Fear of Uncertainties

a) Fear of uncertainties, fear of unknown. Actually this is normal, is a basic instinct when we are unsure of the future happenings. The only way is to overcome it. Never let the fear conquer us. One way to increase our confidence level is to do more homework, research and prepare our self well. For example, we can ask for more opinions and check the experts, we can also ask ourself what if the worst happens, are we okay even the worst happens….Anyway it is good to be caution, however many think and think till they give up because the longer they take to decide, their passion will be gone with the wind. My mentor used to remind me, “doing won’t die, over thinking kill”.

We also need to have faith and believe in our self. How can we expect others to trust us if we do not even trust ourself and our great ideas. I also encourage friends here to mix with supportive and positive people, they need constant reminder that Fear is nothing, once you make the first step, you almost defeat it already!

No pain, no gain

B) Unwilling to make sacrifices and step out of comfort zone. There is a saying “No pain, no gain” we know it but we seldom practice it, why? They are mostly “lazy” to do more for their future. These people are usually short-sighted. I suggest friends here to mix with positive and goal-orientated friends. They probably need peers pressure to step out.

I encourage people to step out is because I saw many of them regretted for not taking action later when they looked back in life. Never let your dream die. Even if we failed in the venture, we will have lots of fulfillments and satisfaction to gain. Moreover, we accumulate experiences. Money can not buy experiences. Only by getting involved, getting our hands dirty that we learned the valuable lessons.

Instead of looking back years later and regret it, why not take the courage to try it, small step at a time … We only live once, live it to the fullest!

This is a guest post by Wai Yin, who had already achieved financial independence.

This article is posted at: KCLau's Money Tips

Action leads to success

However, you must discard any ‘internal liabilities’ that you are carrying within you. For example, anger, laziness, selfishness, small-mindedness, etc. These negative qualities will drag you down preventing you from achieving your life’s goals.

Your children’s assets

Developing your internal assets is important. As a parent watching my young children grow, I want them to have an abundance of good internal assets. I do not tell them that I wish they would grow up to be a wealthy person with lots of money and material things. I am sure that is not what you tell your children either.

As parents, we concentrate on building our children’s character and internal assets which will ensure that they grow up to be successful and happy people. You can call this important process as building the foundation of their true wealth.

Do you agree that being wealthy also means being rich on the inside? It is not enough to be wealthy by having lots of money, properties or material things and poor in terms of internal assets. I call this having superficial wealth only. I believe we also need to be rich in internal assets to be a happy and well-rounded person.

If you know the story of “Scrooge”, then he is a perfect example of someone who is rich but totally lacking in internal assets.

So, do you want to be like Scrooge?

Read other articles by Jacquelyn at WParent.com on parenting matters and Tips4Everyone.com on solving marriage problems.

This article is posted at: KCLau's Money Tips

Are You Rich in Internal Assets?

If you directly invest in stock market, here is good news for you. I was introduced to a free software that can manage your stock portfolio. This software called JStock was created by a talented local programmer, Yan Cheng Cheok. You can download this free stock market software – JStock at

Download JStock: http://jstock.sourceforge.net

Yan has got his name on newspaper, search engine and blog because of JStock. If you are looking for a programmer to materialize your next big idea, please consider Yan.

I tried JStock recently and found it very interesting indeed.

History of JStock

KCLau: Can you briefly tell the story of creating JStock? What’s the motivation behind the creation of JStock?

The birth of JStock began when I received an order from a local stock course instructor, to develop customized stock market software for his courses. However, after completing the development, he broke the contract and refused to pay for the completion of the project.

Instead of letting this to be an abandoned project, I was thinking why not make it a popular project? At least while it spreads widely among Malaysian investors, he will regret for not paying the software which may have helped him to attract more students

However, concern comes into my mind. There are so many good and professional stock market softwares already available in the market. What will make the users want to switch to my software? After several try-and-error by carefully listening to customer, here is what I planned, to grab the market share as soon as possible :-

(1) Many stock market software are targeted to intermediate and professional investors. Most beginners find the software difficult to learn and use. Hence, at the beginning, I concentrate on having “fun, easy, simple” software to be used.

(2) We will make it free. Free as in “freedom”. As we are not paid, and we cannot afford to hire anyone to develop, we will make the source code open, let anyone to study, and contribute to the software source code.

(3) We will make it free. Free as in “free beer”. Users pay 0 to get fully functional software. Some software in the market requires users to pay to get “advanced features”. We don’t play that trick. We make it completely free, with no hidden cost, no hidden features.

By using this strategy, we are pretty fast in grabbing the market. After 2 years, we can see the download rate grow from ~10 downloads copies per day, to ~200 downloads per day, and our users are from all over the world. Currently, primary users are from Malaysia and US, as our marketing plan is only done within these two regions.

If you search from google, “Free Stock Market Software”, you can see we are in the first page of Google

KCLau: What do you want to accomplish with Stock?

Our end greedy goal is to have a fully functional professional stock market software. We are still quite far from there, as we are not backed by any income or fund. (OK lah. To be honest, we do generate some income from web site advertisement. But I don’t call it income, I rather call it pocket money, as its amount is too small, to sustain a life for single programmer). We are trying very hard to grab a tiny portion of investors, who are bored in using over complex software, or too poor to buy a software

Most contributors to JStock are not money motivated, this make us a bit difficult to have committed members. Most of them are just one/two time contributors. However, so far we are happy of their contributions. Although there is no money rewarded, but it is a win-win situation. JStock provide a platform for programmers to show off their technical skill, which will make them easy to be employed. JStock also provides platform for a small start-up graphics company, giving publicity to their new company.

This means, you contribute, we publish for you

Investors love JStock

KCLau: How is the users’ response so far? Can you give us some specific feedbacks from your users?

We are pretty on track. Most of their comment is “easy to use”. This at least achieves our first stage goal. Here is one of the comment from users

BTW, thanks for the software. Although I am not using it due to lack of sufficient inbuilt technical indicators, I still think that the project is on the right track (’right’ meaning user-friendly….. very very unlike ultra-geekish xxx, yyy and such like).

Future Development of JStock

KCLau: What is the future development of JStock?

We will start concentrating on intermediate level investors. We will start to have more and more technical analysis and advanced charting features. Of course, we will not run away from our core (fun, easy and simple) when we develop these advanced features.

Next version, we are going to release cloud feature. Thanks to the hard work of one of our team members Shuwn Yuan Tee. This feature enables user to add portfolio at home, and open up his portfolio from office.

Thanks a lot to Yan for the interview. If you invest in the stock market, go download JStock and give it a try.

This article is posted at: KCLau's Money Tips

Free Software for Stock Market: JStock

Problem faced by old people

The challenges faced by elderly persons in our society can be divided into several areas:
1. Financial problem – they didn’t build up a substantial nest egg to fund their retirement.
2. Health issues – they work too hard and neglect their health to build their career in the younger years, causing their health to deteriorate faster in later years.
3. Emotional and social negligence – the younger society views them as useless. As a result, they feel isolated, lonely and think of themselves as burdens to their loved ones.

What an elderly person really wants?

As you get older, you will find that there are a lot of things that are more important than money. The most obvious of all is “TIME”. The older you get, the less time and health you will have.

Close your eyes and imagine what you really want when you are over 60 years old:
1. You want to have an adequate retirement fund to support the rest of your life
2. You want your friends and relatives to treasure your existence.
3. You want to be fit, healthy and strong.
4. You want to help other people succeed in life
5. You want to travel the world, open your mind, and live life to the fullest.

So, what did you dream?

A balanced life is determined by the appropriate investment of your time

Time is the most important resource we will ever need.
We spend the precious time to earn money.
We need to spend time with our family and friends to have a healthy social life.
We spend time regularly to exercise our body in order to keep fit.

If you have spent your time resource wisely during the younger years, you will have all the things you want at any moment of your life. That’s called the balanced life.

The purpose of this article is not to show you how to care for the elderly.
I want you to know that if you care enough for yourself, and everyone of us do the same, getting old is no longer a nightmare.

The “young you” should take good care of the “old you”. That’s independence.

Wish you all the best!

This article is posted at: KCLau's Money Tips

Caring for the Elderly

Of course my children have been thinking and planning in advance what they would like to have as a Christmas present. They have already come up with gift ideas that are within the set budget.

Giving non-material presents

Actually, this year I plan to teach them that presents do not necessarily come in the form of material things. They can instead request for “non-material” gifts like spending special time with either parents, a picnic at the beach, a treat at their favorite fast-food restaurant, etc.

For parents, they can request the following from the children:

• Babysit for 2 hours
• Make a simple meal
• Do the laundry
• Clean the windows
• Mop the floor
• Clean the garden
• Run three errands
• Keep quiet for 2 hours
• Water the plants
• Feed the pet

The above are just some examples and you have to ensure that any request is age-appropriate. For example, an older child may be able to prepare a simple meal and mop the floor but not a younger child.

Everyone can select or come up with what “non-material” things they would like to have for Christmas and write them down on separate redeemable cards. Everyone can then select a few cards each and present them as a gift.

My eldest 10 year old son said he can prepare simple meals for me and plan to give me three gift cards which I can redeem anytime. Once Christmas is over, you may still have a few gift cards to redeem which is something nice to look forward to in the coming New Year. Enjoy!

Read other articles by Jacquelyn at WParent.com on parenting matters and Tips4Everyone.com on solving marriage problems.

This article is posted at: KCLau's Money Tips

The best Christmas Present

Mr KCLau,

I’m a student at a local university and I’ve been following your blog for a very long time.

I must say, due to your articles, I’ve changed from a spendthrift person to a more financially literate individual.

But now I stand at a junction by which need advice to go on.

I’m a 1st year student, doing medicine for 5 years.

My current assets are:
1) ASB savings: RM87 567.00
2) Gold (current market price): RM7268.00
3) Fixed deposit: RM11 258.00 (with rate of 2.5% p.a)

Each month, I will be able to allocate around RM 1200 for the next 5 years.

Based on the above info, what would be the wisest course of action which would generate the most income in a 5-year period?

The current course of action is I’m putting 60% of my income in ASB, 25% in gold and 15% in FD.

With the restrictions such as being a student, I lack the capability to invest in real property and stocks. Being a Muslim, I am not going to invest in non-Shariah compliant investment vehicle.

Your opinion is highly appreciated.

Thank you.

Current Situation

First of all, it is pretty impressive that a student has a total net worth of RM106,093 since most students are in debt with study loan such as PTPTN. Moreover, Ahmad still has a positive surplus of RM1200 to save and invest every month.

The current asset allocation provides some diversification. Gold is a hedge against inflation. ASB provides steady returns every year. Meanwhile Fixed Deposit gives him the liquidity and flexibility during emergency.

Challenge faced

When we see no trouble in his financial situation, Ahmad is asking for advice to maximize his return in 5-year period. This is a common question people would ask when they are investing their money. But I think the more useful question should be

”What should I do to improve my earnings?”

In fact, there is no sufficient information to give the proper investment plan. The first thing we need to know is the financial goals Ahmad wants to achieve. For example, are you going to use that money for a business start up? Are you going to save that money as your retirement fund?

However, I would assume that Ahmad wants to learn what he should be doing with the money within this five years in school to produce the best monetary outcome when he graduates in the future.

Suggestion to produce the best outcome

Ahmad is doing great with managing his money. I would say he is well ahead of most people around him, who are still studying. He doesn’t spend much. He can really save money.

My three suggestions are

1. Continue to accumulate and invest your money
Now, you can continue to accumulate your wealth using your proven strategies to save in ASB, Gold and FD. There are two other options you can consider – stock and unit trust. There are many Shariah compliant funds and also fundamentally strong companies to invest in. But before you make any investment decision, learn about this equity-type investment and the cost involved.

2. Invest to gain knowledge
You can take up some investment courses in the area most interest you. Some courses are not cheap, but most of the time, it is worth the money to pay hundreds or even thousands to attend the courses. You will be able to learn the tricks and knowledge to earn even more money.

Some courses you can consider include real estate investment, stock investment, self-development, business development and leadership program.

3. Invest to broaden your network
As a student, we are expected to spend most of our time for academic result. But in the real world, excellent academic result doesn’t ensure financial success.

“What you know” is important. But “what you know” will only produce the most financial reward when you know the right person. So “who you know” have to be coupled with “what you know” to give you the success you are looking for.

By all means, join some social works, networking groups, relevant societies and become a committee member. Being actively involved, you will show to the people around you that you are capable to getting things done. The trust relationship will be built along the way. This will be very useful when you doing business in the future.

Conclusion

When I was still a student, I don’t have much money to invest. But I have a lot of time. So I invest the time to gain knowledge and broaden my network.

Ahmad, you are even better. Your future profession is a very profitable career. Now you have time and also money. You can invest both time and money on the right area. I am sure you will succeed in a very short time.

Wish you all the best!

This article is posted at: KCLau's Money Tips

Investment Strategy for a Student

Hi, Mr Lau,

First of all, many thanks to you for giving me the free e-book.
Its’ worth reading, cause I’m aware of unit trust investment now.
As introductory, I’m female, age 33, working in a factory.
I’m in debt, honestly. I’m in debt of personal loan, housing loan, credit card loan.
However I’m also having passive income, if that’s correct to describe my monthly income from 3 acre land of kelapa sawit.
But honestly I’m not a decision maker in financing.
Would you please advise me on below problem;

Debt 1;Personal loan with bank rakyat; balance is total RM 35K. mthly is about 568(a bit for get). for another 62mths. Rates 5.75%.
If settle now need to pay RM 28K.

Debt 2; housing loan, balance is 12 years, mthly is RM 850, rates(forgot).
I’m planning on refinancing my housing loan, which is 71K (plus insurance), for 15 years (rates; 1st ~ 3 yrs: 4.9%, 4th yrs onwards : 5.01 %), mthly will be RM 565.

When I read your ebook, I’m thinking of add another 28K to that amount. So that I can settle the personal loan.
So after discuss the bank officer told me, for 28K, for 15 years, mthly repayment is RM 222.

My intention is to reduce the MRI, monthly repayment installment.
So instead of paying 1418 ;housing & personal
Pay only 787.

But problem is, if the personal loan plus interest total if included in refinancing will be RM 40K. SO I feel confused now. Which way to move on?

MY OPINION:
Undeniably, mortgage loan is the cheapest loan available nowadays. Bankers feel secured because your house will likely appreciate in value over time. I agree that it is a wise move to consolidate your personal loan and mortgage. So that the end result is paying only the mortgage of roughly RM99k. Then you will reduce your monthly installment thus providing you more surplus.

However, you mentioned that the total interest will be RM40k, which is true. Refer this file for an estimation of the mortgage amortization table.

Amortization tabel -rm99k mortgage.pdf

Please don’t be confused by the TOTAL interest you will have to pay. In fact, the money will be in “lesser value” relatively, because RM100 now is worth a lot more than RM100 15 years later. That’s the future value of money. If you discount every ringgit you pay down the road, it is not as high as RM40k you might perceive.

The right perception is to think of the money’s worth in today value. The easiest way to compare is the Internal Rate of Return (IRR). Sorry that I don’t want to confuse you with this jargon. In layman terms, just compare the effective annual rate (EAR) of return on where you put the money now. Since the personal loan interest is 5.75%, it is better to consolidate it in your mortgage refinancing which is 4.9%.

photo credit: SqueakyMarmot

In order to provide a case study, further information needed for the analysis:

1. How much is your house worth now?
the value is about RM140K.(its SEMI-D (SINGLE STOREY))

2. Can you check through your document to find the mortgage interest rate?
3.99 %(1st year) + 6.80%/ANNUM(2001) , I read thru docs, mentioned that we have ceiling of 9%,(eon bank)

MY OPINION:
You really should refinance your mortgage. You will be able to save 1.9% interest charges.

3. You mentioned about credit card debt. Can give more details?
I have hongleong master card, I did balance transfer fr hsbc visa & master, at total amount of RM3000. So I’ve committed to pay RM270/mth in order to keep the special rate which is 6.99% within 1 year. Plus I took coc which is cash online credit after that, at amount of RM2900, so I can pay the legal fee for refinancing & get the lowest rates(if non free moving cost, they offer only blr-1.4, if free,the rates is blr-1.7. So I commit for 3 years, mthly I have to pay RM104.

MY OPINION:
If you are taking the COC for the purpose of getting a better rate on your refinancing, that’ll be not wise at all. The extra 0.3% for zero moving cost (ZMC) refinancing package, based on RM99k loan is only RM297 saved on the first year. The amount you will save on interest charges will get less year after year. How long do you think you can recoup the RM2900 for the legal fees? 8-10 years? Plus all the interest you paid for COC? You should have taken the Zero Moving Cost Package which charges slightly higher interest rate of BLR-1.4.

Moreover, is there any penalty to settle your HL master card debt? If not, why not take additional RM3k via your mortgage to settle it. The interest rate of 6.99% is 2.09% higher than your new mortgage of 4.9%

4. Do you have any other assets beside the mentioned land? such as life insurance policy, or other form of investment?
I have maybank life insurance, which I pay RM112 for 16 years & it will be end in 2015, the sum is RM15K plus bonus.

I also have tabung haji. Monthly I deduct RM 220 fr my salary.

I.m sorry ,but I have another question. Since the factory which I’m working have grouping insurance fr great eastern,I’m thinking about taking the money fr maybank life insurance to invest in unit trust. If surrender now, I can get 9000. Is it worth doing that?

MY OPINION:
Please don’t surrender your policy. It is dumb to do so because you are half wet. Use your saving to invest in unit trust. Don’t use your insurance money.
Since you had paid the premium for this Maybank policy for 9 years, it is really worth to continue paying the premium. Now every sen you pay is 100% used for your policy cash value that will generate more bonus.

After you refinance, you will have a better cash flow. Manage your cash flow wisely and do budgeting and frequent monitoring. You shall continue with your tabung haji too.

Overall opinion:
1. Consolidate all your debts (credit card, mortgage, and personal loan) into only one mortgage. Your house value is RM140k and it is enough to finance all your debts.

2. After you consolidate the debt, you will have a better cash flow and surplus. Save regularly. Meanwhile, learn about how to properly invest your savings.

Do you have any advice for this particular case? Please share in the comment.

If you need help on personal finance, use our forum.

This article is posted at: KCLau's Money Tips

Case Study: Consolidating Personal Loan, Mortgage and Credit Card Debt

That’s the reason why most people has trouble controlling their spending habits. If you are one of the victims of this modern financial creation, see if the below tricks are useful to you.

Earn More Money

It is not a bad thing to fall into debt. Look at the positive side, it actually urges you and motivates you to earn more. Your current income is simply not enough to cover your desired lifestyle or needs.

Why I say “needs”? Some people own money not because they like to spend a lot. For example, expensive medical fees demanded by hospital when your old parent is hospitalized may be the cause of maxing out your credit limit.

The most practical and encouraged solution: EARN MORE MONEY.
Take up a part time job.
Start a business!
Increase your productivity!
………..

Just make more money. Period.

Turn Credit Card Debts into Term Loans

Call the banks to seek for alternative. Instead of keep paying the not-so-affordable minimum payment, you can ask to turn the debt into term loans with lower interest charges.

Shred the plastic

To avoid using the card and keep on spending more, cut the credit cards. When it is out of sight, it is out of mind.

Use Debit Cards

I know credit card gives you convenience and safety, especially at petrol station. You can always replace it with debit cards.

Overdraft (OD)

If you have a property, such as your house, you can apply Overdraft facility to settle your credit card debt. OD interest is lower. Moreover, you can always pay it off earlier ,unlike term loan or car loan.

“Relatives-financing”

Be honest. Talk to your relatives and close friends. They will lend you the money if it is not substantial. You can spread the amount to several friends and relatives. Instead of paying 18% credit card debt interest, you can pay them slightly higher interest compared to Fixed Deposit rate.

Cut Expenses

This is the obvious thing to do.

Pay more than the minimum payment required

This sounds simple. But most people won’t realize that they had increased the credit card debt until the day they can’t even afford the minimum payment.

Balance Transfer Program

You can apply new cards that offer you low interest or interest-free period when you transfer balance. Instead of paying many small debts, consolidate them and only focus to settle one debt.

Insurance policy loan

If you have paid insurance premium for a few years, you can take out policy loan to settle your high-interest-debts.

Seek help from AKPK

AKPK is debt counselling agency by the federal government to assist you. They may be able to help you negotiate with the banks and solve your problem earlier. Don’t be shy to call them.

Do you realize that when you don’t need money, banks keep calling you to lend you more?
But when you desperately need the money, they are somehow reluctant to hand you the cash.
This is the reality.

So, how do you settle your credit card debts?
Tell us your success stories. Or you can also warn us with a bad example.

This article is posted at: KCLau's Money Tips

11 tricks to settle your credit card debt

There are so many ways to save money and you can get an abundant of tips just by reading the information found in this website. Have you ever stop to think back on who taught you to save? Is it a self-learned habit? Perhaps your parents were the one to instill this habit when you were young?

My saving habit is partly self-learned through trial and error. Yep, making mistakes is sometimes necessary in order for us to learn and move on. My parents especially my mother is largely responsible for teaching me about saving money. Her teachings are by example and by recounting her own personal experiences with money. The obvious one that stands out is her account of stretching her meager earnings for daily expenses and savings.

My mom’s story

Back in my mother’s younger days, when I was still in diapers, she had RM0.20 to spend on breakfast and lunch. More often that not, it meant foregoing either breakfast or lunch. She would use the money to buy a cup of coffee and a bun (Chinese Pau) for her daytime meal. Out of that 20 cents, she would have 5 cents left to be put away. Part of her earnings also went towards helping to support her younger brother through school and towards saving for a rainy day.

My own saving habit really started in secondary school where I would jot down my daily spending in a small note book. The purpose is to track where my money was going and how much I had left. To this day, I have maintained the habit of keeping track of my spending which now includes the entire family’s spending.

As you can see, my saving habit rests upon knowing where my money is going. If I can control how I use my money and how much is being spent, this prevents unnecessary spending. Most of my money goes towards necessities or needs instead of wants. Therefore, every month means having a positive cash flow to be put aside for a rainy day.

I did not even use a budget system as this method alone was good enough to ensure money never ran out at the end of each month. Looking at the big picture, controlling your spending is the easiest way to save money. Then invest the money wisely and at the end of the day when you are ready to retire, you will have something to support you.

Read other articles by Jacquelyn at WParent.com on parenting matters and Tips4Everyone.com on solving marriage problems.

This article is posted at: KCLau's Money Tips

What are Your Saving Habits?

There is no doubt that money has more pros than cons. The bad things associated with money are normally due to men’s greed and misused of it.

Money is bad when for example you have to work hard and spend most of your hours slaving to earn that money. There are people who likes working and are self-professed workaholics. It is a matter of choice here. Others have no choice but to toil hard to earn a living.

What’s your choice?

The question is, given the choice, would you want to work hard and earn lots of money to afford a high-flying lifestyle or kick back a bit and just have enough to enjoy a moderate lifestyle?

Different people will choose differently depending on one’s personal desires or expectations. Your priorities will also dictate the choice that you will make.

I used to wonder why a person, a husband or wife, can choose to work away from home travelling often due to work demands. The immediate impression is of a person who puts work, career and money ahead of the family. I do not make judgments now as I realize that my values and priorities are different from others. I prefer to be able to stay at home and not stray far from the family. I work at a job that does not demand that I travel around. My priorities are having a happy family life and good health, first and foremost.

Fortunately, my spouse has the same viewpoint about work and money. We have enough money to cover for life’s necessities and future funding (by our standards) and at the same time we do not work ourselves to death over money. Of course, we do not get to live a luxurious lifestyle like going on expensive holidays and traveling to exotic places but we do get to enjoy family life together which is our top priority.

So, what is your priority?

Read other articles by Jacquelyn at WParent.com on parenting matters and Tips4Everyone.com on solving marriage problems.

This article is posted at: KCLau's Money Tips

Money Pros & Cons, What do You Choose?