does Retire Early means?</span></b></p><p style="text-align: justify;">Retire early could mean differently depending on the person. </p><p style="text-align: justify;">Some people it could mean never having to work anymore. After working non stop for 30-40 years, 9 to 5 every weekdays, which sums up to 56,789 hours, of course it is time to enjoy retirement right! Okay I just made up the hours number, but you get what I mean.</p><p style="text-align: justify;">Then of course towards some people, early retirement simply means having enough money to retire, but they continue to do so because they are passionate in their line of work. Imagine having the power to choose not having to work anymore, like you can actually fire your boss anytime if you want! </p><p style="text-align: justify;">Similar to FI, you need to know your numbers. In this case, you need to know both your retirement number and retirement age. So yes, if you ask me, in a way, Retire Early is the same as Financial Independence. </p><p style="text-align: justify;"><br /></p><p style="text-align: justify;"><b><span style="font-size: medium;">Is it easy to achieve FIRE?</span></b></p><p style="text-align: justify;">Achieving FIRE is not easy at all, especially on the "Early" part. </p><p style="text-align: justify;">As I mentioned before, everything should be measurable. A SMART financial goal has to be time bound too. So if FIRE is one of your financial goal, then one of the question would be BY WHEN? Retire Early means before the standard retirement age of 55 or 60. So depending on your age now and also your money, I supposed you can roughly tell how easy or how difficult it would be.</p><p style="text-align: justify;">Which is why you would not surprised to see some chose to work 100+ hours a week inclusive of the side jobs that they have. While some people have to do all the extreme things to save money in order to retire early. This reminds me of those TV Show like Extreme Cheapskates or Extreme Couponing. I know it could be fake but it also reminds us that not taking saving money too far.</p><div class="separator" style="clear: both; text-align: center;"><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjND4laSYe90zSQUFIghnKgEfzyWQIUDCVOcFISYJHHX0f2fFdfBD3zZy5I9TVC7InJ_SESuma5Xli28F80bsWsOKKR_sX4GRjH4SH2pRIZgE8Nh9Df_5_fWNlJLubaTikZvur2n04EVI3vvwkr2D13YpMSeNVOMrPgpEy-3xLs1aRYgEqll0qEiogL/s1024/MV5BMjgxMjRmODEtMzdiOS00YmZmLWI2MzMtMzQxYzg1ZGIzOTFlXkEyXkFqcGdeQXVyMjAwODM5NTU@._V1_.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="585" data-original-width="1024" height="155" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjND4laSYe90zSQUFIghnKgEfzyWQIUDCVOcFISYJHHX0f2fFdfBD3zZy5I9TVC7InJ_SESuma5Xli28F80bsWsOKKR_sX4GRjH4SH2pRIZgE8Nh9Df_5_fWNlJLubaTikZvur2n04EVI3vvwkr2D13YpMSeNVOMrPgpEy-3xLs1aRYgEqll0qEiogL/w273-h155/MV5BMjgxMjRmODEtMzdiOS00YmZmLWI2MzMtMzQxYzg1ZGIzOTFlXkEyXkFqcGdeQXVyMjAwODM5NTU@._V1_.jpg" width="273" /></a><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiPxm3DyFygIkWgUthYGzdssGhmpcLN6DbhTvUPL2yq8hpmW7YdTBOiFvgUazzNQIulzTmDu2k_pHAFc4OTt2IuE1DTVk4gX2_Etp3CAuLcV35GJKqr8prZ7U03LJ_uQt5L5T8fnLLcnDcJr9DSXrJ2YHXISVKeDUmGe5Vw-chpvVP-gtOhImZZEely/s299/download.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="169" data-original-width="299" height="155" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiPxm3DyFygIkWgUthYGzdssGhmpcLN6DbhTvUPL2yq8hpmW7YdTBOiFvgUazzNQIulzTmDu2k_pHAFc4OTt2IuE1DTVk4gX2_Etp3CAuLcV35GJKqr8prZ7U03LJ_uQt5L5T8fnLLcnDcJr9DSXrJ2YHXISVKeDUmGe5Vw-chpvVP-gtOhImZZEely/w274-h155/download.jpg" width="274" /></a></div><br /></div><br /><p style="text-align: justify;"><b><span style="font-size: medium;">Should You still do FIRE movement? </span></b></p><p style="text-align: justify;">Whether or not it is right for you depends on what you really want and to what lengths you are willing to go to. It is NOT impossible to achieve FIRE, but you will really have to plan it out and work it out. Like the saying goes, "WHY is more important than HOW". Hence, it is utterly important to know WHY you want to do it, which can be helpful to keep you going when you feel like giving up.</p><p style="text-align: justify;"><b><u>Here are some of the reasons to retire early: </u></b></p><p style="text-align: justify;">You want to pursue a passion that you can’t do while having a full-time job</p><p style="text-align: justify;">You want to spend more time with family and friends</p><p style="text-align: justify;">You want to have more time to exercise and be healthy</p><p style="text-align: justify;">You want to have the freedom to choose what you want to do</p><p style="text-align: justify;">You want to travel around the world</p><p style="text-align: justify;">And many more, and perhaps some more common for Asian parents such as:</p><p style="text-align: justify;">You need to help take care of your grandchildren 😅</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgE467YZUG9O-7w0p4macdMiv1d6LgIOn2DImZWGak9GxyrE2oyCGq0bV62ORNU23dazeVmVJU7PSnxnyi6M5jfQbTOnW4ZJa74Ema3MzXRAyW2BEADoWzFy6Jy3ueCybqorVprhF0Qh20UltQZCm4uawMVdgGt0yT31nt0aCdNt6vBdVrY3M3ZJhJA/s1412/Screen-Shot-2018-08-31-at-11.46.12-PM.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="754" data-original-width="1412" height="342" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgE467YZUG9O-7w0p4macdMiv1d6LgIOn2DImZWGak9GxyrE2oyCGq0bV62ORNU23dazeVmVJU7PSnxnyi6M5jfQbTOnW4ZJa74Ema3MzXRAyW2BEADoWzFy6Jy3ueCybqorVprhF0Qh20UltQZCm4uawMVdgGt0yT31nt0aCdNt6vBdVrY3M3ZJhJA/w640-h342/Screen-Shot-2018-08-31-at-11.46.12-PM.png" width="640" /></a></div><div><p style="text-align: justify;"><b><span style="font-size: medium;">Do you really know what you are going to do after retiring early? </span></b></p><p style="text-align: justify;">There are a lot of disadvantages too if you are retiring early, especially without planning. Early retirement does not mean sitting around doing nothing all day. It is certainly not dozing off on a cozy sofa while the TV is watching you. </p><p style="text-align: justify;">The number one con of early retirement is the declines in mental health and mobility, hence, increases in poor health outcomes, such as heart disease and stroke. Many retirees have a tough time making the transition from the daily routines of a full-time job to the unstructured life of retirement. They may find it boring and miss working, but it may not be easy to get back into the workforce once you've left it, voluntarily or otherwise.</p><p style="text-align: justify;">So it is vital to decide ahead of time on what FIRE looks like for you—and how much it will cost.</p><p style="text-align: justify;"><br /></p><p style="text-align: justify;"><b><span style="font-size: medium;">Okay I know what I want, what's next? FIRE Number!</span></b></p><p style="text-align: justify;">Calculations! Many FIRE movement uses simple calculation to calculate their FIRE number. Fire number can be calculated quickly but roughly. First and foremost, how much is your monthly expenses? </p><p style="text-align: justify;">The monthly expenses should include utilities expenses, rental or mortgage expenses, groceries and dining out expenses, transportation expenses, household expenses, clothing expenses, healthcare expenses, entertainment expenses and whatever you see fit.</p><p style="text-align: justify;">Then multiply by 12 to get your Annual Expenses which will be frequently used to calculate FIRE number regardless which rule you wanted to follow.</p><p style="text-align: justify;"><br /></p><p style="text-align: justify;"><b><span style="font-size: medium;">What is 4% Rule (FIRE Number Rule of Thumb)?</span></b></p><p style="text-align: justify;">The most common FIRE number calculation where annual expenses divided by 4%.</p><p style="text-align: center;">Fire Number = Annual Expenses / 0.04</p><p style="text-align: center;">Example: RM60,000 / 0.04 = RM1,500,000</p><p style="text-align: justify;">You may ask why 4%? Where do they get the magic number of 4%? This is according to Trinity Study where 3 professors of the Trinity University wrote “Retirement Savings: Choosing a Withdrawal Rate That Is Sustainable.” So the 4% rule comes from the fact that even after 30 years of withdrawing 4% of your initial portfolio, the success rate is still 95%. So with that, the 4% rule was born!</p><p style="text-align: justify;">For easier calculation, 4% Rule also known as the 25x Rule. Once your net worth exceeds 25 times of your annual expenses, (25 x RM60k = RM1.5mil) in this case RM1.5mil, then congratulations you have hit FIRE! </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEisaA4YYVKcjmeOlNn177ksiZaVNHbWaQXduQQvSVLal0zQxU5AE89FE18SEW2eRE4d8TaEQPmsUfBo1fyUh0Gb-RzB6DMOOzXv9xnRgVIbWTtMsatzKu9RxOhD2gL05EQBh8giceEOrwSDYvIPLNyRSjCy5b7podHJ51uS4rcysvE4QsUOJvzRQtFi/s900/YFD%20Blog%20(1).png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img alt="The 4% Rule" border="0" data-original-height="480" data-original-width="900" height="342" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEisaA4YYVKcjmeOlNn177ksiZaVNHbWaQXduQQvSVLal0zQxU5AE89FE18SEW2eRE4d8TaEQPmsUfBo1fyUh0Gb-RzB6DMOOzXv9xnRgVIbWTtMsatzKu9RxOhD2gL05EQBh8giceEOrwSDYvIPLNyRSjCy5b7podHJ51uS4rcysvE4QsUOJvzRQtFi/w640-h342/YFD%20Blog%20(1).png" title="FIRE Movement 4% Rule" width="640" /></a></div><p style="text-align: justify;"><br /></p><p style="text-align: justify;"><b><span style="font-size: medium;">RM1.5mil that's it, then I do not have to work anymore?</span></b></p><p style="text-align: justify;">Roughly, yes. But not everyone follows this 4% Rule though. Some people go for 3% Rule or even less to be safe. </p><p style="text-align: justify;">A more recent study using historical <b>market data up to 2021</b> to study sustainable withdrawal rates, a <b>100% success rate</b> that someone with a portfolio with at least 50% in stocks could safely <b>withdraw 3%</b> of their investments for <b>40 years without depleting their investments</b>. </p><p style="text-align: justify;">Another thing to keep in mind is that the research were done using S&P 500 Index and also US inflation data. So unless you are staying in US and investing in S&P 500 Index, otherwise it is always better to consult a licensed financial advisor to calculate. Bottom line, you can be more conservative by using lower withdrawal rate - 3% Rule, bigger FIRE Number will be needed.</p><p style="text-align: justify;"><br /></p><p style="text-align: justify;"><b><span style="font-size: medium;">What is Fat FIRE? What is Lean FIRE? What is Barista FIRE?</span></b></p><p style="text-align: justify;">Trust me, there are many different types of FIRE out there. You can make one too, and if you succeed then it would become popular. But generally here are the differences:<br /></p><p style="text-align: justify;">Fat FIRE: hit FIRE with a higher annual expenses budget, spending over 100,000 annually</p><p style="text-align: justify;">Lean FIRE: hit FIRE with a lower annual expenses budget, spending around 20,000 annually</p><p style="text-align: justify;">Barista FIRE: hit FIRE but still with a part time job to cover long term benefits such as health insurance</p><p style="text-align: justify;">Regardless which one you follow, always make sure you pick the one you are most comfortable with.</p><p style="text-align: justify;"><br /></p><p style="text-align: justify;"><b><span style="font-size: medium;">Okay, Any other rules that I should know?</span></b></p><p style="text-align: justify;">Not rules but here are some methods the FIRE movement community follow to help them hit FIRE as soon as possible, such as:</p><p style="text-align: justify;">Live minimally, live below your means</p><p style="text-align: justify;">Save and invest first before you spend</p><p style="text-align: justify;">Spend less than you make</p><p style="text-align: justify;">Buy used cars only</p><p style="text-align: justify;">Fully utilize credit card rewards </p><p style="text-align: justify;">Focus on adding multiple streams of income</p><p style="text-align: justify;">Lower your tax liability by investing in tax-deferred accounts like <a href="https://yourfinancedoctor.blogspot.com/2017/11/time-for-private-retirement-scheme-prs.html" target="_blank">Private Retirement Scheme</a></p><p style="text-align: justify;"><br /></p><p style="text-align: justify;"><b><span style="font-size: medium;">The Bottom Line...</span></b></p><p style="text-align: justify;">FIRE movement can be a great financial goal, especially if you do not have any specific financial goals yet. Having a goal like that can makes you work harder and live life to the fullest instead of just running in a endless rat race. </p><p style="text-align: justify;">Start calculating your FIRE Number now! If the figure is too overwhelming, then you might look at ways to increase income or otherwise, reduce your expectation on retirement expenses. You can also talk to me by dropping a comment below or <a href="https://beacons.ai/yfdhenry" target="_blank">private message me in social media</a> if you are too shy! </p></div>Henry Tanhttp://www.blogger.com/profile/11927168352621516247noreply@blogger.com0tag:blogger.com,1999:blog-8707620835473312559.post-35311287707519114832020-06-30T10:55:00.001+08:002020-06-30T10:55:46.194+08:00Do You Have Unclaimed Money? Find Your Windfall Here!<div style="text-align: justify;">Do you know if you have any unclaimed money from the government? Do you know as of the end of 2019, there are a total of RM8.75 billion remained unclaimed, higher than the almost RM7 billion recorded at the end of October 2019 despite efforts by the authorities to return the money to their owners. <b><font color="#3367d6">Fret not, you can now check online for FREE!</font></b></div><div style="text-align: justify;"><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhNscb2gCMOKWA2uaP0QXTY1TJLFtQUCWltbHk0dqLOvHQqPh2PNlbnIuj00vEOGwAnEuoEdq1s3mvuVvf1jPUfXXekbAd9ANR_-Y6-GOWoDlOANsJ7IuzH8NAygLU-kLVmCKnKY5rvvko/s1080/1.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1080" data-original-width="1080" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhNscb2gCMOKWA2uaP0QXTY1TJLFtQUCWltbHk0dqLOvHQqPh2PNlbnIuj00vEOGwAnEuoEdq1s3mvuVvf1jPUfXXekbAd9ANR_-Y6-GOWoDlOANsJ7IuzH8NAygLU-kLVmCKnKY5rvvko/w640-h640/1.png" width="640" /></a></div><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjMzUSJko23pZ9s6Zdqch6V_G31tsffzgQBio-uUk0a0mASnge9ugd_dIZYa-GkCE9ETTuEZ2Mfm8pjv4P0dmUs5_r40aF1Y9tLQMgat_qddulIpCgcjIydzAhTSxFBudTVye6k9LSpKtY/s1080/2.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1080" data-original-width="1080" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjMzUSJko23pZ9s6Zdqch6V_G31tsffzgQBio-uUk0a0mASnge9ugd_dIZYa-GkCE9ETTuEZ2Mfm8pjv4P0dmUs5_r40aF1Y9tLQMgat_qddulIpCgcjIydzAhTSxFBudTVye6k9LSpKtY/w640-h640/2.png" width="640" /></a></div><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhAG1tBYTm63floccXXOPQ27GzbmlvXbGYN07eqkK3dz6FsLxGaXehQLvWLwRC6Hs_r5tiR6dKHxS-fhi3Wuf-855t7OKyq5Y6SAkoxg8J5Er3D8dg1LnqTKclJYqClSvN15F6lcJ8LU5g/s1080/3.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1080" data-original-width="1080" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhAG1tBYTm63floccXXOPQ27GzbmlvXbGYN07eqkK3dz6FsLxGaXehQLvWLwRC6Hs_r5tiR6dKHxS-fhi3Wuf-855t7OKyq5Y6SAkoxg8J5Er3D8dg1LnqTKclJYqClSvN15F6lcJ8LU5g/w640-h640/3.png" width="640" /></a></div><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEixgfZiKimVd3RPz05M_Mi3mdGT9QnmD_Ue_7M9FAmFkaWV9ftv6L4v9wbqRWHjnwHV3BwNs3fU6PHa-idj0RMJCgoJJfxXeJIInn5R7hjPiC7ahQ3OZCnwK65PeKstaWfaF3X4WL5Sv88/s1080/4.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1080" data-original-width="1080" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEixgfZiKimVd3RPz05M_Mi3mdGT9QnmD_Ue_7M9FAmFkaWV9ftv6L4v9wbqRWHjnwHV3BwNs3fU6PHa-idj0RMJCgoJJfxXeJIInn5R7hjPiC7ahQ3OZCnwK65PeKstaWfaF3X4WL5Sv88/w640-h640/4.png" width="640" /></a></div><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjaNZN5QyPc6wCAwhnbb__TdXOquGKitun_FkBs_BHTQwv5WE267iTETBtNEl25EKWmQa4WyRxbZuXXe3yZZDnwgRjg8KjDDysCmomoNe9h3MUalLbgWT9ey8t2SDnX606rEncOWxxqnTM/s1080/5.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1080" data-original-width="1080" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjaNZN5QyPc6wCAwhnbb__TdXOquGKitun_FkBs_BHTQwv5WE267iTETBtNEl25EKWmQa4WyRxbZuXXe3yZZDnwgRjg8KjDDysCmomoNe9h3MUalLbgWT9ey8t2SDnX606rEncOWxxqnTM/w640-h640/5.png" width="640" /></a></div><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgS-tvCQBpRb9AhvUNHpj0_WIx0eEMR__JCd106BWLgrU3mkRZzItiYiHKoBoLFJPSUQOcXz-4lqOwfsDSN1MWZ0tRGZzGyU8u_sKezTJYi9WUlgoJamtODxW-Bl5IixusDFMT7lY16ASM/s1080/6.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1080" data-original-width="1080" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgS-tvCQBpRb9AhvUNHpj0_WIx0eEMR__JCd106BWLgrU3mkRZzItiYiHKoBoLFJPSUQOcXz-4lqOwfsDSN1MWZ0tRGZzGyU8u_sKezTJYi9WUlgoJamtODxW-Bl5IixusDFMT7lY16ASM/w640-h640/6.png" width="640" /></a></div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Here are more information in details regarding Unclaimed Money extracted from Accountant General's Department of Malaysia. </div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><b><u><font size="5">Definition of Unclaimed Moneys</font></u></b></div><div style="text-align: justify;">1. Moneys which are legally payable to the owner but have remained unpaid for a period of <b>not less than one year</b>. Examples under this category are:</div><div style="text-align: justify;"><div><ul><li>Salaries, wages, bonuses, commissions and other payments due to employees;</li><li>Dividend;</li><li>Profits declared for distributions;</li><li>Insurance claims which have been approved for payment;</li><li>Bank draft, cashier's order and other documents of similar nature which validity period have lapsed;</li><li>Fixed deposits (without automatic renewal instructions ) which have matured;</li><li>Tender deposits for which the intended purpose has been fulfilled;</li><li>Sundry creditors or sundry debtors with credit balance.</li></ul>2. Moneys standing to the credit of an account that has not been operated in whatever manner by the owner for a period of <b>not less than seven years</b>. Examples under this category are:</div><div><ul><li>Saving account;</li><li>Current account;</li><li>Fixed deposit (with automatic renewal instructions).</li></ul></div><div>3. Moneys to the credit of a trade account that has remained <b>dormant for a period of not less than two years</b>. Examples under this category are:</div><div><ul><li>Trade creditors account</li><li>Trade debtors account with credit balance.</li></ul></div></div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">If you found yourself having unclaimed money, then proceed to claim it back right away since there will be no interest earned in there. You can find everything you need to know from the government official website (<a href="http://www.anm.gov.my/index.php/en/khidmat/pembayaran-gaji/2-uncategorised/1482-unclaimed-money" target="_blank">Click this Link</a>) or call 03-20568000 to find out more!</div><div style="text-align: justify;"><br /></div>Henry Tanhttp://www.blogger.com/profile/11927168352621516247noreply@blogger.com0tag:blogger.com,1999:blog-8707620835473312559.post-20121046389702717982020-05-28T14:51:00.000+08:002020-05-28T14:51:40.948+08:00#1 Hindsight Bias | Behavioral Finance 101<h2 style="text-align: left;"><font size="6">What is Hindsight Bias?</font></h2><div style="text-align: justify;">Hindsight bias is the tendency of investors to <b><font color="#b51200">falsely believe</font></b> that they predicted the outcome since the beginning, <b><font color="#b51200">only after</font></b> learning the outcome. The most common phrases would be "I knew it all along" and all the "should have" and "could have". </div><div style="text-align: justify;"><br /></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj4QnfEnbwcEY7yayUttgymy6a0yGfSQLA0nrfW4DdwKC_m_3ci46NiUDtwTKSSoxlU0J633CoFektSQCUC9jK9PBPUDjaRsVElAHAGAyhztsWhGftfK4_uwhVL_IkFwCxN9berc1GHZ0A/" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img alt="Hindsight Bias" border="0" data-original-height="416" data-original-width="655" height="406" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj4QnfEnbwcEY7yayUttgymy6a0yGfSQLA0nrfW4DdwKC_m_3ci46NiUDtwTKSSoxlU0J633CoFektSQCUC9jK9PBPUDjaRsVElAHAGAyhztsWhGftfK4_uwhVL_IkFwCxN9berc1GHZ0A/w640-h406/Hindsight+Bias.PNG" width="640" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Hindsight Bias<br /></td></tr></tbody></table><div style="text-align: justify;"><br /></div><h2 style="text-align: justify;"><b><font size="6">Implication of Hindsight Bias?</font></b></h2><div style="text-align: justify;">In Behavioral Finance, this is one of the most common financial biases every investors would make unknowingly, which may leads to <b>overconfident</b>. This in turn causes them to <b>take more unnecessary risks</b> and trade more than they otherwise would. </div><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh0XsGFiXe16x1eZi3e9cWi9WbbnOnOcZwvosBz57TclfAbqySQO6Bax2KhtizrXzBY_9IUHe_OwAU4qS10aZFI4DG2LN7wTwcwDSO6FNEo1DUsmF864La0XECEnydOLdTY_0inQNcjHSU/" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img alt="Hindsight Bias" border="0" data-original-height="841" data-original-width="1080" height="498" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh0XsGFiXe16x1eZi3e9cWi9WbbnOnOcZwvosBz57TclfAbqySQO6Bax2KhtizrXzBY_9IUHe_OwAU4qS10aZFI4DG2LN7wTwcwDSO6FNEo1DUsmF864La0XECEnydOLdTY_0inQNcjHSU/w640-h498/Hindsight+Bias.png" width="640" /></a></div><div style="text-align: justify;"><br /></div><h2 style="text-align: justify;"><font size="6">How to Avoid Hindsight Bias?</font></h2><div style="text-align: justify;">To avoid Hindsight Bias, just follow the 4 simple steps! </div><div style="text-align: justify;"><ol><li><b>Acknowledge and be conscious that everyone is vulnerable to the bias </b></li><li><b>Keep an Investment Diary</b></li><li><b>Record the reasoning behind all the financial decisions in the diary</b></li><li><b>Map the outcomes to the reasons and learn from both the wins and losses</b></li></ol></div><div style="text-align: justify;">It is utterly important to know, not just what happens, but why it happens regardless if is a win or a lose. With a record of all the reasoning, <b><font color="#0b8043">win can be repeated</font></b> and <b><font color="#b51200">loss can be avoided</font></b> in the future. That is the best way to learn from the past, instead of relying on our biased mind. Which is why Warren Buffet always warned about investors not learning from the past in one of his favorite quote.</div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjvOTBBk8INMO_SMNWvsM_LM0i0cMWO5-_MbZ5c9bz7QWHyQt2g_MR8ekAJL6E4PYUxhQTlFQ_9EaTJj7JAatacsLMqk7R2MohdrcE3y9b5X5WmPndAe51QcX_Iq-VZCjJuh9CDD9XNMK0/" imageanchor="1" style="margin-left: 1em; margin-right: 1em; text-align: center;"><img border="0" data-original-height="845" data-original-width="1080" height="500" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjvOTBBk8INMO_SMNWvsM_LM0i0cMWO5-_MbZ5c9bz7QWHyQt2g_MR8ekAJL6E4PYUxhQTlFQ_9EaTJj7JAatacsLMqk7R2MohdrcE3y9b5X5WmPndAe51QcX_Iq-VZCjJuh9CDD9XNMK0/w640-h500/Copy+of+Hindsight+Bias.png" width="640" /></a></div><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><br /></div><div style="text-align: justify;">Stay tuned for other financial biases that we commonly made in the upcoming posts! Remember to Like, Comment and Share @YourFinanceDoctor.Henry if you find it useful!</div><div style="text-align: justify;"><br /></div>Henry Tanhttp://www.blogger.com/profile/11927168352621516247noreply@blogger.com0tag:blogger.com,1999:blog-8707620835473312559.post-4407652808539205892018-11-13T21:23:00.003+08:002018-12-10T10:13:23.467+08:00EPF Increases Minimum Basic Savings to RM240,000 At Age 55 Effectively Starting 2019<div style="text-align: justify;">
The <b>Employees Provident Fund (EPF)</b> has announced that the basic savings at age 55 will be increased from RM228,000 to RM240,000 <b>effective Jan 1, 2019</b>. The increment will also be made across all ages accordingly, refer to the table below. </div>
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EPF last revised the amount back in <a href="http://yourfinancedoctor.blogspot.com/2016/09/epf-increases-minimum-basic-savings-to.html" target="_blank">Jan 1, 2017 from RM196,800 to RM228,000 (read here)</a>. Given that Malaysian has not saved enough for retirement, EPF further increases the basic savings. </div>
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<b><span style="color: red; font-size: large;">What is Basic Savings?</span></b></div>
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The basic savings is a <b>pre-determined amount</b> set according to age in Account 1 to enable members <b>achieve a minimum savings at different age</b>, for example, when they reach age-55, they should have at least RM240,000 to retire. The <b><span style="color: blue;">amount in excess</span></b> of the Basic Savings <b><span style="color: blue;">can also be invested</span></b> in products offered by appointed Fund Management Institutions approved by the Ministry of Finance.</div>
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<a href="http://yourfinancedoctor.blogspot.my/2016/05/3-reasons-to-maximize-your-epf-savings.html" target="_blank">3 Reasons to Maximize Your EPF Savings (Read Here)</a></div>
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<b><span style="color: red; font-size: large;">Why Do I Need That?</span></b></div>
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The rationale for the implementation of this basic savings is to ensure that members have sufficient savings when they retire in order to <b><span style="color: blue;">support their basic retirement needs for 20 years</span></b> from age 55 to 75, in line with Malaysians' life expectancy. The new quantum is bench-marked against the minimum pension for public sector employees, which has been raised from RM950 to <b><span style="color: blue;">RM1000 per month from age 55 to 75</span></b>. (<b><span style="color: red;">I don't think RM1000 per month is enough either!</span></b>)</div>
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<a href="http://yourfinancedoctor.blogspot.my/2015/05/invest-in-prs-as-low-as-rm100.html" target="_blank">EPF is not enough, you need PRS too! (Read Here)</a></div>
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<b><span style="color: red; font-size: large;">How Does It Affects Me?</span></b></div>
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Well, it doesn't if you did not opt to withdraw for the Members Investment Scheme (MIS). But if you do, then the <b><span style="color: blue;">withdrawal amount for MIS will be reduced</span></b>. </div>
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<b><span style="color: red; font-size: large;">Conclusion:</span></b></div>
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With the increment in Minimum Basic Saving, members can now <b><span style="color: blue;">withdraw lesser money, so that you have more money at retirement!</span></b></div>
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To find out more about it, feel free to contact #YourFinanceDoctor at <a href="mailto:henrytcx@gmail.com">henrytcx@gmail.com</a></div>
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Earn, Save, Invest, Repeat!</div>
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Till then. Happy Investing! ;)<br />
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Henry Tanhttp://www.blogger.com/profile/11927168352621516247noreply@blogger.com22tag:blogger.com,1999:blog-8707620835473312559.post-11006342731203626652018-10-30T14:33:00.001+08:002018-10-30T14:33:10.265+08:00How to Deal with the Market’s Ups and Downs<div style="text-align: justify;">
The most commonly asked question on investing - <b>Is it a good time to invest?</b> I would argue that anytime is the best time – not because I can answer correctly to the question but precisely because I can’t… and neither does anyone else. </div>
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Study after study has shown that the vast majority of professional investment managers <b>can’t successfully time or beat the market</b> and the few that do happen to outperform <b>aren’t able to consistently to do so</b>.</div>
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So what does this mean for you as an investor? <b>Trying to time the market is probably a waste of time that will likely backfire.</b> The irony is that investing is so complex that your best bet is to keep it simple by following these three steps:</div>
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<b><span style="color: blue; font-size: large;">1) Invest according to your risk tolerance.</span></b></div>
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Risk tolerance comes in two forms. The first is <b>how much risk you can afford to take</b>, which is largely <b>a function of when you might need the money</b>. Anything you might need in the next 1-3 years (savings for emergencies, a vacation/holidays in the next year) should be kept safe in cash. Beyond that, the longer your time frame, the more aggressively you can invest in the market, which are extremely volatile in the short run but are <b>less likely to lose money the longer you hold them (assuming you’re well diversified)</b>.</div>
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The second is your personal comfort level with risk. How do you feel if your portfolio turns red? After all, if you can’t sleep well at night when your portfolio falls in value, you may be tempted to cash out and miss the recovery. The more conservative you are, the less you may want to have in stock market and vice versa.</div>
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<b><span style="color: blue; font-size: large;">2) Reduce your costs.</span></b></div>
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Regardless of which investment you choose, you’ll want to look for ways to <b>reduce your taxes, fees, and transaction costs</b>. To reduce taxes, make sure you’re utilizing Private Retirement Scheme (PRS) with tax relief up to RM3,000 and even Skim Simpanan Pendidikan Nasional (SSPN) with tax relief up to RM6,000 for those with kids. </div>
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As for unit trust or mutual fund costs, a Morningstar study found that low costs was the “most proven predictor of future fund returns” when comparing similar funds. Regardless of the types of unit trust fund, you’ll want to pay attention to the fund’s sales charge and switching cost. The former is what the fund charges you every upfront investment (some can goes as high as 6.5%!) and the second is how much it costs when switching between funds. You can generally minimize both by investing using <a href="http://yourfinancedoctor.blogspot.com/2016/08/faq-how-do-you-charge-in-unit-trust.html" target="_blank">Wrap Account</a> (<b>as low as 2% sales charge and free switching!</b>).</div>
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The same holds true when choosing an advisor as their advisory fee will come on top of any fund fees you’re paying. Most unit trust agent collect a commission from selling high-fee funds or charge a percentage of the assets they manage for you. Both can be <b>expensive and present conflicts of interest</b>. Instead, <b><span style="color: blue;">look for unbiased advisors</span></b> that charge a flat annual, monthly, or hourly fee as this can be both cheaper and less biased.</div>
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<span style="color: blue; font-size: large;"><b>3) Stick to your plan.</b></span></div>
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Once you’ve created a suitable to yourself and low cost portfolio, <b>the most important thing you can do is to stick with it</b>. You may be tempted to jump onto the next hot investment fad (dot com stocks in the 90s, and then real estate, and more recently cryptocurrency), chase top performing funds or strategies, or bail out during the next bad news or market downturn, but a<b>ny of these actions can badly affect your portfolio returns</b>. </div>
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If you can’t help yourself, put aside some “play money” you can afford to lose by speculating and consider hiring a financial advisor to talk you out of a bad decision with the rest of your money. Financial advisor can help you to stick with your portfolio when the going get rough. (Vanguard estimates that this “behavioral coaching” can boost your returns by 1.5%.)</div>
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This last step may be as simple as the others, but it’s not easy. The hardest part of investment management isn’t when or what to invest. In fact, it’s not about managing investments at all. It’s about managing ourselves!</div>
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Henry Tan, CFP®, Shariah RFP, is a <b>Licensed Financial Advisor</b> at #YourFinanceDoctor. For speaking opportunities on personal finance issues, please email <a href="mailto:henrytan@fa.my" target="_blank">henrytan@fa.my</a></div>
Henry Tanhttp://www.blogger.com/profile/11927168352621516247noreply@blogger.com20tag:blogger.com,1999:blog-8707620835473312559.post-45087170086070709132018-07-30T11:24:00.005+08:002018-07-30T11:24:56.162+08:006 Questions to Test if You Know Your Money<div style="text-align: justify;">
The one and only trait of all the wealthy people is - <b><span style="color: blue;">Understand Your Money</span></b>. Do you really know about your money? Here are 10 questions to test yourself! If you can answer all clearly, congratulations, you are on your way towards the wealthy people! </div>
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<b><span style="color: blue; font-size: large;">Q1: Where did my money go last week?</span></b></div>
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Wealthy people know exactly where they spend all their money. Having said that, the wealthy people have allocation/budget for all expenses. So if you don't, it's not too late, take 10 minutes to review your bank and credit card transactions. Did you stay within your budget last week?</div>
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<b><span style="color: blue; font-size: large;">Q2: Where will my money go this week?</span></b></div>
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If you did not stay within your budget last week, no worry, this week is your redemption! If you have overspent last week, what can you cut down this week to make up the difference? Review your budget again to figure out how much exactly you can spend on each categories this week.</div>
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<b><span style="color: red; font-size: large;">I don't even have a budget?</span></b></div>
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At this juncture, if you cannot answer the two questions above, then you really gotta start from the beginning! Get yourself a notebook for tracking of all your income and expenses, call it "<b>My Money Book</b>". If you are Go-Green supporter, you can set up a spreadsheet using Excel or Google Sheet to do the tracking. To help you kick-start your financial management, you can download #YourFinanceDoctor Template here. </div>
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<b><span style="color: blue; font-size: large;">Q3: What do I want in 5 years that I need to save/invest for today?</span></b></div>
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"<b>Direction is so much more important than speed. Many are going nowhere fast.</b>" I bet many of you have not really thought of what you want in 5 years that you need to save/invest for today. You probably just work work work work work. <span style="font-size: x-small;">*plays Rihanna's Work*</span> Here are some examples:</div>
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"In 5 years, I would like to have RM100k to buy a house." </div>
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"In 5 years, I would like to have RM50k for vacation in Europe for a month." </div>
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"In 5 years, I would like to be financially independent with a passive monthly income of RM5k."</div>
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<b><span style="color: blue; font-size: large;">Q4: What is the one major goal you want to accomplish in a year?</span></b></div>
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Long term goal does not motivates you in short term? Set yourself some short term goals as well. Big goals can be broken down into small goals so that <b>they looked more achievable</b>. Here are some examples:</div>
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"I want to pay off all my credit card debt."</div>
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"I want to accumulate RM10k for emergency fund."</div>
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"I want to start invest RM1k per month."</div>
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<b><span style="color: blue; font-size: large;">Q5: What should I do this week to move closer to my goal?</span></b></div>
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<b>"A dream is only a dream if work don't follow it."</b> You can dream all you want but if you don't put it into action, you can never achieve them. So ask yourself, what step will you take to move yourself closer to the goal? Here are some examples:</div>
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"I will track every dollar I spend this month to see where my money is going."</div>
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"I will stop using my credit cards so that no new debts added."</div>
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"I will stop all entertainment expenses until I have accumulate RM10k emergency fund."</div>
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<b><span style="color: blue; font-size: large;">Q6: What can I do this week to further my money knowledge?</span></b></div>
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<b>Learning is a lifelong journey.</b> But this is simple. You are already doing this right now!<br /><br />"I will Like & Follow <a href="https://www.facebook.com/yourfinancedoctorhenry/" target="_blank">#YourFinanceDoctor</a> blog."</div>
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"I will make appointment with #YourFinanceDoctor to better manage my finances."<br />"I will read a chapter from a personal finance book."<br />"I will attend investment conference to keep myself up to date."</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiSgOrO1ytEA4zQPTxR55LjCn8VOHqWnGGsf48mOEKA2yy7P5pIvhyphenhyphenprVhZaZslvD9nccnvm7jOyGv0AwVi9EVshH2OYAYBivsypW3vwVSBkg3IxVnP2dIydIoKC5HSiKFbX5f_zFDeN70/s1600/aged-cane-elder-33786.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img alt="6 Questions to Test if You Know Your Money" border="0" data-original-height="1067" data-original-width="1600" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiSgOrO1ytEA4zQPTxR55LjCn8VOHqWnGGsf48mOEKA2yy7P5pIvhyphenhyphenprVhZaZslvD9nccnvm7jOyGv0AwVi9EVshH2OYAYBivsypW3vwVSBkg3IxVnP2dIydIoKC5HSiKFbX5f_zFDeN70/s640/aged-cane-elder-33786.jpg" title="6 Questions to Test if You Know Your Money" width="640" /></a></div>
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Like the saying goes "<b>你不理财,财不理你</b>". <b><span style="color: blue;">If you dont take care of your money, your money will not take care of you too</span></b>. So you should always be proactive for your personal financial management. Start now so that 5 years from now, you will look back at all these steps you have taken and thank yourself for how far you have achieve. It's never too late to start NOW.</div>
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Henry Tanhttp://www.blogger.com/profile/11927168352621516247noreply@blogger.com1tag:blogger.com,1999:blog-8707620835473312559.post-52381023727121869742018-05-14T09:55:00.001+08:002018-05-14T09:55:07.536+08:00How The Market Will Be After Election?<div style="text-align: justify;">
A historic win at Malaysia's general election by the opposition alliance, Pakatan Harapan, unexpectedly beat the 60 years of ruling Barisan Nasional coalition. While the news is excellent for democracy, market uncertainty is likely to linger. Thankfully <b>most are positive that the volatility will be temporary. </b></div>
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***<b>Update</b>***</div>
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Prime Minister Tun Dr Mahathir Mohamad swiftly named a senior cabinet portfolios and a “council of elders”is <b>likely to soothe investor sentiment</b> within a brief period.</div>
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Council of Elders:</div>
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1. Daim Zainuddin</div>
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2. Zeti Aziz</div>
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3. Hassan Merican</div>
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4. Robert Kuok</div>
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5. Jomo Kwame Sundaram</div>
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<b><span style="color: blue; font-size: large;">Related Quotes:</span></b></div>
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<b>Amy Yuan Zhuang, Research Analyst at Nordea Markets</b></div>
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The unexpected election result is MYR negative in the near term, but once political uncertainties fade away, the MYR will likely strengthen against the USD, supported by expected USD weakness, high oil prices and solid macro conditions.</div>
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<b>Aninda Mitra, Senior Sovereign Analyst at BNY Mellon Investment Management</b></div>
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The bottom line is that while a long-term fix of governance, institutions and public life is now in sight, near-term policy uncertainty will be high. That will take a toll on the ringgit at least until more clarity emerges.</div>
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<b>Teera Chanpongsang, portfolio manager at Fidelity International</b></div>
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Short-term, we may see market volatility given uncertainty around policy implementation. However, we may see some opportunities should policies move in the right direction. </div>
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<b>Gan Eng Peng, Director of Equities Strategy and Advisory at Affin Hwang Asset Management</b></div>
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While we acknowledge the possibility of short-term capital outflows because of policy uncertainties, we firmly believe the newly-formed government presents an opportunity, as it is comprised of a group of senior ministers with strong credibility.</div>
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<b>Datuk Shahril Ridza Ridzuan, CEO at Employee Provident Fund</b></div>
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Short term volatility is natural given this is the nation’s first experience of a power transition, but the smooth process seen so far will assure investors that Malaysia is a mature democracy and economy. The new government’s call for greater enhancements to local institutions’ corporate governance practices and independence, together with greater scrutiny by strong regulators, such as Bank Negara Malaysia and the Securities Commission Malaysia, would bode well for the local business environment.</div>
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<b>Anushka Shah, Sovereign Risk Group Assistant Vice-President at Moody’s </b></div>
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The Government’s debt burden is relatively higher than other A-rated sovereign states and this will likely remain a challenge for the country’s credit profile. </div>
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<b>Anthony Dass, Chief Economist at AmBank Group Research</b></div>
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Removing the GST and introducing the SST and other subsidies will act positively on the economy, as they help to improve the disposable income of households, and thus, spending. This will help buffer any shortfalls from the GST. Besides prudent financial management as we have seen in Selangor and Penang, a more transparent public procurement system or tendering process will improve competition and lower margins for players and ease budget strains. Dr Mahathir’s strong track record, added with Datuk Seri Anwar Ibrahim as the prime minister-in-waiting and the maturity of Malaysians as reflected in this GE, augur well for the country. These are positive signs on the business and consumer confidence.</div>
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<b>Simon Chen, Investors Service Financial Institutions Group Vice-President at Moody’s </b></div>
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We are closely following the developments around some campaign promises that could have a negative impact on market sentiment and trigger volatility in the financial markets. These dynamics will take time to unfold and a lot will depend on what the new Government unveils in the coming weeks and months.</div>
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<b>Tan Sri Muhammad Ibrahim, Governor at Bank Negara Malaysia</b></div>
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Malaysia was no stranger to short-term volatility, as the country's open economy was highly integrated with global markets. Industry players should not to overreact to market noises, especially when it was caused by factors which were temporary in nature.</div>
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<b>Tan Sri Azman Mokhtar, Managing Director at Khazanah Nasional Bhd </b></div>
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On managing investors’ perception during the transition of power, he said there could be the usual gyration in the market in the short-term, but the current environment provided a fantastic opportunity in the medium-to-long term. So, from the market, ringgit standpoint, I think clearly the confidence is actually the biggest factor. I think with the new reset, this will come through. </div>
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Henry Tanhttp://www.blogger.com/profile/11927168352621516247noreply@blogger.com1tag:blogger.com,1999:blog-8707620835473312559.post-71053227305493989552018-03-08T15:50:00.003+08:002018-03-08T15:50:43.197+08:00What is RM200 PRE-AUTH DEBIT?<div style="text-align: justify;">
Have you come across "PRE-AUTH DEBIT" and "PRE-AUTH REFUND" with the amount of RM200 in your bank transaction statement? Well don't be shocked, these are actually the bank deduction when you swipe your card for self-service petrol pump at petrol station. </div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgVa5tqBCdomRZUJcNiOlOxGPRZaJEZVszG8ffztlOVb9yN_qwZxzo9rG-AanKpJ2y_Jl9SfFirclF1kthOwxPSSAXJ18R2bYp2rTxbowuIOS87VLWHMB1YH-q56be0SW-X2Nk02pIzFWw/s1600/Capture.PNG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="415" data-original-width="926" height="286" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgVa5tqBCdomRZUJcNiOlOxGPRZaJEZVszG8ffztlOVb9yN_qwZxzo9rG-AanKpJ2y_Jl9SfFirclF1kthOwxPSSAXJ18R2bYp2rTxbowuIOS87VLWHMB1YH-q56be0SW-X2Nk02pIzFWw/s640/Capture.PNG" width="640" /></a></div>
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As you know, #YourFinanceDoctor is a frequent user of Caltex given that there's BPoint to earn. And recently, Caltex is promoting on the Wave & Win with Visa Paywave, so I started to use the self-service pump. Which explains why recently there's such deductions in my bank statement.</div>
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To be honest, I don't always check my bank account statement, but I was shocked at first too for not knowing what it is, but given that there is refund so I am not too worried. After a quick search in Google, then only I found out...</div>
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<b><span style="color: red; font-size: large;">PRE-AUTH = Pre Authorization</span></b></div>
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Basically the bank will deduct RM200 for Pre Authorization <b><span style="color: red;">IF AND ONLY IF</span></b> cardholder pays for petrol at a self-service pump. This amount will be refunded within 3 to 5 working days. So if you do not wish to be deducted, just proceed to the counter to use your card. </div>
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<b><span style="color: red; font-size: large;">Why do they want to deduct?</span></b></div>
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Well, since the amount of money to pump petrol <b>is not known yet</b> until you are done and put back the pump nozzle, so they have to deduct a fixed amount of RM200 first just to make sure that the card has sufficient credit before the transaction. So if your account has lesser than RM200, you would not be able to proceed to use. </div>
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<b><span style="color: red; font-size: large;">Can I avoid being deducted?</span></b></div>
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Not unless if you opt to use pay-over-counter. But if you insist to use self-service pump, perhaps you can consider to use <a href="https://www.cimbbank.com.my/en/personal/press-releases/promotions/important-notices/removal-of-pre-authorisation-amount-for-petrol-automated-fuel-dispensers-transactions-effective-8-February-2017.html" target="_blank">CIMB Card with no deduction but only at Petronas</a>. </div>
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So the next time if you see such deduction, don't be scared or shocked, you will be refunded! </div>
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Henry Tanhttp://www.blogger.com/profile/11927168352621516247noreply@blogger.com5tag:blogger.com,1999:blog-8707620835473312559.post-81318471655921052972018-02-21T18:45:00.003+08:002018-02-21T18:59:11.373+08:003 Years Since I Quit My Engineering Job And Start My Own Business As Financial Advisor!<div style="text-align: justify;">
As many of you would know, I used to be a product regulatory engineer in Keysight Technologies (formerly Agilent Technologies) for 3 years before I quit my corporate job to start my own business as a <b>Licensed Financial Advisor</b>/<b><a href="https://www.facebook.com/yourfinancedoctorhenry/" target="_blank">#YourFinanceDoctor</a></b>. </div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhXGD3QSKJGlI-lBl2oYMKnQElx1KUBTO_12yGXL9svM3WiBu-1eYyhT6zy204JKi0BN942FREtcg8vpVys49w5O2zI3VKGtH9XGyQOgeZIIh6mo6z3ffViSMWQzjiwT7SDmukAFShMso0/s1600/27629488_10209704936373672_2605790551766834883_o.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="640" data-original-width="1280" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhXGD3QSKJGlI-lBl2oYMKnQElx1KUBTO_12yGXL9svM3WiBu-1eYyhT6zy204JKi0BN942FREtcg8vpVys49w5O2zI3VKGtH9XGyQOgeZIIh6mo6z3ffViSMWQzjiwT7SDmukAFShMso0/s640/27629488_10209704936373672_2605790551766834883_o.jpg" width="640" /></a></div>
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Top Advisor under Advisory Fee in 2017</div>
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After completing my 2 years Certified Financial Planner® part time course and exam, I was eligible to <b>upgrade myself</b> from being a unit trust consultant/insurance agent to Licensed Financial Advisor (FA) by applying for the licenses from Bank Negara Malaysia and Securities Commission Malaysia. <a href="http://yourfinancedoctor.blogspot.my/p/about-me.html" target="_blank">Read more on why I want to upgrade to being a Financial Advisor</a>. Recently, I even gotten myself Shariah Registered Financial Planner (RFP)! </div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEheY-NcPvtDCw9oWF9en6hL7qwSRGQW3Ewr4qVON_R1GPzGdYPOyqUOssoDO53sXmA-ViDrlnjYEEwn2a5-mD1WeXXX2xSn1-peD4vsxOS8MwVGkrrLl7G0GjkA2fRQd654iN21H0uSt50/s1600/10343497_10152407331212054_7644280454371325980_n.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="640" data-original-width="640" height="200" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEheY-NcPvtDCw9oWF9en6hL7qwSRGQW3Ewr4qVON_R1GPzGdYPOyqUOssoDO53sXmA-ViDrlnjYEEwn2a5-mD1WeXXX2xSn1-peD4vsxOS8MwVGkrrLl7G0GjkA2fRQd654iN21H0uSt50/s200/10343497_10152407331212054_7644280454371325980_n.jpg" width="200" /></a><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj7rnAZ8ySDXEU3aEQ4edp5KBt7kGDUB5QQj-z0HjfgN7wn5e42RZLTMxcxQeQsoxmWmCCWjiyo40k78IJK71lmmpf2sCVZRHTjWCyEJd0Oih-87FhG9QlNCiQcfW49FUfScbTvSCwAwFM/s1600/10553556_10152609237632054_6784089071651714157_n.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="640" data-original-width="640" height="200" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj7rnAZ8ySDXEU3aEQ4edp5KBt7kGDUB5QQj-z0HjfgN7wn5e42RZLTMxcxQeQsoxmWmCCWjiyo40k78IJK71lmmpf2sCVZRHTjWCyEJd0Oih-87FhG9QlNCiQcfW49FUfScbTvSCwAwFM/s200/10553556_10152609237632054_6784089071651714157_n.jpg" width="200" /></a></div>
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Those were the days as engineer! </div>
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Throughout the 3 years, many were curious on what business I am into, am I doing well or not, and even asked if I would consider to go back engineering job. I am not going to lie, but these 3 years has been really tough, so much so that it was way beyond my expectations. Nevertheless, I am still going strong and determined than ever, just like the mantra of the Survivor, "<b><span style="color: blue;">Outwit, Outplay, Outlast!</span></b>". </div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgY-UN4Uz9Hu89_qAgODx_a0PuqB-ihf5uPDPcPLgwj3Z8GMw4nZBR5WnQ4s4IaptiZLLiWE2jLWV_jAwutuJJv9XoAtkaR-ZYg3mjlMk7zYZsfTU64qdZW9mGYy8-3GYjeSvqL3MpP3j4/s1600/27907535_10155603334357054_3600329259425370424_o.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="809" data-original-width="1080" height="238" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgY-UN4Uz9Hu89_qAgODx_a0PuqB-ihf5uPDPcPLgwj3Z8GMw4nZBR5WnQ4s4IaptiZLLiWE2jLWV_jAwutuJJv9XoAtkaR-ZYg3mjlMk7zYZsfTU64qdZW9mGYy8-3GYjeSvqL3MpP3j4/s320/27907535_10155603334357054_3600329259425370424_o.jpg" width="320" /></a><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjTnQ0V0sOgFEyXXYph7wLVJfithdrhxno4RaCzc83k1GtDZW0t-0vTF76tqwNhXLmK-amIJC3ld0WbP5sun1rb9vboEBz5ogse0fgBuseEkfV_pvxtNnvbJ1aCDpqlY9qB-Kb3lYTgvSQ/s1600/10406697_10152631391192054_6962381332172520330_n.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="640" data-original-width="640" height="200" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjTnQ0V0sOgFEyXXYph7wLVJfithdrhxno4RaCzc83k1GtDZW0t-0vTF76tqwNhXLmK-amIJC3ld0WbP5sun1rb9vboEBz5ogse0fgBuseEkfV_pvxtNnvbJ1aCDpqlY9qB-Kb3lYTgvSQ/s200/10406697_10152631391192054_6962381332172520330_n.jpg" width="200" /></a></div>
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Completed both CFP and Shariah RFP</div>
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So here are the most commonly asked question and answer.</div>
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<b><span style="color: red;">What business you are into?</span></b></div>
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Licensed Financial Advisor. I help my clients to achieve their financial goals through proper comprehensive financial plan, which helps them to <b>see the big picture</b> and set both long and short-term life goals. In return, it's easier for them to make financial decisions and stay on track to meet their goals. </div>
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<b><span style="color: red;">Any difference from insurance agent/unit trust consultant(UTC)? </span></b></div>
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Since I used to be both agent and UTC, I know exactly how it is like. A simple multiple choice question exam with just SPM certification, one can be easily qualified. Besides, being financial advisor means I have to resign from any insurance company and unit trust company, and become <b>independent-unbiased advisor</b> that only <b>represents client</b>. </div>
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<b><span style="color: red;">How do I know if you are really who you claimed to be?</span></b></div>
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If seeing is believing... Check out these websites:</div>
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Bank Negara Malaysia: <a href="http://www.bnm.gov.my/index.php?ch=en_misc&pg=li_fin_adv&ac=563">http://www.bnm.gov.my/index.php?ch=en_misc&pg=li_fin_adv&ac=563</a></div>
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Securities Commissions: <a href="http://ers.seccom.com.my/public/Default.aspx?menu=1">http://ers.seccom.com.my/public/Default.aspx?menu=1</a></div>
Certified Financial Planner (CFP): C005430 (<a href="http://www.fpam.org.my/fpam/membership/membership-lists/">http://www.fpam.org.my/fpam/membership/membership-lists/</a>)<br />
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Shariah Registered Financial Planner (RFP): M30012221 </div>
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(<a href="https://mfpc.org.my/join-us/individual-members/">https://mfpc.org.my/join-us/individual-members/</a>)</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjJ4FmBox_3Rmi1Iso2GRhTftclsg5d1I5dKLOnYvop4rceQyYE9lAWb0oYqcNnfk-I5A5LFDuH_zprJe9pg95_OLosAqM57-Pjb_08GNWtnI7G34b6tFBG20Xc1dtsXCEXccMTbbLp59c/s1600/12112295_10153645919367054_6106550611346014408_n.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="807" data-original-width="807" height="200" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjJ4FmBox_3Rmi1Iso2GRhTftclsg5d1I5dKLOnYvop4rceQyYE9lAWb0oYqcNnfk-I5A5LFDuH_zprJe9pg95_OLosAqM57-Pjb_08GNWtnI7G34b6tFBG20Xc1dtsXCEXccMTbbLp59c/s200/12112295_10153645919367054_6106550611346014408_n.jpg" width="200" /></a><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgFNQXxXFDRLceaGuerECs1d2ei21ji0NHpiX9qy3wobsY_ewd91H4kOyfXxLeVFvlL2Tk95HdkYf7jFVswlpKuc89nH2IVNvOUcpEayKVYcOs_bI_Ye3azV_SPrr5I-XysmSYO7VVWlp8/s1600/19679062_10154989160552054_3236308598618356576_o.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="694" data-original-width="1040" height="212" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgFNQXxXFDRLceaGuerECs1d2ei21ji0NHpiX9qy3wobsY_ewd91H4kOyfXxLeVFvlL2Tk95HdkYf7jFVswlpKuc89nH2IVNvOUcpEayKVYcOs_bI_Ye3azV_SPrr5I-XysmSYO7VVWlp8/s320/19679062_10154989160552054_3236308598618356576_o.jpg" width="320" /></a></div>
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Financial Talk in universities and multinational corporations.</div>
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<span style="color: red;"><b>How many FA in Malaysia?</b></span></div>
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Many people would have thought that they have heard or known about financial advisor, but those that they know are probably insurance agent/unit trust consultant calling themselves financial advisor. In Malaysia, there's only <b>about 600 REAL financial advisor</b> out of 32 million Malaysia's population! In fact, misusing the term "financial advisor" without the license from BNM will be liable to <b><span style="color: red;">imprisonment</span></b> for a term not exceeding eight years or to a fine not exceeding twenty-five million ringgit or to both. (<a href="http://www.bnm.gov.my/documents/act/en_fsa.pdf" target="_blank">Section 139, Financial Services Act 2013</a>)</div>
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<b><span style="color: red;">What is your Unique Value Proposition?</span></b></div>
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There are too many people that are simply selling product and collecting commission. They are driven by the incentive trips and bonuses provided by the companies, to the extent that you would start wondering if they are putting <b>client's interest first or their wallet first</b>? </div>
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Since a financial advisor does not represents any insurance companies/fund houses (not entitled to any of those incentive trips/bonuses too!), I can sell anyone of them which are <b>best suited to the client</b>. I will need to research the marketplace and recommend the most appropriate products and services available, ensuring that clients are aware of products that best meet their needs and then only securing a sale. </div>
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<b><span style="color: red;">Is that consider as a business?</span></b></div>
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Yes, we are required to register with Suruhanjaya Syarikat Malaysia (SSM). In order for Bank Negara Malaysia to give us the license, we will need to provide a <b>statutory declaration</b> where we declared as non bankruptcy and also pass all the "Fit and Proper" criteria.</div>
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<b><span style="color: red;">Do you get a base salary as a financial advisor? </span></b></div>
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No I do not. As a financial advisor, we are all <b>self-employed</b>. </div>
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<b><span style="color: red;">If not, how do you earn?</span></b></div>
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I am a <b>Fee-Based financial advisor</b>, where I charge both fees and commissions based on the investment or insurance products I sell. I charge a fee based on client's annual household income and also a fee on asset under my management for my client. </div>
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As far as I know, there is still no "Fee-Only" financial advisor in Malaysia given that the awareness on financial advisor is still far too low. But given the rise of fin-tech, I hope one day I would be fully converted to "Fee-Only" financial advisor.</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhBcobiLOgBzAakf2-5YDa1hwSK0xfiPjeqnmrW4eUHHfa3lzi1b7daWiHj6ihxWNzMfFcr8ZSsfJilj8RrmOVENa9QQsUh-4-bDeLHRl0VN2cPEdg8nMXDeBre9mzgWlkbfgO5jUyx91g/s1600/IMG_3381.JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1024" data-original-width="683" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhBcobiLOgBzAakf2-5YDa1hwSK0xfiPjeqnmrW4eUHHfa3lzi1b7daWiHj6ihxWNzMfFcr8ZSsfJilj8RrmOVENa9QQsUh-4-bDeLHRl0VN2cPEdg8nMXDeBre9mzgWlkbfgO5jUyx91g/s640/IMG_3381.JPG" width="426" /></a></div>
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Being awarded as the Top Advisor in collecting Advisory Fee in 2017.</div>
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All in all, I believe in proper financial planning, which by having a comprehensive financial plan, it is the best way to help you to <b><span style="color: blue;">make sensible and informed decisions</span></b> about money that can help you achieve all your goals in life; it's not just about buying products like a medical card or a saving plan.</div>
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Gain control and peace of mind today, contact #YourFinanceDoctor! </div>
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<span style="background-color: white; color: #666666; font-family: "open sans";">Give me a call: 016-427 0233 or shoot me an email: </span><a href="mailto:henrytcx@gmail.com" style="background-color: white; color: #15c869; font-family: "Open Sans"; text-decoration-line: none;">henrytcx@gmail.com</a><span style="background-color: white; color: #666666; font-family: "open sans";"> TODAY!</span></div>
Henry Tanhttp://www.blogger.com/profile/11927168352621516247noreply@blogger.com20tag:blogger.com,1999:blog-8707620835473312559.post-72265117015205926002018-01-18T10:06:00.003+08:002018-01-18T10:06:27.160+08:00Net Asset Value - NAV<h2 style="text-align: justify;">
<span style="font-size: x-large;">What is Net Asset Value - NAV?</span></h2>
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Net Asset Value (NAV) is the value per unit of a unit trust fund or a mutual fund on a specific date. The per-unit amount is based on the total market value of all the securities in a unit trust fund's portfolio (Total Assets minus Total Liabilities) and divided by the number of units outstanding. Hence, it is the price per unit of the fund which used for subscribing (buy) and redeeming (sell). </div>
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<span style="font-size: large;">What is the difference with share price?</span></h3>
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Unlike share price which fluctuates throughout the day, NAV per unit is only <span style="color: blue;"><b>computed once per day</b> <b>based on the closing market prices</b></span> of all the securities within the unit trust fund's portfolio. So, investors usually can only get to know the NAV per unit the next day. However, all the subscription and redemption order will be processed using the NAV of the Transaction Date. </div>
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<b>Example:</b></div>
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Investor A bought RM10,000 into Unit Trust X on 10/1/2018 (Transaction Date).</div>
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But Investor A can only get to know the NAV he bought on the following day, 11/1/2018. (T+1)</div>
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In other words, today you only get to know the NAV of a unit trust fund for the day before. </div>
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<b><span style="font-size: large;">What else I need to know?</span></b></h3>
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Unlike share price of a share company, the NAV of a unit trust fund <b><span style="color: blue;">does not depends on demand and supply</span></b> of the unit trust fund. In order to buy a share at a certain share price, one would need wait for a matching seller and vice versa. But for unit trust fund, one can always make subscription and redemption at anytime. </div>
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From the NAV formula, only increases in Total Assets or decreases in Total Liabilities can directly affect NAV of a unit trust fund. As a result, changes in NAV are not the best gauge of a unit trust fund performance. Many other measures such as <a href="http://yourfinancedoctor.blogspot.my/2017/04/annualized-return.html" target="_blank">Annualized Return</a>, Sharpe Ratio, Alpha, Beta and so on, would be much better indications of a unit trust fund performance. </div>
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Henry Tanhttp://www.blogger.com/profile/11927168352621516247noreply@blogger.com12tag:blogger.com,1999:blog-8707620835473312559.post-21822261841417395442017-12-19T11:54:00.001+08:002017-12-19T11:54:19.983+08:00What's your New Year's Resolution?<div style="text-align: justify;">
We are entering towards the last few weeks of the year, probably you have started thinking about your new year's resolution and how you are going to be better in the new year. But, chances are that you would probably end up the same like any previous year. </div>
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Every year, you stopped at just having the thought but without any actual actions. Then, time flies by in the blink of an eye and turn that into a vicious cycle. You aged year by year and as you get older, you start to stay in your comfort zone and too afraid to try anything new or even to take the leap of faith. </div>
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But deep down, you know you have to make a change. So here's how!</div>
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<b><span style="font-size: large;">Decide to do something different!</span></b></div>
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How bad do you want it? You may have heard about this a lot but nothing can really happen until you actually make the decision. You have to decide what you really want and what you are willing to sacrifice to exchange for it. Tell yourself, "<b>I will do whatever it takes to get me there!</b>". </div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgOCCWwWVanUTTj-rwRvzvttYd4H4CteiHDxONVVdwav1vx1e8Qn4tx1yO75GnmFzOfXcemz-5BWieGVKc7aCbMpc7DjF88JI5IQ0guFs6TitGMY-xQAAs1E3prswvpfcLhEvWhVsaOuGw/s1600/24fa7d88f90c2a7c25618cdae26d5345.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="435" data-original-width="720" height="241" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgOCCWwWVanUTTj-rwRvzvttYd4H4CteiHDxONVVdwav1vx1e8Qn4tx1yO75GnmFzOfXcemz-5BWieGVKc7aCbMpc7DjF88JI5IQ0guFs6TitGMY-xQAAs1E3prswvpfcLhEvWhVsaOuGw/s400/24fa7d88f90c2a7c25618cdae26d5345.png" width="400" /></a></div>
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<b><span style="font-size: large;">Set Goals! </span></b></div>
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Imagine how a runner can win a race without knowing where the end point is? It's like kicking football penalty without a goal post, shooting basketball without a hoop or even driving without a destination! How horrible would you be feeling? And <b>set a SMART goal</b>, make sure it is specific, measurable, attainable, relevant and time-bound. </div>
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<b><span style="font-size: large;">Make Plans!</span></b></div>
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Many people just start right away without a plan, which is also why they failed halfway through. Yes you may have your eyes on the prize/goal/destination, but without knowing what actually you need to do is not going to get you there. It's just like in order to get you to your destination, how much petrol you need to pump into your car, how much money you need to prepare for the toll, what are the directions and most importantly, can you arrive on time? <b>Make a thorough plan</b>!</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg9Z0t1v8lY5v-WaQsXxXRLmMLaI7YY8m87dC3ggj4sinBBru95ZQ2iolVJPUqv9cdBXEZQr32a9Fp5qpPOBSYr0zti-3JwMCySHtmIMAgebo77Onh9I8qfG15CToEKpcvATxAgg4mc03Q/s1600/1671440-John-J-Beckley-Quote-Most-people-don-t-plan-to-fail-they-fail-to.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="444" data-original-width="1024" height="172" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg9Z0t1v8lY5v-WaQsXxXRLmMLaI7YY8m87dC3ggj4sinBBru95ZQ2iolVJPUqv9cdBXEZQr32a9Fp5qpPOBSYr0zti-3JwMCySHtmIMAgebo77Onh9I8qfG15CToEKpcvATxAgg4mc03Q/s400/1671440-John-J-Beckley-Quote-Most-people-don-t-plan-to-fail-they-fail-to.jpg" width="400" /></a></div>
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<b><span style="font-size: large;">Take Action!</span></b></div>
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3....2....1... Action! Life is pretty much like a movie where you are your own main actor/actress, as well as the director, except that there is no take two in life and you just wasted another day or another year. There is certainly no stuntman to replace you too, you just have to do it all by your own. So, can you be the best actor/best director for your own life movie? <b>You can and you should</b>. </div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEha1Nkl3Hzm1hDKZpgAzs4BIvxvJZP5D_ZstlaoAG0UT25pQNg8gog0R5ZSfVPb44_rNAeBIULG8KWV6LvSx9uM8ZPMfO2lDcRzsSATpTEyZqjhShXA4mHmMyYRei2Vpi_2EQ7lP7FndIw/s1600/e954e577772906de072bc4b276855b0b.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="480" data-original-width="1024" height="187" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEha1Nkl3Hzm1hDKZpgAzs4BIvxvJZP5D_ZstlaoAG0UT25pQNg8gog0R5ZSfVPb44_rNAeBIULG8KWV6LvSx9uM8ZPMfO2lDcRzsSATpTEyZqjhShXA4mHmMyYRei2Vpi_2EQ7lP7FndIw/s400/e954e577772906de072bc4b276855b0b.jpg" width="400" /></a></div>
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And again, this may be just another typical articles that you read which could only sparks for a moment for you. You may find it inspiring, liking the post or even sharing to your friend. But at the end of the day, it is you who is going to change your own life! <a href="http://yourfinancedoctor.blogspot.my/2016/10/hire-your-finance-doctor-today.html" target="_blank">Take action now!</a></div>
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#YourFinanceDoctor is <span style="background-color: white;">a </span><b style="background-color: white;">Licensed Financial Advisor</b><span style="background-color: white;"> with </span><span style="background-color: white;"><b>CFP®</b></span><span style="background-color: white;">! He helps his clients to </span><b style="background-color: white;">achieve their financial goals</b><span style="background-color: white;"> through proper comprehensive financial plan. He also provides unbiased and independent professional financial services including financial plan, investment, insurance, will and trust. <a href="http://yourfinancedoctor.blogspot.my/2016/10/hire-your-finance-doctor-today.html" target="_blank">Hire #YourFinanceDoctor today</a>! </span></div>
Henry Tanhttp://www.blogger.com/profile/11927168352621516247noreply@blogger.com54tag:blogger.com,1999:blog-8707620835473312559.post-51971705623925264192017-11-08T12:34:00.003+08:002017-11-08T12:34:42.371+08:00Time for Private Retirement Scheme (PRS) Again!<div style="text-align: justify;">
Every year I have written one to two posts on the Securities Commission (SC) Malaysia regulated Private Retirement Scheme (PRS). This year I will do the same as well since we are going towards the end of 2017 and it's about time to invest in PRS again! </div>
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If you have read my <a href="https://yourfinancedoctor.blogspot.my/2015/05/invest-in-prs-as-low-as-rm100.html" target="_blank">previous PRS post back in 2015</a>, you would have known all the advantages of investing in PRS. Up to date, the advantages are still remain the same, which include:</div>
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<li>Set aside another retirement saving on top of Employee Provident Fund (EPF)</li>
<li>Enjoy up to RM3,000 Tax Relief allowable by Lembaga Hasil Dalam Negeri (LHDN)</li>
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And also the newly added and change to the advantages:</div>
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<li>Nominate for your loved ones</li>
<li>Get rewarded with RM1,000 Youth Incentive (Only for Malaysian aged 20-30) </li>
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If you happen to be one of <a href="https://www.facebook.com/yourfinancedoctorhenry/" target="_blank">#YourFinanceDoctor</a>'s clients, one of my advice is to invest at the end of the year. PRS allows you to enjoy the RM3,000 tax relief regardless of when you invest the money, as long as it is <b><span style="color: blue;">within the calendar year</span></b>. So why not make good use of the money first in the beginning of the year, be it to invest in share market or unit trust, then only invest in PRS at the end of the year. </div>
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Of course, this does not apply to all, especially those non-financial savvy person or those without the discipline to keep the money, which may ended up with no more cash at the end of the year. So in this case, <a href="https://www.facebook.com/yourfinancedoctorhenry/" target="_blank">#YourFinanceDoctor</a> may advise you to just <b><span style="color: blue;">apply for a monthly auto deduction</span></b> (direct debit authorization) from your bank account to PRS. </div>
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So regardless which type of person you are, if you are reading this and you have yet to invest in PRS, <b>NOW IS THE TIME</b>! I strongly believe that you should be investing in PRS as long as you fulfill the following criteria:</div>
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<li>Your <a href="http://yourfinancedoctor.blogspot.my/2015/06/2015-income-tax-rate.html" target="_blank">Income is Tax Liable</a> (You are required to pay tax!)</li>
<li>You are Malaysian aged 20-30 (More reason to invest!)</li>
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In other words, I can't think of any reason for you to say no to PRS unless you are:<br /><ol>
<li>Your Income is not Tax Liable (You doesn't need to pay tax!)</li>
<li>You are older than aged 30</li>
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So let's get it done! Then, your next question will be... <a href="http://yourfinancedoctor.blogspot.my/2015/08/which-PRS-Fund-To-Invest.html" target="_blank">Which PRS Fund to Invest</a>? Similarly, I have written in 2015 (<a href="http://yourfinancedoctor.blogspot.my/2015/08/which-PRS-Fund-To-Invest.html" target="_blank">click here to read</a>) on the 3 methods for you to determine which fund to invest out of a total of 56 available PRS funds. </div>
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<a href="mailto:henrytcx@gmail.com" target="_blank">Contact #YourFinanceDoctor</a> now to kickstart your PRS!</div>
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Next PRS post I will be writing about the newly added advantage of Nomination and the change of Youth Incentive from RM500 to RM1,000. Stay tuned! </div>
Henry Tanhttp://www.blogger.com/profile/11927168352621516247noreply@blogger.com44tag:blogger.com,1999:blog-8707620835473312559.post-23171820173245890202017-11-07T16:38:00.002+08:002017-11-07T16:38:12.886+08:00I Make 36k A Year: How Much Should I Invest?<div style="text-align: justify;">
Recently graduated with a starting pay of $36,000 a year and you are wondering how much you should invest? Regardless of how much money you make, the amount you invest each year should always be based on your <a href="http://yourfinancedoctor.blogspot.my/2015/08/recipe-to-achieve-your-financial-goal.html" target="_blank">financial goals</a>. Your financial goals not only provide you with a target to achieve, they also provide the motivation to stick to your financial plan.</div>
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Given the annual income of $36,000, the ideal amount that you would like to invest maybe constraint by the ever-rising living expenses. But remember when you were young, the same you were able to save every little penny so that you could to buy yourself a PS1 (for <a href="https://www.facebook.com/yourfinancedoctorhenry/?ref=bookmarks" target="_blank">#YourFinanceDoctor</a>'s case) or whatever toy that you would want.</div>
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So what's missing now? Goals and a plan!</div>
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If you set you your mind on your goals, you should be able to achieve, just like how you did it before. With the four key financial planning steps here, you can find out exactly how much to invest in the beginning and have a plan for reaching your goals through the gradual increases in the amount you invest. </div>
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For the purposes of illustration, this particular case involves a 25-year-old, earning $36,000 per year with an expected income increment of 3% per year.</div>
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<span style="font-size: large;"><b>Begin With The End In Mind</b></span></div>
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At age 25, you may only have a few goals you want to achieve, which could include preparing an emergency fund, purchasing a car, buying a house and probably retirement fund. Okay maybe not, most of you may not have think about retirement yet, but trust me, you should!</div>
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Well, this is a lot to accomplish with just $36,000 income and it might sounds scary to you. Nevertheless, you should not let your current income constrain your financial goals since your income will increase gradually over the years. You just have to list down all your financial goals and sort it according to your priority and urgency.</div>
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The financial goals you set have to be a SMART goal, namely, specific, measurable, achievable, realistic and time bound. So for example, assume one of the goals you want to achieve is to retire at the age of 55. So a SMART goal will be "Monthly Expenses of $5,000 (based on present value) After Retirement at Age 55". After all the calculations, you will know exactly the amount needed to prepare for each goals. </div>
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<span style="text-align: justify;">Lazy to do it yourself...? </span><a href="http://yourfinancedoctor.blogspot.my/2016/10/hire-your-finance-doctor-today.html" target="_blank">Hire #YourFinanceDoctor today!</a></div>
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<b><span style="font-size: large;">Create a Plan</span></b></div>
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The most common mistake many people make is that they roughly determine (a.k.a agak-agak) their saving amount, in other words, they save what's left after all the expenses. Like the wise man always said, spend what is left after saving. Common sense? More like common mistake. </div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgx-xKhM4HRuRdL7LcQsnA0_07TsvvOWrwLOJ3xvTY3rdfcQN3yibIVoCcRgTqxtoYLxCt-cMhUJrvsdF9W5Tc7BHHHc6J16YoF08-kJidQgIPinaYN9u4HUDkfsrHtF56g3DQLxapgwMQ/s1600/warren+buffet.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="330" data-original-width="787" height="268" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgx-xKhM4HRuRdL7LcQsnA0_07TsvvOWrwLOJ3xvTY3rdfcQN3yibIVoCcRgTqxtoYLxCt-cMhUJrvsdF9W5Tc7BHHHc6J16YoF08-kJidQgIPinaYN9u4HUDkfsrHtF56g3DQLxapgwMQ/s640/warren+buffet.jpg" width="640" /></a></div>
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As you would expect, there could be no money available for investing when expenses run high in particular month. But people who are intent on achieving their financial goals reverse the process and determine their monthly expenses around their savings goals. Which is why the wise man is one of the billionaire! </div>
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So if you are required to save $1,000 monthly to achieve your financial goals, make this amount as your first expenditure. With the advancement of internet, it would be easier to do if you set up direct debit authorization from your bank account for a qualified investment plan. This forces you to manage your expenses on $1,000 less each month.</div>
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<b><span style="font-size: large;">Maintain a Healthy Financial Ratio </span></b></div>
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With a financial plan where all your incomes, expenses, assets and liabilities are being analyzed, you would be able to know all your financial ratios and more importantly, how to improve if the ratio is not healthy. Percentage on each category of expenses are equally important too so that you understand where your money goes!</div>
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The financial plan would acts as a monitoring tool where you know your exact budget for each items so that you would not overspend. Most financial advisers would recommend saving at least 10% to 15% of your annual income, but #YourFinanceDoctor would advise you to save as much as you can! So, $1,000 a month amounts to 33% of your income, which is healthy considered you just started out with not much commitment.</div>
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<b><span style="font-size: large;">Invest According to Your Risk Profile</span></b></div>
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After knowing your investment amount through financial plan, you need to know your risk profile too! Understanding your money may not be enough as you need to understand yourself too. Be it a risk taker or a risk adverse, there are always different option of investments suitable for you.</div>
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At a younger age, you have a longer time horizon, which may allow you to assume a little more risk for the potential of higher returns. As you are nearer to your retirement age, you then may want to reduce the risk in your investment portfolio by increasing the allocation in fixed-income investments. </div>
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Having a well diversified investment portfolio may also effectively reduced your investment risk. Over the time, your investment portfolio allocation should be evolved according to your risk profile at different life stages.</div>
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<a href="http://yourfinancedoctor.blogspot.my/2017/05/7-important-financial-lessons-to-master.html" target="_blank">7 Important Financial Lessons to Master before You're 30</a></div>
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<b><span style="font-size: large;">Conclusion</span></b></div>
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There isn't a definite answer to the question on how much one should invest as it varies from one to another depending on your financial goals. But as a rule of thumb, it should be at least 10% to 15%. Another common mistake to avoid is to remember to increase investment amount according to your yearly income increment. Salary increases, lifestyle improves, same goes to your investment too! </div>
Henry Tanhttp://www.blogger.com/profile/11927168352621516247noreply@blogger.com15tag:blogger.com,1999:blog-8707620835473312559.post-57945719147225831942017-11-01T16:07:00.001+08:002017-11-01T16:25:50.661+08:00Which Household Income Group Do You Belong To? Top Middle or Bottom?<div style="text-align: justify;">
Department of Statistics Malaysia recently has released Report of Household Income And Basic Amenities Survey 2016 in their website on 9 October 2017. Personal interviewing approach was used for a period of twelve months starting from May 2016 until April 2017 to collect data on the characteristics of Malaysian household particularly on income and basic amenities.</div>
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<b><span style="color: blue; font-size: large;">What is Household Income?</span></b></div>
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#YourFinanceDoctor came across some <a href="https://www.facebook.com/xiaoMY/photos/a.117285207568.98786.116505487568/10155213616877569/?type=3" target="_blank">Facebook posts</a> where people seems to be confused with the data. First and foremost, Do bear in mind that Household Income <b><span style="color: red;">is not the same</span></b> as Personal Income. Household Income refer to total incomes received (accrued) by <b>all members of households</b>, both in cash and in kinds which occur repeatedly within the reference period (within a year). </div>
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So remember, the figure is <b><span style="color: red;">not just your salary alone</span></b>, you have to add it all together with your spouse, parents or whoever that is staying with you. Next, the difference of median and mean. What is median and mean? Why both are important?</div>
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<a href="http://yourfinancedoctor.blogspot.my/2017/05/7-important-financial-lessons-to-master.html" target="_blank">7 Important Financial Lessons to Master Before 30</a></div>
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<b><span style="color: blue; font-size: large;">What is Median? </span></b></div>
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If you still remember the maths in high school, Median is the <b>middle number</b> in a sorted list of numbers. For this survey report, all the household income data collected will be sorted from smallest to largest. So, Median is the middle value that separating the higher half from the lower half. </div>
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<b><span style="color: blue; font-size: large;">What is Mean?</span></b></div>
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Mean is the <b>average</b> of all the values, which computed by dividing the total of all values by the number of values. In other words, all the household income data collected were being summed and divided by number of household. </div>
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<a href="http://yourfinancedoctor.blogspot.my/2015/08/recipe-to-achieve-your-financial-goal.html" target="_blank">Recipe to Achieve Your Financial Goals</a></div>
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<b><span style="color: blue; font-size: large;">Why Median & Mean are Important?</span></b></div>
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A lot of you might be curious what does Median tell us? Well, in this case, Median gives a helpful measure of center of the data, especially if there is an extreme value which could impact the Mean. </div>
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RM3,000 RM4,000 RM5,000 RM6,000 <b><span style="color: red;">RM200,000 (extreme)</span></b></div>
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Mean = RM218,000 / 5 = RM43,600</div>
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Median = RM5,000</div>
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For example, if there is a millionaire (extreme value) which earns RM200,000 a month, then it would greatly increases the Mean (RM43,600). However, the Median (RM5,000) would <b>more accurately represent the income of most of the people</b> in this example. </div>
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<b><span style="color: blue; font-size: large;">Which one should I use?</span></b></div>
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BOTH. For this Household Income case, Median would be more preferrable, but Mean tells you something too! Ideally, if Mean and Median are having the same figure, then the data are normally distributed or also known as the "Bell Curve". So by comparison of Median and Mean...</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiHXReSXA2Qnfm6x_Avrmn7A7Wd8x0pChoHZy3lYeb_fgapb1mfxm2yyU8ZSw27Cj8VHDsepyvDQ3UrSg0Qu53zvktprhYQgAi_XB5VFTqhKLh9xUL_tw56KcZai50xSAqyn9PffteOej8/s1600/Median+vs+Mean.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="500" data-original-width="953" height="334" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiHXReSXA2Qnfm6x_Avrmn7A7Wd8x0pChoHZy3lYeb_fgapb1mfxm2yyU8ZSw27Cj8VHDsepyvDQ3UrSg0Qu53zvktprhYQgAi_XB5VFTqhKLh9xUL_tw56KcZai50xSAqyn9PffteOej8/s640/Median+vs+Mean.png" width="640" /></a></div>
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<b><span style="color: blue; font-size: large;">Conclusion...</span></b></div>
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<b><u><span style="color: red;">1. Malaysia as a whole, rich people are a lot richer!</span></u></b></div>
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As shown in the first figure, Malaysia Household Income as a whole has a Median of RM5,228 which is lower than the Mean of RM6,958. In other words, those higher than the middle value, Median (RM5,228), is a lot richer. </div>
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<b><u><span style="color: red;">2. T20 of Malaysia, rich people are a lot more richer! </span></u></b></div>
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For the T20, Median of RM13,148 is lower than the Mean of RM16,088. So there must be extreme value in the T20 from the super duper rich! </div>
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<b><u><span style="color: red;">3. M40 of Malaysia, near to normally distributed</span></u></b> </div>
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For the M40, Median of RM6,275 is slightly lower than the Mean of RM6,502.</div>
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<b><u><span style="color: red;">4. B40 of Malaysia, poor people are a lot poorer!</span></u></b></div>
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Lastly, for the B40, Median of RM3,000 is higher than the Mean of RM2,848. In other words, there are extreme values from the B40, which is way below of RM2,848.</div>
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By now, you should roughly know which household income group you belong to. And within the group itself, is your household income higher or lower than the Mean and Median? Regardless which group you are in, as a Malaysian, let's do our part by earning more money to help Malaysia achieve high income nation status by 2020! </div>
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<a href="http://yourfinancedoctor.blogspot.my/2016/10/hire-your-finance-doctor-today.html" target="_blank">Hire #YourFinanceDoctor now!</a></div>
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgqdm-uvFiBYSlsMBlw7Anp-W9Wl7ZGg6lcvfChHdm6sr2kCyxFTcpjNTZ6Mri7hMEO2TMnXZKOBkvwL7RXpchW-icHNclEIFf2jKUmlEy0Z9B5MmU9ybq0irEHbMCjeltviedBM9U0nRY/s1600/Malaysia+Houlshold+Income+by+States.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="500" data-original-width="953" height="334" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgqdm-uvFiBYSlsMBlw7Anp-W9Wl7ZGg6lcvfChHdm6sr2kCyxFTcpjNTZ6Mri7hMEO2TMnXZKOBkvwL7RXpchW-icHNclEIFf2jKUmlEy0Z9B5MmU9ybq0irEHbMCjeltviedBM9U0nRY/s640/Malaysia+Houlshold+Income+by+States.png" width="640" /></a></td></tr>
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p/s: Data taken from <a href="https://www.dosm.gov.my/v1/index.php?r=column/cthemeByCat&cat=120&bul_id=RUZ5REwveU1ra1hGL21JWVlPRmU2Zz09&menu_id=amVoWU54UTl0a21NWmdhMjFMMWcyZz09" target="_blank">Department of Statistics Malaysia</a></div>
Henry Tanhttp://www.blogger.com/profile/11927168352621516247noreply@blogger.com20tag:blogger.com,1999:blog-8707620835473312559.post-30841914148250144162017-06-20T13:29:00.003+08:002017-06-20T13:29:33.786+08:00What $1,000 Invested in Facebook, Apple, Amazon, Netflix and Google 10 Years Ago is Worth Today<div style="text-align: justify;">
Generally, the stock market cycle has an average period of 10 years, which consist of both bull and bear markets. So it would be interesting to find out how the company's stock is performing throughout the whole market cycle. Let's take a look at how the most popular technology stocks, namely, <b><span style="color: blue;">Facebook, Apple, Amazon, Netflix and Google</span></b>, also known as FAANG, would perform!</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj7FHwndyz_9Sij1gqJWrMVoAYv6HT6ZNATCjKtXyHYzH_yJiRyNL9J3-m3aoAX3BQro4Ybcpg6rluPzS9Tk-6RaueuQQA3X19MPPCSn7tQdmD9zpu4Je35SxLYy3YW7Se0khIgzBd4YxE/s1600/Thumbnail_Final.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="492" data-original-width="940" height="334" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj7FHwndyz_9Sij1gqJWrMVoAYv6HT6ZNATCjKtXyHYzH_yJiRyNL9J3-m3aoAX3BQro4Ybcpg6rluPzS9Tk-6RaueuQQA3X19MPPCSn7tQdmD9zpu4Je35SxLYy3YW7Se0khIgzBd4YxE/s640/Thumbnail_Final.jpg" width="640" /></a></div>
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For better illustration, #YourFinanceDoctor gathered Morningstar data to see what $1,000 invested in these FAANG companies back in 2007 would be worth 10 years later. If you would like to find out the <a href="http://yourfinancedoctor.blogspot.com/2017/06/5-best-performing-unit-trust-funds-in.html" target="_blank">5 Best Performing Unit Trust Funds in Past 10 Years</a>, click through to see which funds have produced spectacular <a href="http://yourfinancedoctor.blogspot.com/2017/04/annualized-return.html" target="_blank">annualized return</a> in the past decade. </div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhYVopqnBgbI9IdUCY9WmnRbZUt6uFmZLNsNZUaEUfJR1kjtwsZ3IcS-gw_CHypcI6rVtUIqJeCiJ6b2jHOZ6s3S72M9dnPT1E259f6Lg4VJr8dQL_vbPOO4MOewZ5FRaxHV9cstd0G7Fg/s1600/Facebook-640.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="427" data-original-width="640" height="266" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhYVopqnBgbI9IdUCY9WmnRbZUt6uFmZLNsNZUaEUfJR1kjtwsZ3IcS-gw_CHypcI6rVtUIqJeCiJ6b2jHOZ6s3S72M9dnPT1E259f6Lg4VJr8dQL_vbPOO4MOewZ5FRaxHV9cstd0G7Fg/s400/Facebook-640.jpg" width="400" /></a></div>
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<b><span style="color: blue; font-size: large;">1. Facebook (FB) : $3,940.29 (5 years)</span></b></div>
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<b>Share Price May 18, 2012 : $38.23 </b></div>
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<b>Share Price June 16, 2017 : $150.64</b></div>
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<b>5-year Annualized Return : 38.08% </b></div>
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<b>10-year Annualized Return : N/A</b></div>
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Facebook held its Initial Public Offering (IPO) on Friday, May 18, 2012, which was the biggest in technology sector with a peak market capitalization of over $104 billion. Since it is less than 10 years, it would not be fair to compare along side with the rest. However, a whopping 38.08% of 5-year annualized return still very incredible! </div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhKJPORakNdwnuDk9YlkbnCgdMkUWrFysN4y1JP62G9k8pmejUqlD7_mw5zkpKrayIGXwVw8TSXc3Pw9WfNPGvirQGynVH7GoNgOgHC8UXkugqW7o0CN0hiDryMwzdLlKg85uR-YxdU7IU/s1600/Apple-640.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="427" data-original-width="640" height="266" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhKJPORakNdwnuDk9YlkbnCgdMkUWrFysN4y1JP62G9k8pmejUqlD7_mw5zkpKrayIGXwVw8TSXc3Pw9WfNPGvirQGynVH7GoNgOgHC8UXkugqW7o0CN0hiDryMwzdLlKg85uR-YxdU7IU/s400/Apple-640.jpg" width="400" /></a></div>
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<b><span style="color: blue; font-size: large;">2. Apple (AAPL) : $7,961.29</span></b></div>
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<b>Share Price June 18, 2007 : $17.87 </b></div>
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<b>Share Price June 16, 2017 : $142.27</b></div>
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<b>5-year Annualized Return : 13.13% </b></div>
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<b>10-year Annualized Return : 24.34%</b></div>
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Everyone knows about Apple as they build their branding well thanks to their premier consumer products that became a status symbol of luxury. Apple managed to refocus into consumer electronics successfully by keeping things simple and packing more features into their devices. Invested $1,000 10 years ago would brings you to a magnificent $7,961.29! </div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjH-vuicrClQzZep4S0W1GVNVgjkDjweZ2ulInToh1mN5vW7-ecr7I3-KV10-c4OrTsJ3zrOioMsCp5Jbl7gjQSrxZkZOufIjgToUhz3yga1fV-MZYqINvgcaiUOv0I-vnfwkQJCztTmDU/s1600/Amazon-640.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="427" data-original-width="640" height="266" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjH-vuicrClQzZep4S0W1GVNVgjkDjweZ2ulInToh1mN5vW7-ecr7I3-KV10-c4OrTsJ3zrOioMsCp5Jbl7gjQSrxZkZOufIjgToUhz3yga1fV-MZYqINvgcaiUOv0I-vnfwkQJCztTmDU/s400/Amazon-640.jpg" width="400" /></a></div>
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<b><span style="color: blue; font-size: large;">3. Amazon (AMZN) : 13,749.91</span></b></div>
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<b>Share Price June 18, 2007 : $71.83 </b></div>
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<b>Share Price June 16, 2017 : $987.71</b></div>
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<b>5-year Annualized Return : 35.24% </b></div>
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<b>10-year Annualized Return : 29.86%</b></div>
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Founded by Jeff Bezos where Amazon started as online bookstore back in 1994, and now became the largest internet-based in the world by total sales and market capitalization. If you noticed the logo of Amazon, you would realized that there's an arrow pointing from A to Z which represents their A-to-Z guarantee claim policy. Investing in Amazon would yields a 29.86% of 10-year Annualized Return! </div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgmlBVG8MSk9Hbj8ajoTHwY8Q69d4CM_EFOSmdfZ_xntY0E5qpotmPZJ2Lfla9GAVz3CFUi3N3N1JFYc49txCGTRMAsNDKra_266lB_EO_n88e3wv6vEjFAYZjLd3yPjS-FrMPE7cM-a_k/s1600/Netflix-640.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="427" data-original-width="640" height="266" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgmlBVG8MSk9Hbj8ajoTHwY8Q69d4CM_EFOSmdfZ_xntY0E5qpotmPZJ2Lfla9GAVz3CFUi3N3N1JFYc49txCGTRMAsNDKra_266lB_EO_n88e3wv6vEjFAYZjLd3yPjS-FrMPE7cM-a_k/s400/Netflix-640.jpg" width="400" /></a></div>
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<b><span style="color: blue; font-size: large;">4. Netflix (NFLX) : $53,279.67</span></b></div>
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<b>Share Price June 18, 2007 : $2.86</b></div>
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<b>Share Price June 16, 2017 : $152.38</b></div>
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<b>5-year Annualized Return : 74.57% </b></div>
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<b>10-year Annualized Return : 49.05%</b></div>
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In the initial years, Netflix focuses on DVD rental by mail business. As the technology changes, Netflix switch the focus to streaming media which expanded internationally, and even entered the content production industry in 2013. Among all the FAANG companies, Netflix generates the highest 10-year Annualized Return of 49.05%, which means the $1,000 invested 10 years ago has now became $53,279.67!</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiESz5_BY-mSwuuBaQQgwk3gGCe9X2xaqYyHP6I4_yKLLf0aWrVlEFug2MvyqLgpye5oNVOuU-Q71ZgJW_D76tudhEOppJH8ubrvIVxIm5IN_E05lmU_dMJDLDlhETamhwh45aSYF7BxrQ/s1600/Google-640.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="427" data-original-width="640" height="266" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiESz5_BY-mSwuuBaQQgwk3gGCe9X2xaqYyHP6I4_yKLLf0aWrVlEFug2MvyqLgpye5oNVOuU-Q71ZgJW_D76tudhEOppJH8ubrvIVxIm5IN_E05lmU_dMJDLDlhETamhwh45aSYF7BxrQ/s400/Google-640.jpg" width="400" /></a></div>
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<b><span style="color: blue; font-size: large;">5. Alphabet (GOOGL) : $3,717.53</span></b></div>
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<b>Share Price June 18, 2007 : $257.60</b></div>
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<b>Share Price June 16, 2017 : $958.62</b></div>
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<b>5-year Annualized Return : 21.94%</b></div>
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<b>10-year Annualized Return : 11.65%</b></div>
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Alphabet, a.k.a Google is the most well known brand given the success of their internet related services and products, particularly the search engine. Now Google is just one of the subsidiaries under Alphabet as Alphabet is a conglomerate of various interests such as Youtube, Blogger and many more! But don't be surprised that the 10-year Annualized Return is actually the lowest with 11.65%, simply because 10 years ago their share price has already exceeded $100 since 2005.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi242lv99dAUc5TrXMGpKHfwM47URLEYE4tCFy6CWXfo-rxI4Udz9NXaqtRP6LjRKSFnpKGtzAZeeDCrcZRBsrV1mAa4DHZxRbFSttkNcrW5yjdn6Zhe0DHM0lW9GzXRATCcnM-7EfYXS8/s1600/FAANG.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="190" data-original-width="531" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi242lv99dAUc5TrXMGpKHfwM47URLEYE4tCFy6CWXfo-rxI4Udz9NXaqtRP6LjRKSFnpKGtzAZeeDCrcZRBsrV1mAa4DHZxRbFSttkNcrW5yjdn6Zhe0DHM0lW9GzXRATCcnM-7EfYXS8/s1600/FAANG.png" /></a></div>
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This is the power of investing! But here's the question, how many of us can actually resist the temptation to sell when it is high or fight the emotion to keep when it is low? Most importantly, these are just the successful cases for technology companies, there are still plenty that ended up badly. So it is important to know <b><span style="color: blue;">what's your investment objective</span></b> and <b><span style="color: blue;">what you are investing in</span></b>!<br />
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All the result were prepared by #YourFinanceDoctor using Morningstar data.</div>
Henry Tanhttp://www.blogger.com/profile/11927168352621516247noreply@blogger.com11tag:blogger.com,1999:blog-8707620835473312559.post-24387473514809714872017-06-14T14:45:00.001+08:002017-06-14T14:45:11.374+08:005 Best Performing Unit Trust Funds in Past 10 Years<div style="text-align: justify;">
When it comes to Unit Trust Funds, what is your common perception towards the return? Well, most people would have different answer depending on their personal past experience. Given to the wrong hand of those bad apples will surely yields you a bad return with your hard earned money. So, are you getting the best funds from the market? </div>
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<a href="http://yourfinancedoctor.blogspot.my/2016/10/3-ways-to-protect-yourself-from-bad.html" target="_blank">3 Ways to Protect Yourself From Bad Financial Advice</a></div>
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhd0htwztwWf5XNpE-BO7XU3eZUgRe8RBjxBqVXA9tHHTpTFGdZPHkECd7_17F6cHYc44htxBMFMULArm5Yy5wZOAvOHrUkytSRn2VtU7EUJEHkALRGlyDA4dEE2eeAYwzeWU-u77xxFKI/s1600/10YearsAnnualized_Thumbnail.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="404" data-original-width="771" height="334" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhd0htwztwWf5XNpE-BO7XU3eZUgRe8RBjxBqVXA9tHHTpTFGdZPHkECd7_17F6cHYc44htxBMFMULArm5Yy5wZOAvOHrUkytSRn2VtU7EUJEHkALRGlyDA4dEE2eeAYwzeWU-u77xxFKI/s640/10YearsAnnualized_Thumbnail.jpg" width="640" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Table from <a href="http://my.morningstar.com/ap/fundselect/results.aspx" target="_blank">Morningstar</a></td></tr>
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Let's take a look at the 5 Best Performing Unit Trust Funds over the past 10 years out of 540 funds available in Malaysia. You can invest into any of it with minimum of RM1,000, some can even <a href="http://yourfinancedoctor.blogspot.my/2015/05/start-invest-as-low-as-rm100-now.html" target="_blank">start as low as RM100</a>! </div>
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<a href="http://yourfinancedoctor.blogspot.my/2017/04/annualized-return.html" target="_blank">What is Annualized Return?</a></div>
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<b><span style="color: blue;">Affin Hwang Select Asia (Ex-Japan) Quantum Fund (AHSAQF)</span></b> seeks to achieve consistent capital appreciation over medium to long-term by investing mainly in growth companies in Asia with market capitalization of not more than USD 1.5 billion at the time of acquisition. The fund has a <b>10-Year annualized return of 15.32%</b>. However it is currently soft-closing as it almost reaches the maximum fund size, so cash investment is no longer available, but you may still invest in it using EPF Withdrawal. </div>
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<b><span style="color: blue;">Kenanga Growth Fund (KGF)</span></b> aims to provide Unit Holders with long-term capital growth by invest principally in a diversified portfolio of equity and equity-related securities in Malaysia. Lee Sook Yee is the fund manager as well as the Chief Investment Officer (CIO) since 2013, bringing with her more than twelve (12) years of experience in local and regional equities investment. The fund has a <b>10-Year annualized return of 14.51%</b>. You can <a href="http://yourfinancedoctor.blogspot.my/2015/05/start-invest-as-low-as-rm100-now.html" target="_blank">start investing in it as low as RM100</a>! </div>
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<b><span style="color: blue;">Eastspring Investments Small-cap Fund (EISCF)</span></b> targets to provide investors with maximum capital appreciation by investing principally in small market capitalization up to RM3 billion at the point of acquisition companies in Malaysia which will appreciate in value. The fund led by Chen Fan Fai, where the team continue to adopt a bottoms-up approach in selecting stocks where they prefer stocks with healthy earnings growth and strong balance sheet. The fund has a <b>10-Year annualized return of 14.02%</b>. However, it is no longer available to invest as it reaches the maximum fund size limit. </div>
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<b><span style="color: blue;">Manulife Investment Progress Fund (MIPF)</span></b> strives to provide Unit Holders with steady long-term capital growth at a reasonable level of risk by investing in a diversified portfolio of small- to medium-sized public listed companies in Malaysia. Nicholas Tiong is the fund manager since 2002. The fund has a <b>10-Year annualized return of 12.26%</b>.</div>
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<b><span style="color: blue;">Public Smallcap Fund (PSCF)</span></b> works to achieve high capital growth through investments in companies with market capitalization of RM1.25 billion and below with special focus on growth stocks. To achieve increased diversification, the fund may invest in foreign markets. The fund may also invest in fixed income securities to generate additional returns. The fund has a <b>10-Year annualized return of 12.16%</b>. However, it is no longer available to invest as it reaches the maximum fund size limit.</div>
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<b>***Noteworthy<span style="color: blue;"> - KAF Vision Fund (KVF)</span></b>'s investment objective is to provide Unit holders with medium to long-term capital growth with a mixture of maximum 65% of the Fund’s NAV will be invested in smaller capitalized companies not exceeding RM1 billion at the time of purchase and maximum 30% of the Fund’s NAV in larger capitalized companies exceeding RM1 billion at the time of purchase. The fund has a <b>10-Year annualized return of 10.46%</b>.</div>
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<b><span style="color: red; font-size: large;">Did you invest any of these?</span></b></div>
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<b><span style="font-size: large;">Conclusion:</span></b></div>
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Take note that the only 4 funds, namely <b><span style="color: blue;">AHSAQF, KGF, EISC and KVF</span></b> managed to get <b><span style="color: #274e13;">DOUBLE-FIGURE annualized return</span></b> for all <b><span style="color: blue;">10-year, 5-year, 3-year, 1-year and even Year-To-Date</span></b>! Although past performance does not guarantee the future return, but judging from the past performance of the fund, one can tell how good is the fund manager in their investment approach, stock selection methodology and even how efficient is the fund manager utilizing the pool of funds from investors. (provided that there is no change in management) </div>
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Anyway, this post is just to show that Unit Trust Fund can <b><span style="color: blue;">yields high return</span></b> as well (does not indicate any buy recommendation), provided that you have done your research and analysis on which fund to invest in. If the fund recommended by your agent is still not performing after a long period, the reason can only be one - <a href="http://yourfinancedoctor.blogspot.my/2016/08/faq-how-do-you-charge-in-unit-trust.html" target="_blank">your agent is not managing for you</a>! Time to <a href="http://yourfinancedoctor.blogspot.com/2016/10/hire-your-finance-doctor-today.html" target="_blank">hire #YourFinanceDoctor</a>!</div>
Henry Tanhttp://www.blogger.com/profile/11927168352621516247noreply@blogger.com31tag:blogger.com,1999:blog-8707620835473312559.post-9739243253641283072017-06-01T22:26:00.002+08:002017-06-01T22:45:21.603+08:00Time Value of Money (TVM)<h2>
What is Time Value of Money?</h2>
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<b>Time Value of Money (TVM)</b> is the concept that the value of the same amount of money available <b><span style="color: blue;">today is worth more than the value in future</span></b> with the same amount of money receive. The main reason is because of INFLATION, where the value of the money is reduced in time. In other word, your purchasing power is reduced with the same amount of money comparing today and 10 years later. </div>
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<b><span style="font-size: large;">Why Understand Time Value of Money is important?</span></b></div>
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Simply because <b><span style="color: blue;">time is money</span></b>! You want to fully utilize your time and money to make more money. The value of your money is decreasing every single day when you waste/procrastinate by letting them do nothing in your pocket. So <b><span style="color: blue;">what you do with the money you have NOW is utterly important</span></b>! Time Value of Money can be better understand with the basic formula of calculating future value.</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjrlmCwev1s94Iw0inb80mAy950nMjmUyvDjvGvbxOjj5t68ZZ66agldyKdBxFHh3ve1pkW4p2ERs99gIbWyd0H92JDp9KmnYNrqsz7n7yiExyxpJhQnD11YbyGx5BLWi0z2xzkS5JNb_8/s1600/Time+Value+of+Money2_Final.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="427" data-original-width="640" height="424" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjrlmCwev1s94Iw0inb80mAy950nMjmUyvDjvGvbxOjj5t68ZZ66agldyKdBxFHh3ve1pkW4p2ERs99gIbWyd0H92JDp9KmnYNrqsz7n7yiExyxpJhQnD11YbyGx5BLWi0z2xzkS5JNb_8/s640/Time+Value+of+Money2_Final.png" width="640" /></a></div>
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<b><span style="font-size: large;">How to Calculate Future Value of Money?</span></b></div>
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Future value of money can be calculated by using these variables, namely present value, interest rate and number of periods. Looking at the formula, by increasing any of these variables, the future value of money will be increased too and vice versa. Which is why you <b><span style="color: blue;">have to start invest early</span></b>, so that your number of periods is bigger and <b><span style="color: blue;">future value will be greater</span></b> too. Greater return (interest rate) will yield higher future value too, so keeping in your pocket, keeping in bank and keeping in investment make a big difference as well! </div>
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<b><span style="font-size: large;">Example?</span></b></div>
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If you won a lottery (forget about the tax or whatsoever) and you are given a choice to choose:</div>
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Option A : Receive RM1mil now</div>
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Option B : Receive RM1mil 5 years later</div>
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<b>Which one would you choose?</b></div>
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Obviously, the answer would be A, <b><span style="color: blue;">you want it now</span></b> since Option B doesn't give you any extra incentive. And the same RM1mil probably not enough to buy you the same house or same land or same car or anything 5 years later because of inflation. So this is easy to choose, what about....</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh9_NwewCtp7vfVR6ENBMWjPZ3ZGe1hY5xEP-elzamGbPfiNToj8pn0ARF1hYniSyy7IlG8p-FNYNBuWIltvv_KCNv60CMT0WGcy3QzKNKEsV050vyxMwvFO8ZAJNfsplUpMkRU6rc3wHU/s1600/Time+Value+of+Money_2.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="411" data-original-width="617" height="424" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh9_NwewCtp7vfVR6ENBMWjPZ3ZGe1hY5xEP-elzamGbPfiNToj8pn0ARF1hYniSyy7IlG8p-FNYNBuWIltvv_KCNv60CMT0WGcy3QzKNKEsV050vyxMwvFO8ZAJNfsplUpMkRU6rc3wHU/s640/Time+Value+of+Money_2.png" width="640" /></a></div>
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Option A : Receive RM1mil now</div>
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Option B : Receive RM1.5mil 5 years later</div>
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<b>Which one would you choose?</b></div>
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Now, this is tricky! But actually not if you understand Time Value of Money. </div>
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<b><u>Step 1 - Find out the interest rate (return, r)</u></b></div>
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By moving around the future value formula above, we will get the number of period formula as per below. Do you feel familiar with this formula? Yes, this is indeed the same as <a href="http://yourfinancedoctor.blogspot.my/2017/04/annualized-return.html" target="_blank">Annualized Return</a> where I have posted about it in previous post (<a href="http://yourfinancedoctor.blogspot.my/2017/04/annualized-return.html" target="_blank">read here</a>). Simply go to <a href="http://www.calculator.net/finance-calculator.html?ctype=returnrate&ctargetamountv=1500000&cyearsv=5&cstartingprinciplev=1000000&cinterestratev=6&ccontributeamountv=0&ciadditionat1=beginning&printit=0&x=94&y=6" target="_blank">Online Finance Calculator (click here)</a> and key in all the values, you will find the <b><span style="color: blue;">Interest Rate/Annualized Return is 8.447%</span></b>. </div>
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PV = RM1mil, FV = RM1.5mil, n = 5, find r?</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj5Tp2pB4E1WZ-y83pge1y6RvXgitk72iXQV81-HRS7nNGH8KzWY9-NFX0RsL1kYsQ8x2CLyGuxdVsqQN8MR8E52OzuyIcFa4s6LRXhkEeDTt_eqsQTuvP70TtJuDGGRaD4CPK8ogleOaY/s1600/period+of+time.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="495" data-original-width="740" height="267" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj5Tp2pB4E1WZ-y83pge1y6RvXgitk72iXQV81-HRS7nNGH8KzWY9-NFX0RsL1kYsQ8x2CLyGuxdVsqQN8MR8E52OzuyIcFa4s6LRXhkEeDTt_eqsQTuvP70TtJuDGGRaD4CPK8ogleOaY/s400/period+of+time.png" width="400" /></a></div>
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<b>Step 2 - What will you do with the money?</b></div>
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Now the question is simple, what will you do with the money if you receive it now. If you are going to take the RM1mil now and put in your home (with 0 interest) or put in fixed deposit (around 4%), then you might as well choose Option B. Let's not forget that you may want to include inflation into your calculation as well. So bottom line, 8.447% should be your benchmark, unless you can <b><span style="color: blue;">beat the benchmark of 8.447%</span></b>, otherwise you should always choose Option B, <b><span style="color: blue;">you want it later</span></b>. </div>
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<b>If you won a lottery, probably these are not in your mind...</b></div>
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I bet most of you will be thinking how to spend it all away. Which is why according to National Endowment for Financial Education, about <b><span style="color: red;">70% of lottery winners actually end up broke</span></b> within a few years. (<a href="http://www.cleveland.com/business/index.ssf/2016/01/why_do_70_percent_of_lottery_w.html" target="_blank">Read here</a>)</div>
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Well, nothing wrong with that, it's natural to want to spend money on nice things once you receive a huge amount of money. But if you do not have a <a href="http://yourfinancedoctor.blogspot.my/2015/08/recipe-to-achieve-your-financial-goal.html" target="_blank">proper financial plan</a>, even for millions of dollar, you can easily lose track of how much you have spent <b><span style="color: red;">until it is too late to realize</span></b>. </div>
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So remember, if you happen to win a lottery or receive a big inheritance, regardless of Option A or Option B, remember to <a href="http://yourfinancedoctor.blogspot.my/2016/10/hire-your-finance-doctor-today.html" target="_blank">hire #YourFinanceDoctor</a> to ensure that you can spend part of the money yet keeping the rest of them to <b><span style="color: blue;">generate more money for you</span></b>! 😉😉😉</div>
Henry Tanhttp://www.blogger.com/profile/11927168352621516247noreply@blogger.com21tag:blogger.com,1999:blog-8707620835473312559.post-56133353777448882642017-05-12T21:34:00.001+08:002017-06-01T15:38:33.920+08:007 Important Financial Lessons to Master before You're 30<div style="text-align: justify;">
You may feel young, wild and free during your 20s, but in the blink of an eye, reality will hits you fast and hard with all the financial commitments which may include getting married, getting your own house and having children. Then suddenly in your 30s, you realized that you are halfway to retirement, yet there are far too many outflows with too little inflow of income to cope with.</div>
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<a href="http://yourfinancedoctor.blogspot.my/2016/10/3-ways-to-protect-yourself-from-bad.html" target="_blank">3 Ways to Protect Yourself From Bad Financial Advice</a></div>
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Thankfully this scenario can be avoided, but every financial decisions you make now will be crucial. Here are 7 most important financial lessons that you should master early on, ideally before you turn 30.
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<b><span style="font-size: x-large;">1. Forget about Everyone can Fly</span></b></h3>
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No doubt that the flight ticket is cheaper than ever, but just because it is affordable does not mean you should do it. I am not saying that you should not go for vacation at all, but rather make it a <b>delayed gratification</b>, where you resist the temptation for the immediate reward and wait for a better reward later. Travel is in everyone's bucket list nowadays, but instead of spending away all the money on vacation, plan and save for it according to your affordability <b>with other financial goals taken into consideration</b>, which leads us to the next financial lesson. </div>
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<b><span style="font-size: x-large;">2. List Down Your Financial Goals</span></b></h3>
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One of the 7 Habits of Highly Effective People written by Stephen Covey is to <b>begin with the end in mind</b>. In order to prepare for your financial future, you should have a clear written list of all your financial goals. Most often than not, you probably have not figure that out in your 20s. But don't let it stop there, take time to sit down and think about them. Write them down and plan how to make them a reality so that you have a <b>clear vision</b> of actually achieving them. You are less likely to achieve any goal if you do not write it down and <a href="http://yourfinancedoctor.blogspot.com/2015/08/recipe-to-achieve-your-financial-goal.html" target="_blank">create a concrete plan</a>.</div>
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<b><span style="font-size: x-large;">3. Stick to a Budget</span></b></h3>
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Everyone knows the importance of having a budget, but how many of you, especially in your 20s, actually stick to a budget with discipline? So, with all your goals written down, the next thing to do is to <b>understand your current financial situation</b> and the best way to find out is to have a budget to know where all your money goes and start to allocate where each dollar you earn goes. Knowing where you spend can limit yourself from over-budgeting too, such as impulse buying especially when there is promotion going on. Allocating at the right place is essential as well because you want to fully utilize your money, making sure <b>your money works harder than you</b>.</div>
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<b><span style="font-size: x-large;">4. Build a Strong Emergency Fund</span></b></h3>
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One of the first thing to allocate in your budget is to build a strong emergency fund. As a rule of thumb, you should have an emergency fund of at least 3 to 6 months of expenses. The number of months of expenses will be depending on your comfort-ability as well as how fast you are able to get a new job in your particular field. In other words, if you happen to lose your job, at least you are able to sustain for few months. Generally, you do not want to be <b>over saving</b>, as letting your hard earned money to rest in bank while you are working hard may not sound like a good idea. </div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi7IP388aA7gcFrCSuXABdTAsZ_2HLfO-Nv446cjAr_SdpYq8yZFjPrnYXPEJ2FhWCgtKL8C7VhUEAuAlnnsFP-xxpDjKmbuNUbvHGbF13gdv8adGpJbFNbuX_Otdo2akAi5WUZFEx9hJU/s1600/emergency-fund-1940x900_36282.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi7IP388aA7gcFrCSuXABdTAsZ_2HLfO-Nv446cjAr_SdpYq8yZFjPrnYXPEJ2FhWCgtKL8C7VhUEAuAlnnsFP-xxpDjKmbuNUbvHGbF13gdv8adGpJbFNbuX_Otdo2akAi5WUZFEx9hJU/s1600/emergency-fund-1940x900_36282.jpg" /></a></div>
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<b><span style="font-size: x-large;">5. Be Prepared for Unforeseen Circumstances</span></b></h3>
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Besides of having a strong emergency fund for unforeseen circumstances (which may not be enough), another smart way to be prepared is to have <b>risk transfer strategy</b>. Transfer the risk of loss to the insurer through insurance, be it for yourself, your family and even your assets. Imagine if you had an car accident without insurance, medical expenses (maybe repairing cost too) are going to burn a hole in your pocket. In your 20s, probably you are feeling strong and invincible, where illnesses are unlikely to come to you. But the real "sweet spot" for buying coverage is actually in your 20s when you are <b>still qualified</b> with good health condition at a cheaper rates. </div>
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<a href="https://feedburner.google.com/fb/a/mailverify?uri=HenryTan-YourFinanceDoctor&amp;loc=en_US" target="_blank">Subscribe to Your Finance Doctor by Email</a></div>
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<b><span style="font-size: x-large;">6. Best Time to Begin Investing is NOW</span></b></h3>
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For Malaysian, I am sure you are familiar with this peribahasa (proverb) - "Sedikit-sedikit, lama-lama jadi bukit" which literally means bit by bit, long enough it will pile up like a mountain. So the keyword here is "lama-lama (long enough)", period of time is vital especially with the <b>compounding interest effect</b>. So the best time to start is as soon as of now! Many misperception on investing is that you can only start to invest when you are rich, but the fact is, it is the opposite way round! Think of any self made billionaire or millionaire, how many of them are not investing to get them richer? Best of all, you can actually <a href="http://yourfinancedoctor.blogspot.my/2015/05/start-invest-as-low-as-rm100-now.html" target="_blank">start to invest as low as RM100</a>! </div>
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<b><span style="font-size: x-large;">7. Don't Forget Retirement!</span></b></h3>
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Now you just started to work where retirement seems like a long way to go. You might even be thinking that it is more than enough as a small part of your income has already been deducted for EPF retirement fund. But here are the <b>cold hard facts</b>, your salary probably just about the same compare to those who started to work 10-20 years ago; your annual increment does not catch up with inflation where cost of living is ever rising, yet our lifespan is getting longer with medical advancement! Many simply <b>cannot afford to retire</b> especially in the developed country, where the retirement age increase gradually once every 5 years according to the increase in average lifespan. So to ensure your <b>wealth span outliving your lifespan</b>, you just gotta START NOW! </div>
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<a href="http://yourfinancedoctor.blogspot.my/2016/10/hire-your-finance-doctor-today.html" target="_blank">Need someone to guide? Hire #YourFinanceDoctor</a></div>
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All in all, 20s are the most significant years in everyone's life. So be sure that you master all the lessons above to make more right financial decisions so that you do not have to regret later in life. Plan and implement as early as possible will only bear sweet fruits. After all, failing to plan is planning to fail! </div>
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Henry Tanhttp://www.blogger.com/profile/11927168352621516247noreply@blogger.com10tag:blogger.com,1999:blog-8707620835473312559.post-3319861153043943692017-04-24T17:28:00.005+08:002017-06-01T15:39:41.903+08:00Annualized Return<h2 style="text-align: justify;">
<b>What is Annualized Return?</b></h2>
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<b>Annualized Return</b> is the geometric mean return of an investment provides over a period of time and expressed in a <b><span style="color: blue;">time-weighted annual percentage</span></b>. It shows what an investor would earn over a period of time if the <b><span style="color: blue;">annual return was compounded</span></b>. The Annualized Return is measured against the initial amount of the investment and represents a geometric mean rather than a simple arithmetic mean. </div>
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<a href="https://feedburner.google.com/fb/a/mailverify?uri=HenryTan-YourFinanceDoctor&amp;loc=en_US" target="_blank">Subscribe to Your Finance Doctor by Email</a></div>
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<b><span style="font-size: large;">Why used Annualized Return?</span></b></div>
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Annualized Return, also known as Compound Annual Growth Rate (CAGR), is <b><span style="color: blue;">more accurate</span></b> than a simple return, as it includes the <b><span style="color: blue;">compounding interest</span></b>, while simple return just simply add up all the returns without the time-weighted factor. Hence, this makes it one of the best measures when various type of investments are being compared. </div>
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<span style="font-size: large;"><b>How to Calculate Annualized Return?</b></span></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjkbxib5KxBcfEBiDnmDufA0tooVT932bekmzM_CN_rKmD7IRebe7sIthD79Nbew51VV_A4Fb-GgcZsmMquLo60v6gVsX0c535M_OFQSk35XieXx-FeJOyxn0zi9HZmjjloRim-dN3KSnU/s1600/Annualized+Return.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjkbxib5KxBcfEBiDnmDufA0tooVT932bekmzM_CN_rKmD7IRebe7sIthD79Nbew51VV_A4Fb-GgcZsmMquLo60v6gVsX0c535M_OFQSk35XieXx-FeJOyxn0zi9HZmjjloRim-dN3KSnU/s1600/Annualized+Return.png" /></a></div>
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<b><span style="font-size: large;">Example?</span></b></div>
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Client A invested RM100,000 on Unit Trust Fund A with #YourFinanceDoctor on Jan 1, 2007. Assume that Client A would like to sell on Jan 1, 2017 for RM200,000. Client A also receives a total of RM50,000 in dividends over the ten-year holding period. So ending value of investment will be RM250,000 while beginning value of investment will be RM100,000 over 10 years.</div>
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Annualized Return = ((250,000/100,000)^(1/10)) - 1 = 9.60%</div>
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Simple Return = ((150,000/100,000) x 100%) / 10 = 15%</div>
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A Simple Return of 15% a year would seems like a very good investment but in fact the Annualized Return is only 9.60%! (Which is still a good return tho!) Simple Return is commonly used in promotional materials for investments, so <b><span style="color: blue;">beware not to be mislead-ed</span></b> and <b><span style="color: blue;">always ask for the Annualized Return</span></b>!</div>
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Henry Tanhttp://www.blogger.com/profile/11927168352621516247noreply@blogger.com21tag:blogger.com,1999:blog-8707620835473312559.post-49307877505914448272017-02-11T00:07:00.001+08:002017-06-01T15:40:04.998+08:00The Most Important Lesson From Becoming Warren Buffett<div style="text-align: justify;">
"Becoming Warren Buffett", the HBO documentary that aired in 30 January 2017 tells the story as well as dives deep into the daily life of Warren Buffett, the legendary successful investor and also one of the world richest person! #YourFinanceDoctor has always been a big fan of his, so surely, I would watch it right away. </div>
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<b><span style="color: red; font-size: large;">The Most Important Lesson </span></b><b><span style="color: red; font-size: large;">From "Becoming Warren Buffett"</span></b></h2>
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<b><span style="font-size: large;">Surround Yourself with the Right People</span></b></div>
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<b><span style="color: red;">Parents (Okay, maybe you didn't get to choose this one)</span></b></div>
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Growing up as a child, Warren Buffett was being influenced by his father, Howard Buffett, the most. He was a stock salesman and then went on to start his own business, then finally a congressman. He taught Warren Buffett that money isn't important, he believes very much in having an "Inner Scorecard" and never worry about what other people are thinking about you. <span style="color: blue;"><b>You know what you are doing and why you are doing and that's good enough</b>.</span> When Warren Buffett ran away from home, his father not only did not scold him but rather just said "<span style="color: blue;"><b>You can do better than this.</b></span>" His father never taught him by telling him but taught him by example even when he screwed up. </div>
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<b><span style="color: red;">Mentor</span></b></div>
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Then he met the Father of Value Investing, Benjamin Graham, who shaped his professional life. Which is why Warren Buffett came out with <b><span style="color: blue;">2 Rules for Investing, Rule 1 - Never lose your money and Rule 2 - Never forget Rule 1</span></b>. Value Investing is all about careful scrutiny of a company's financial report, and if you bought value, it will eventually prove out. So basically the investing philosophy of Warren Buffett centred around Benjamin Graham's Value Investing. </div>
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<b><span style="color: red;">Friend/Partner</span></b></div>
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Later on, Warren Buffett met Charlie Munger, who formed partnership with and became the Vice Chairman of Berkshire Hathaway. Charlie Munger is an important partner to Warren Buffett, who Warren Buffett relied heavily on. Charlie Munger also ended Warren Buffett's "Cigar Butt" era where he bought a lot of cheap stock regardless of the company with lousy management. Then, he taught Warren Buffett to <b><span style="color: blue;">look for "Wonderful Company with Fair Price" rather than "Fair Company with Wonderful Price"</span></b>. From there on, Berkshire Hathaway skyrocketed. </div>
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<b><span style="color: red;">Teacher</span></b></div>
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“<b><span style="color: blue;">The chains of habit are too light to be felt until they are too hard to be broken.</span></b>” Warren Buffet used to be terrified of public speaking, he could not do it with his stage fright but he knew that if he didn't cure it then, he will never be able to do it. So he attended Dale Carnegie course, which works on developing the ability to speak in public. Warren Buffett knew that if he didn't attend the course, his whole life would be different. Which is why you will not see his degree certificate nor his master certificate on the wall of his office, but just the course certificate he gotten from Dale Carnegie. </div>
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<span style="color: red;"><b>Spouse</b></span></div>
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Warren Buffett's late first wife, Susie, played the most important role in his life and how invaluable she was to him. Warren Buffett was raised a Republican mainly because of his father, Howard Buffett. But because of Susie's actively involvement in the civil rights movement, and often brought him along to speeches and meetings, Warren Buffett became an active Democrat. Warren Buffett and Susie love each other very much, they admire each other and were totally in sync of what each other is doing. He also said that "Susie really put me together and she believes in me. Not only I turned out to be the person I turned out to be but I actually would not have a successful business without her, <b><span style="color: blue;">she made me more of a whole person.</span></b> "</div>
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<b><span style="font-size: large;">In conclusion...</span></b></div>
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"<b><span style="color: blue;">It's kind of crazy to spend your life painting if you're painting a subject you don't want to look at.</span></b>" Warren Buffett chose to work with a group of people that would make his life easy and take good care of him. So the people you surround yourself with, those you interact with regularly, will have a huge impact on you. They provide the opinions, ideas and even points of views that your mind is continuously subject to, both consciously and subconsciously. The good news is... the people who can help you succeed may already be around you, <b>you just have to identify them!</b> </div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg-GMHUKECN2opAWrw685Bj4wq-MkQ15u_tvdhwsG4cAsNYJe822R3UwRWka4Ok88kpJm1Pdh6lDeRhha4EdvvmEas8RgcnX_IB_Pirm7qdhuyLV6UfolnAxAC3jX9lZKOzOTvRMyoFk6A/s1600/6c0a34f575d53035577846447c63cc6689893c6df75332c4532a9c252ebca66f.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg-GMHUKECN2opAWrw685Bj4wq-MkQ15u_tvdhwsG4cAsNYJe822R3UwRWka4Ok88kpJm1Pdh6lDeRhha4EdvvmEas8RgcnX_IB_Pirm7qdhuyLV6UfolnAxAC3jX9lZKOzOTvRMyoFk6A/s1600/6c0a34f575d53035577846447c63cc6689893c6df75332c4532a9c252ebca66f.jpg" /></a></div>
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Till then. ;)</div>
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Enjoy watching the show. </div>
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Henry Tanhttp://www.blogger.com/profile/11927168352621516247noreply@blogger.com19tag:blogger.com,1999:blog-8707620835473312559.post-8498873956506710002017-01-05T14:04:00.001+08:002017-06-01T15:40:22.677+08:00How to Cope with Weakening of Currency<div style="text-align: justify;">
In the previous post of "<a href="http://yourfinancedoctor.blogspot.my/2016/06/financial-precautions-you-should-take.html" target="_blank">How to React in an Uncertain Economy</a>", expose to foreign currency is one of the way. This is especially true when most of your assets are denominated in a weakening currency, for example, the Malaysian Ringgit (MYR) which <b>breeds anxiety</b> among Malaysian.<br />
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg4iXOYyvXCE4tKa0ZiwOBLYqRuZpVelnkExSAYLQYOwLdYnPVsJVWp_VAlotS4zuN7DpxM3kq3EszXbaswdwJDq9ES46kQGWYLG94ipknJuTaxpbXG4s_oO28WqvgmICBqttxN8dGLWvY/s1600/USDMYR.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg4iXOYyvXCE4tKa0ZiwOBLYqRuZpVelnkExSAYLQYOwLdYnPVsJVWp_VAlotS4zuN7DpxM3kq3EszXbaswdwJDq9ES46kQGWYLG94ipknJuTaxpbXG4s_oO28WqvgmICBqttxN8dGLWvY/s1600/USDMYR.png" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Taken from xe.com</td></tr>
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Ringgit has breached the psychological mark of 4.50 against the US dollar, as foreign investors continued to pare down their holdings of Malaysian government bonds. Not just against the greenback, it slipped against the Singapore dollar to 3.1096; against the British pound sterling to 5.5163; against the Euro to 4.6837 from 4.6892; and against the Australian dollar to 3.2680.<br />
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Historically, the Ringgit reached a record low of 2.10 in October of 1978 and an all time high of 4.71 in January of 1998. So where are we now? Is Ringgit weakening to the all time high? How high can it goes? Will the government peg the ringgit to stop any further decline? These are all the <b>uncertainties that made us fear</b>.<br />
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<b><span style="font-size: large;">Are you feeling the same too?</span></b><br />
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Parents with kids studying abroad would <b>feel the pinch the most</b> with the ringgit continue to slide. Some are also planning to shorten the study period of their children to cope with the extra costs incurred, while there are also those children that might need to take up part time jobs to help finance their education. Meanwhile, many are looking at other destinations for their children’s higher studies.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjjgSyjHyyg0S1I8wQUyK6Il0dsYYjT2gFIo8vsGgIxzkpmKcVJLXScKigrXbsu13KuKkvQ3j1ITWzhbUu7RM_NTIcYI9Vf6_iYmpJbQJ_i4VuQAWjzso0L2S8lx7QRGMHkMFt92NuSWWI/s1600/Ringgit+Weakening.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="374" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjjgSyjHyyg0S1I8wQUyK6Il0dsYYjT2gFIo8vsGgIxzkpmKcVJLXScKigrXbsu13KuKkvQ3j1ITWzhbUu7RM_NTIcYI9Vf6_iYmpJbQJ_i4VuQAWjzso0L2S8lx7QRGMHkMFt92NuSWWI/s640/Ringgit+Weakening.png" width="640" /></a></div>
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From consumer point of view, one may argue that the impact would be minimum so long as all spending are done in Malaysia and avoid imported product, right? No! Even domestically produced items may use parts and components or even expertise from foreign countries. Weaker currency can drive inflation up as well! Travelling overseas may required to <b>cough out more money</b> too!<br />
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<b><span style="font-size: large;">So what can you do with your money?</span></b><br />
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To safeguard your finances, the only way is to diversify your asset into different foreign currencies. Whether you are an average investor who just wants to <b>mitigate currency risk</b> or a more experienced one who wants to <b>take advantage of currency fluctuations</b>, here's how you can do:<br />
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<b>1. Stocking Up Foreign Currency in Foreign Currency Account (FCA)</b><br />
This is the easiest and straightforward way to mitigate the currency risk. Whether it is a Foreign Currency Savings Account (normal account) or Foreign Currency Time Deposit Account (like FD), you can maintain a foreign currency in a local bank account as well. While mitigating the currency risk, you can also enjoy potentially higher interest rate. FCA is eligible for PIDM protection up to RM250,000 too!<br />
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<b>2. Buy Overseas Properties</b><br />
One way to hedge against a weaker ringgit before it falls is to buy property in countries where the currency is more stable, which would be an indirect way of hedging. However, this method is only suitable for investors who qualify as high net-worth individuals. This method would be very helpful if the property is invested in the country where the children will be going for education.<br />
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<b>3. Invest in Foreign Stock Market</b><br />
Investing in foreign stock market can be fruitful especially in stocks such as Google, Apple, Microsoft, Amazon and so on! If you have purchased any of these stocks 10 years ago, you would be seeing a double figure annualized return! (Google-15%, Apple-28%, Microsoft-10%, Amazon-37%) However, investing in these foreign stocks is only suitable for those who have the skills and time to manage and to choose the right stock.<br />
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<b>4. Expose to Currency-Hedged or Foreign Currency Denominated Unit Trust Fund</b><br />
Besides mitigating currency risk, you may want to invest into currency-hedged unit trust fund whereby the fund would remove the currency risk for you thru hedging. Subsequently, you can also opt for unit trust fund denominated in different currency such as USD, AUD and so on. However, the downside is that when you sell, it will be converting back to ringgit. So it may not be ideal for those who actually needed to use the foreign currency like travel or children study abroad.<br />
<a href="http://yourfinancedoctor.blogspot.my/2016/08/faq-how-do-you-charge-in-unit-trust.html" target="_blank"><br /></a>
<a href="http://yourfinancedoctor.blogspot.my/2016/08/faq-how-do-you-charge-in-unit-trust.html" target="_blank"><br /></a>
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<a href="http://yourfinancedoctor.blogspot.my/2016/08/faq-how-do-you-charge-in-unit-trust.html" target="_blank">Unit Trust Fund Sales Charge of 2% with Wrap Account!</a></div>
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<b>5. Invest in Capital Protected Foreign Index Investment </b><br />
Capital Protected Foreign Index Investment can be suitable for those who doesn't have the appetite to take the risk and the time to do research like those in Method 2, 3 and 4. It gives the opportunity to hold stronger currencies while making potential gain in foreign index such as S&P 500, MSCI Emerging Market, MSCI World and so on. Most importantly, it is principal protected without having to fear of losing your capital.<br />
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Now you have known all the possible way to cope with weakening of currency. The question is...<br />
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<b><span style="color: red; font-size: large;">Are you going to do it now or wait to drop further?</span></b></div>
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The best time is always now as nobody can really time the market. If you have any other methods, feel free to share in the comment section below too!<br />
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<b><span style="color: blue; font-size: large;">Take control of your finances by taking the first step: <a href="http://yourfinancedoctor.blogspot.my/2016/10/hire-your-finance-doctor-today.html" target="_blank">Hire Your Finance Doctor today</a>! </span></b></div>
Henry Tanhttp://www.blogger.com/profile/11927168352621516247noreply@blogger.com0tag:blogger.com,1999:blog-8707620835473312559.post-16583419629946201502016-12-21T13:14:00.001+08:002017-06-01T15:40:32.892+08:00Two People With An Apple, How to Share Fairly?<div style="text-align: justify;">
The question may sounds like typical IQ question, but I find the answer interesting and immediately reminds me of the common situation in estate planning and distribution, which is why I thought to share it here. So let's try to answer this.</div>
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<b><span style="color: red; font-size: x-large;">How would you do?</span></b></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhOm45RFPBlDTwxZb8T2fTR7QBHfKjho4L-rhh-gVJoSHtp6MRLdvgnqIKxFfP3rTy8KHkbnNn110hIk4KhC7sFLpgHLxI-XxZaYNcuBu44UznfAd1LXP31zxcSLKc5IrVx3TL_ZMfMoSE/s1600/Presentation1.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="334" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhOm45RFPBlDTwxZb8T2fTR7QBHfKjho4L-rhh-gVJoSHtp6MRLdvgnqIKxFfP3rTy8KHkbnNn110hIk4KhC7sFLpgHLxI-XxZaYNcuBu44UznfAd1LXP31zxcSLKc5IrVx3TL_ZMfMoSE/s640/Presentation1.png" width="640" /></a></div>
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<b><span style="color: blue; font-size: large;">Take it simple...</span></b></div>
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Mathematically, you would be thinking how to cut it into halves, how to make sure that the cut passes through the precise center of the apple and even the angle of the knife cutting through. </div>
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<b><span style="color: blue; font-size: large;">Try to be smart...</span></b></div>
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IQ question cannot be that easy! So the best way you can come out with is to make them into apple juice and divide equally. That's much more quantifiable compare to cutting it. </div>
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<b><span style="color: blue; font-size: large;">The answer is...</span></b></div>
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<b>Cut and Choose method</b> or also known as "<b>I Cut, You Choose</b>". Basically it means one person divides the apple into what they believe are equal halves, and the other person chooses the "half" they prefer. Thus, the person that cutting the apple would want to divide as fairly as possible, so that he or she will not be left with an undesirable portion. </div>
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<b><span style="font-size: x-large;">无怨一定公平,但是公平不一定无怨。</span></b></div>
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<b><span style="color: blue; font-size: large;">Envy-Free Fair Division.</span></b></div>
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Thru cut and choose method, both party would be <b>satisfied without complaints</b>, so this is an envy-free fair division. Fair division relates so much to the real life problem such as the <b><span style="color: red;">divorce settlement</span></b> or even <b><span style="color: red;">estate distribution</span></b>, which causes a lot of <b><span style="color: red;">family dispute</span></b>. </div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEirlsMoiZnLzIXZV0CucTNBq2TWxb_f7_lRyqqlb9fT8y7OnHyvTyV0LIfhxl2NyU17tt9eJDn29IVRi-VOGX-CFAzRRxBRtrdPhx0ASYInL6ma6gPApLUxrGZ3pI2Ky15bA5l2_ELrjt0/s1600/Cake+Cutting+Fair+Division.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="480" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEirlsMoiZnLzIXZV0CucTNBq2TWxb_f7_lRyqqlb9fT8y7OnHyvTyV0LIfhxl2NyU17tt9eJDn29IVRi-VOGX-CFAzRRxBRtrdPhx0ASYInL6ma6gPApLUxrGZ3pI2Ky15bA5l2_ELrjt0/s640/Cake+Cutting+Fair+Division.png" width="640" /></a></div>
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Taken from one of the slides in my "Estate Planning for Greater Family Happiness" talk. </div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh_lzcZq5FFq9NUWrcGLed2qlE3_paOszL7Qu2SZRFX8U266FKdjdk_mXLdT6qvNoABW5CNW7GWb5lE4xGuGpYXFlv0ztYR30-iB66xZUH5KazFKvyM-QESzF25ArdF1bWjOLY5rPOc0M4/s1600/Cake+Cutting+Fair+Division+2.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="480" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh_lzcZq5FFq9NUWrcGLed2qlE3_paOszL7Qu2SZRFX8U266FKdjdk_mXLdT6qvNoABW5CNW7GWb5lE4xGuGpYXFlv0ztYR30-iB66xZUH5KazFKvyM-QESzF25ArdF1bWjOLY5rPOc0M4/s640/Cake+Cutting+Fair+Division+2.png" width="640" /></a></div>
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Through the above example, you can tell <b>fair might not be equal and equal might not be fair</b>. So most importantly, it is the <b>Envy-Free Fair Division solution</b> that is needed to avoid all the complications in the future for estate distribution. No amount of money can compensate for a shattered family. So it is important for you to do your estate planning well now! </div>
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<b><span style="color: red; font-size: large;">If you didn't get the answer right for the apple distribution,</span></b></div>
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<b><span style="color: red; font-size: large;">what about all of your assets which is much more complicated?</span></b></div>
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Till then. </div>
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Happy planning! ;)</div>
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Henry Tanhttp://www.blogger.com/profile/11927168352621516247noreply@blogger.com35