Money

Question About (Part of) Your Life…

I come across this questions, really serious questions that are potentially affect your financial standing for your future. If you were to think it through thoroughly, without procrastination, I believe the impact will be huge; even greater than you can imagine. Treat it seriously, do not delay it till tomorrow, it might be too late then. If you were to have bad habit of procrastination, maybe you can try to overcome it here..

1. Are you one of the 95% who are financially threatened?
2. Are you always running out of cash at month end?
3. Are you tied down with credit card debts?
4. Is your current job secured?
5. Is your business giving you a headache?
6. Are you always quarrelling because of lack of money?
7. Do you grow with your children everyday or they are cared for by someone else?
8. How often do you spend quality time with your loved ones?
9. Do you have enough savings for emergency?
10. Do you have a solid retirement plan?
11. Are you one of those 95% who are working to make the 5% rich?
12. How can you survive the global economic crisis and profit from it?

Wish that it do some help to make things better. If after all you feel that you are in good shape, I guess you are lucky enough and please don’t be hesitate to share. If not then I would suggest you to think harder on improving the situation.

Case Study… Investing in Property

Do you ever think about investing, maybe in property? If you have yet to join this facebook group, consider it. Click here…

Ok, in this short post here, just want to do some simulation. If you were to invest in a condominium, what should you consider.

Just some number crunching first. Based on some assumption and the situation may vary from time to time.

1. Assuming you get a condominium at RM 230,000. You have the budget to pay the 10% down payment (RM 23,000) and around RM 7,000 misc fees (SPA, stamp duty, transfer of title).

2. Therefore, you need to get a bank loan of RM 207,000. At the current market situation, if you manage to get a bank to finance you at BLR-2.0 and free moving cost (meaning the bank absorb the fees for loan agreement, stamp duty and so on).

3. For the amount of loan, and with the tenure of 30 years, and assuming the interest rate won’t suffer any increase in the foreseeable future, your monthly installment will be around RM 950.

4. The condominium at this price range, can easily cost around RM 250 per month for the maintenance fee. It totals up the monthly cash outflow of RM 1200.

5. In order to make it just nice that you do not have to come out any money every month, the rental should be at least RM 1200.

Let’s say for the investment horizon of 5 years.

1. In total of the 5 years, the total cost (assume the interest rate remains the same) is the upfront of RM 30,000 and the total 5 years cash outflow of RM 72,000. The rental has been very stable and you have just balanced the cash flow every month, therefore you did not pay a single cent for the period.

2. After 5 years period, you should now still owing the bank for around RM 185,000.

3. Assuming the property market is really good and you manage to sell the condominium at price of RM 300,000.

4. After settle the bank outstanding loan, you have in hand RM 115,000. So you minus out the initial RM 30,000, your profit is RM 85,000. If compared to the initial value of the property, the total 5 years return is 36.95% or simply 7.39% a year without compounding. If you were to look at the initial cash investment that need to put in, it is RM 30,000 against RM 85,000, or simply 280% return rate. 

Remarks:

1. In this simulation, the rental income is assumed to be good enough to cover the monthly cost. Therefore you do not have to scarifies your life style, or other investment plan in hand to support the property investment. This is risk number 1 that you need to consider. If you do not have this kind of cash flow in investing, consider twice.

2. It is assuming the rental is constant cash flow, which means you do not suffer any lost due to vacancy. This is risk number 2. If you are not confident that the house could always be occupied, and you do not have the confident to keep paying the installment and maintenance fees with your own pocket money when nobody is renting your property, consider twice.

3. It is assuming no cost on any serious repair. If you don’t have the confident to find tenant that can take good care of the house and no serious cost involved within the investment horizon to repair the house, consider twice.

4. The simulation above is perfectly ideal investment scenario which it is a sure win situation. I wish I could find one. If there is any good opportunity like this, please don’t be hesitate to share.

Learn Investing? A Group May Help…

As what I discuss earlier, social networking is a good place to get things shared with sincerity. I would like to share another facebook group that in particular, build to talk about investment. I am sure that the founder come with mind to benefit fellow group members with neutral review, knowledge and experience in INVESTMENT. Click here to join…

To be frank the group is relatively new and not much content in there. However if fellow members are generous to contribute knowledge and experience in field of each own, especially in the topics of INVESTING, it will be soon an active group that benefits everyone with all the in and outs of investing in Malaysia, might even overseas. No matter that you are veteran in investing, or just new to try out, I recommend you to join and start asking and sharing. Chances are you gain more knowledge and sharpen your view while communicating to the crowd.

Good luck investing..

Are You the One Not Affected?

Well, do you realize that sometimes, when you buy something, even though you pay the same price, but without knowing you are actually getting less? For example, when you go and eat your favorite  one ton mee, out of sudden you realize that your RM 3.50 paid for only 2 wantan instead of 3 which you get one day earlier, and the wantans are actually smaller? Or do you have experience that when you buy shampoo, the same similar bottle may contain 50 ml less than what you bought earlier? My personal experience, every each small pack of mamee is containing much smaller portion of mamee compared to our young age time, even though the price is still almost the same.

Do you think the examples above actually means the same to you? If yes, then you are agreeing to what Datuk said, that since you are still paying RM 1.80 per liter of petrol, no matter it is RON95 or RON97, you are not affected with the change. I think 11 out of my any 10 people, won’t believe in that theory. I hope I can find the 12th person.

I really hope that we can see things from another angle. Actually what the government doing is good to us also. Maybe, the intention is to encourage the thinking of drive less, save more. Human beings are adaptable to what ever changes happen around, provided that the change don’t kill us off. We have been surviving the age of petrol price hiking at RM 2.70. So it is so lucky now that the different of price is only 5 cents per liter.

Just to share another piece of information that maybe good to calm you down, where it actually tells you RON95 is actually better for your care than RON97. Then you may feel more comfortable paying the same price, if not higher, to buy RON95 instead of RON97.

This is clip from an email sent by a good friend:

“The Difference between RON92, RON95, RON97 and RON99

FOR YOUR INFORMATION!

Understanding The Difference between RON92, RON95, RON97 and RON99

The Difference between RON92, RON95, RON97 and RON99

Many said that RON92 oil is the older oil, only suitable for older cars or for cars that use carburetor only. There are also some that said that RON92 oil will make the engine dirty and also said that RON92 oil is less powerful compared to RON97 and RON99. Before you make any false assumptions, let us see what the real meaning of RON is.
RON stands for Research Octane Number. Octane number or octane rating refers to the gasoline ability to withstand auto ignition (knocking) inside the engine. Higher octane number refers to higher ability of the oil to fight auto ignition. In other words, it means that RON95 is harder to ignite compared to RON92.
Different vehicles are designed to be used with different octane number of oil. Higher octane number oil is basically designed for high performance vehicles such as sports vehicle and racing vehicle. Why is that so? This is to avoid premature ignition of oil inside the engine because of auto ignition, which happens before the spark plug ignite the fuel. This phenomenon is known as knocking. Knocking is not wanted because it reduces the performance of vehicle.
The right usage of octane number based on design and adjustment of engine will maximize the performance and effectiveness of the vehicle. Modern vehicles are equipped with knock sensor which enables it to adjust its combustion timing automatically according to the oil octane number to avoid knocking or premature ignition of oil.

Not all vehicles require high octane number petrol. You can check your vehicle fuel requirement inside the guide book of your vehicle or you can simply check the minimum Octane Rating at the back of the fuel lid cover of your vehicle. Most cars can still use RON92.
Higher RON number does not mean that it is more powerful. It means that it is harder to ignite. It will also cost you more.”

So we are so many years paying higher price for something that not at all necessary, I mean by using RON97 petrol. Government is actually helping us up now.

Caveat is, what do you experience after changing from RON97 to RON95? My friend told me that he experience under power and consume more petrol. I am not sure whether it’s true because I am still observing. What’s your experience so far?

E-Statements Instead of Hardcopies… Be More Friendly to the Environment

I have just got a notification HSBC that they will be no more sending me the monthly statement. It reminds me that CITIBANK as well, already stop from sending me the monthly statement since months back. They are now only give me the e-statement forwarded to my email every month. Don’t feel any inconvenient since then.

To me this is a good move. It helps to reduce a lot of paper waste, and more importantly, eliminate tremendous amount of energy for sending the mails. Of course, you may want to say that the savings is only benefit to the business people, because they have the cost cut. That’s obviously true, but we are not in any lost also. Maybe if the business could give some incentive for clients receiving e-statement instead of hardcopies, it will help to encourage people on accepting this concept. The best arrangement will be win-win for everybody.

So the trend do goes on. I just figure out that the telco company also provide options for users to stop from receiving hardcopy statements. Just one of the example, I have just registered an account with TMonline. With the account, you do have the choice to have no paper bill sent to your mailbox. Instead, you can view your statement online or sent to you via email.

According to another friend that is using mobile services from Maxis, they charge extra for any hardcopy statement sent to you. In another words, you are saving some bucks for saving paper bills.

No matter what, the best reason is by eliminating paper statements, you are saving our environment. Unless you are not online and do not have an email (which is unlikely since you are reading my article now), then what stops you from doing it? Maybe your feedback do make sense and worth thinking. Please do comment if any.