Selasa, Oktober 26, 2010

What’s your money personality?

During my seminars and personal financial consultations, I have come across many people who have different attitudes towards money. All of us have unique personalities − some characteristics are inborn and some are learnt along life’s journey. Likewise, when it comes to money and real estate investments, we too possess various money personalities. They are:
1. Spenders / Shoppers
These personalities derive great emotional satisfaction from spending money. They need instant gratification and can't resist spending money. Spenders often shop to entertain themselves, even if the items they buy go unused. A sale is simply an excuse to spend money on the pretext of getting a good deal on things that they do not need at the moment.
A well-to-do good friend of mine was shocked to discover, during his house moving, that his wife owned more than 100 pairs of shoes and over 30 handbags! Like most guys, he couldn’t see the need for his wife to own so many pairs of shoes and handbags. As money was not an issue, he didn’t mind his wife buying more new shoes or handbags, provided that she gave her old ones away. He was concerned that his new house was quickly running out of closet space to store the things his wife bought.
Unfortunately, besides being a shopper, his wife was also a hoarder. She didn’t have the heart to give away things that are still fairly new and seldom used. This led to frequent quarrels and my friend decided that the only way out was to build more closet space in his current house and to move to a bigger house a few years later to accommodate his wife’s impulsive shopping habit. It was a small price that he could afford to pay to keep his wife happy.
Advice for Spenders/ Shoppers: Shop a lot less, save a lot more
If you love to spend, it's very likely that you are going to continue doing it. when shopping, try to seek long term value, not just short -term satisfaction.  Before purchasing, ask yourself how much that purchase is going to mean in a year. If the answer is "not much",then forgo the purchase. This way, you can limit your spending to things that you'll actually use. If possible, set a monthly budget and stick to it. In case you over-spend  in a month, make sure that you have the discipline to cut back the following month.
Another suggestion is to cut up any extra credit cards you may have and lower the credit limit  on the ones you use regularly. Give standing instructions to auto-debit your bank account on the due date with the full amount for all your credit cards. This way you will not  be tempted to overspend.
2. Debtors
Debtors are similar to Spenders/Shoppers. The only difference is that they are spending money that they don’t have and are living beyond their means. They are deeply in debt and often, are not in a position to do much investing. Debtors will typically live rich but die poor!
A newly married young couple in their late twenties came to see me for a personal financial consultation. They were keen on investing in properties and stocks. Their combined gross income was RM15,000 per month but their net worth was less than RM100,000! They had RM20,000 in credit card debts, less than RM5,000 in savings and they both drive brand new Japanese cars worth around RM70,000 each. Their logic of purchasing new cars was that they didn’t want any problems associated with buying cheaper second-hand cars.
In my opinion, both fell into the Debtor personality. While they were earning well for their age bracket, they were mismanaging their money by accumulating credit card debts and over-spending. Since both were desk-bound employees, there was no need for them to make a good impression by driving new cars. In fact, they could ill-afford to drive new cars at this stage of their lives, given their current financial situation.
In order to clear up the credit card debts and begin their investment journey, I strongly suggested that they sell off their two cars which were around a year old and downgrade to a three year old Proton or Perodua car which costs around RM35,000 each. Straight away, they would be able to settle their credit cards debts and have sufficient start-up capital of around RM50,000 to begin investing.
Unfortunately, it was easier said than done. Towards the end of our consultation, the husband blurted out that they had just placed a deposit for a new car for himself worth RM85,000 to lock-in the low interest rates. Since both had the Debtor personality, I really had a tough time convincing them to change their spending habits. If one of them had a different money personality, perhaps I would have an easier time to get one spouse to convince and force the other to change his/her ways. Finally, all I could do was wish them good luck. Personally, there is no way they will go far in life unless they make drastic changes to their behaviour
Advice for Debtors: Start saving, investing & don't spend money that you don't have!
If you are already in debt, you first need to get your debts sorted out before you can begin investing. If you are not  be able to do it alone, get some professional financial help like what the couple did when they saw me.
Also, analyse what caused you to get into trouble. If it was easy access to credit cards, then the solution would be to cut up all "temptations" cards and sticks to debit cards. If spending was something that you used to compensate for other areas in your life that you feel were lacking, think about what these might be and work on changing them. If your house and cars were purchased because of the need to look good, then you may even need to downgrade your lifestyles by moving to a smaller house, drive an older car, etc.
Next, focus your efforts on saving money diligently. Pay yourself first by setting aside a certain portion of your take-home income that automatically goes into a special bank account that is used for investments. The money in this account  can never be spend -  it is your golden goose. Later, when you retire, you can only spend the eggs that your golden goose laid i.e whatever interest, dividend or rental incomethat  your investments generated.

3. Savers
Savers are the exact opposite of Spenders/Shoppers and Debtors. They only shop when absolutely necessary and never accumulate credit cards debts. They generally have no debts and are often viewed as cheapskates. Savers are not concerned about keeping up with the Joneses or following the latest trends. They are happy with their 20-year-old cars and derive great satisfaction from seeing the interest earned on their bank statements. Due to their conservative nature, they don't take big risks with their investments. They prefer fixed deposits instead of other riskier investments where there is a possibility of a loss.
Extreme Savers unfortunately will live poor but die rich! Most of our parents who had lived through the Second World War and experienced hard times, where they didn’t have the luxury of three meals a day, will fall into this money personality type. I met many people who live in old houses that were last renovated 20 years ago and drive well-maintained cars that are more than 15 years old. These people are the ones who have more than RM5 million in fixed deposits! At the current fixed deposit rate of 2.5% p.a., their interest income alone is over RM10,000 per month which is more than sufficient to fund their no-frills lifestyle.
Advice for Savers: Practice moderation & take a little more investment risk
If you are a Saver,  you should not let all the fun parts of life pass by just to save a few cents. To achieve some sort of balance, it's advisable that you allocate a small sum of "Play Money" where you can nourish your inner child by living like a King/Queen for a few hours every month. Spending a bit of money on having fun isn't going to make you bankrupt. Once you have tasted the good life, would you want more? The answer is a definite 'Yes'. In fact, you would be motivated to challenge yourself to make more money so that you can have more of the good life.
Instead of taking little or no investment risk by leaving all your money in fixed deposits, you need to learn to take a little more risk  by investing a portion of your capital into higher return investments such as REITs, properties, bond funds, etc. After all, the key to investing success is to minimise risks while maximising returns. Avoiding investments risks completely will not get you far in the long run.

4. The Avoiders / Money Monks
These people are not comfortable with the subject of money due to their lack of interest or they feel that that are other more important issues. Often, they will try their level best to avoid the subject completely. Money Monks are happy-go-lucky types who strongly belief that God will take care of them. At the extreme end, they may not even know whether they are rich or broke.
If you are married to an Avoider or a Money Monk, you will have to shoulder the responsibility of managing money and investing for your family. The big advantage is that you will have little or no arguments on any money matters with them.
Advice for Avoiders/Money Monks: Make sure that you do not marry your own kind. Alternatively, find a trusted professional financial planner.
It's a sad fact that people typically will not change even when they know they need to. Hence, it is extremely tough to suggest to Avoiders and Money Monk that they should have an interest in knowing how money works. If you are an Avoider or Money Monk, an easier alternative is to make sure you don't marry  their own kinds or you should seek professional help when it comes to managing your money.

5. Investors
Investors are consciously aware of how money works. They know where they are financially today and try to put as much of their money to work. All investors tend to seek a day when their passive income from their investments will provide sufficient income to cover all their expenses. Their actions are driven by careful decision making, and they are comfortable with the need to take a certain amount of risk in pursuit of their goals
Advice for Investors: Keep it up!
Congratulations! Financially speaking, you are on the right path and doing great! Keep doing what you are doing, and continue to educate yourself.
It’s extremely important to know which money personality you fall into as each has its own strengths and weaknesses. Understanding your unique money personality will help you shape your approach to spending, saving and investing. If you are married, it will also help you understand your spouse better as most marriages get into trouble because of money issues.

Dr M: High income will come with high cost of living

October 26, 2010
Dr M: Unless the increase in incomes is properly managed, it will not enrich the people in terms of purchasing power.
KUALA LUMPUR, Oct 26 — Former prime minister Tun Dr Mahathir Mohamad has warned the public to expect cost of living to go up in tandem with income, adding that rising income may actually lower purchasing power if not managed properly. He explained increased wages would force the private sector to look for efficiency gains and invest in better equipment to realise higher profits as income, and that this would increase the cost, and therefore the prices, of goods.
“I am all for the government’s high income policy. My worry is that the people may expect high income without the accompanying high cost of living. It is better for them to be forewarned,” Dr Mahathir said in his popular blog today.
“Higher income will therefore result in higher cost of living. This will reduce the purchasing power expected of higher incomes. This would be meaningless unless the increase in cost of living will be less than the increase in incomes.
“Unless the increase in incomes is properly managed, it will not enrich the people in terms of purchasing power. As the cost of living rises, the increases in income may not purchase more than what the previous lower income would. Indeed, it may be possible that the increases in income will actually purchase less goods and services than the previous low income.”
The government will most likely have to cut development expenditure if it opts to pay higher salaries and this will not be welcomed by the people, he added.
Dr Mahathir gave the example of the United States, whose citizens enjoyed a per capita income some five times greater than that of Malaysians but not a similarly multiplied purchasing power.
“In fact in certain cases the purchasing power is the same as Malaysians. According to the McDonald’s Hamburger Index, the ringgit is the same as the US dollar in purchasing McDonald’s hamburger — one ringgit will buy in Malaysia what US$1 (RM3.09) will buy in the US,” he said.
“Clearly the increased income in high-cost countries does not give an increase in purchasing power equal to the increase in income as compared to low-cost countries. It is important that the Malaysian public understand this.”
The former premier told “price-sensitive” Malaysians to be prepared to accept reasonable price hikes when incomes and profits are increased as Malaysia tries to power itself out of its middle-income trap.
However, Dr Mahathir stressed that high incomes could increase purchasing power to some extent if managed well, particularly in the purchase of imported goods and services and when travelling aboard.
The Najib administration seeks to propel Malaysia to high-income nation status by 2020 through its market-friendly New Economic Model (NEM), which includes the five-year 10th Malaysia Plan (10MP) and the ambitious Economic Transformation Programme (ETP).

Khamis, Oktober 21, 2010

Berusaha Mencari Rezeki

Hadith :
Rasulullah s.a.w bersabda, maksudnya:“Meraka yang mencari harta dunia (kekayaan) dengan jalan yang halal dan menahan dirinya dari meminta-minta (tidak menjadi pengemis) dan berusaha mencari nafkah untuk keluarganya serta belas kasihan, kasih sayang terhadap jiran tetangganya, nescaya di hari kiamat kelak ia akan berjumpa dengan Allah dengan mukanya berseri-seri seperti bulan purnama pada waktu malam.”
Riwayat At-Tabrani
Pengajaran Hadith:
i) Sesungguhnya Allah S.W.T amat kasih kepada orang yang berusaha atau bekerja mencari rezeki dengan titik peluh sendiri di mana dengan itu dia dapat memenuhi keperluan dan tanggungjawabnya terhadap diri, keluraga dan masyarakat. Malah kedudukannya adalah lebih baik daripada bersikap pemalas dan meminta-minta daripada orang lain.
ii) Allah telah menetapkan dalam sunnah kehidupan bahawa kejayaan itu adalah hasil daripada kerja tekun dan dedikasi. Inilah antara maksud jihad yang dituntut oleh Islam.
iii) Kita perlu ingat bahawa hanya rezeki yang halal sahaja mesti dicari kerana di situlah letaknya keberkatan dan ganjaran daripada Allah S.W.T. Sedangkan rezeki yang diambil daripada punca yang haram seperti rasuah dan sebagainya, lambat laun akan menimbulkan kecelakaan dan masalah dalam hidup bukan sahaja di dunia malah di akhirat juga.
Sumber : Jabatan Kemajuan Islam Malaysia

Selasa, Oktober 19, 2010

MIER concerned with rising household debt

The Malaysian Institute of Economic Research (MIER) is concerned with the rising household debt level which stood at 77 per cent of Gross Domestic Product (GDP) last year.

In Bank Negara Malaysia (BNM)'s 2009 annual report, household debt was reported to have risen to 76.6 per cent for the year, the highest in Asia, from 63.9 per cent of GDP in 2008.

"Loan-to-value (LTV) ratio should be reduced to address the rise," said Senior Research Fellow Dr Foong Kee-Kuan.

"Going forward, there should be more business loans than household loans. More business loans will contribute to our growth," he said. The concern was highlighted during a media briefing on the Malaysian Economic Outlook report released today.

Quoting the central bank's Banking and Monetary Indicators report, MIER said household loan in April, May, June, July and August this year stood at 10 per cent, 11.7 per cent, 12.5 per cent, 11.9 per cent and 11.8 per cent respectively.

"Our household debt level is a concern and no measures were mentioned to address this in the Budget 2011.

"If this scenario continues along with slower economic growth, it can translate into unemployment and lead to people having problems in servicing their loans," he added.

He said although lowering LTV would not be favourable for the banking sector as it would reflect in revenue, the escalating household debt must be addressed to prevent risk in future.

In its report, MIER said it was anticipating the OPR to be steady at 2.75 per cent until end of this year. "This along with reduction in mortgage LTV ratios and tighter credit card conditions would address the rising household debt problem," it cautioned.

The OPR would trend higher to 3.25 per cent in 2011. In a recent research note, Kenanga Research had also said the central bank should consider imposing tighter borrowing limit for the property sector to avert potential over-leveraging on the household segment and speculations.

It suggested that bank loans should be lowered to between 70 and 80 per cent value ratio for a third mortgage. -- Bernama

Jumaat, Oktober 15, 2010

Petua FPAM elak kesempitan hidup di hari tua

UtusanOnline, PETALING JAYA 13 Okt. - Persatuan Perancangan Kewangan Malaysia (FPAM) menasihatkan golongan pekerja swasta di negara ini menabung sekurang-kurangnya 10 peratus daripada pendapatan bulanan mereka bagi menjamin kehidupan selepas persaraan.

Usaha untuk menabung boleh dilakukan dalam institusi perbankan atau melalui pelaburan-pelaburan lain yang mendatangkan keuntungan termasuk melalui unit amanah.
Timbalan Presidennya, Tan Beng Wah berkata, para pekerja swasta boleh menggunakan simpanan tersebut sebagai pencen persendirian (private pension) dan tidak boleh terlalu bergantung kepada wang yang dicarum ke dalam Kumpulan Wang Simpanan Pekerja (KWSP).
Jelasnya, wang caruman KWSP dijangka hanya menampung sara hidup dalam tempoh dua hingga tiga tahun selepas persaraan dan ia mengundang kesempitan hidup kepada para pesara berikutan kos sara hidup yang meningkat.
''Kajian yang dilakukan mendapati lebih 94 peratus daripada 5.8 juta pencarum aktif KWSP akan memperoleh kurang daripada RM150,000 pada waktu persaraan. KWSP hanya merupakan jaring perlindungan (safety net) pekerja.
''Jumlah caruman terkumpul itu tidak mampu menampung sara hidup untuk tempoh 10 hingga 20 tahun akan datang kerana jangka hayat rakyat Malaysia semakin meningkat,'' katanya yang juga Ketua Pegawai Eksekutif Penasihat Kewangan CIMB.
Beliau berkata demikian kepada pemberita selepas menghadiri majlis perasmian Persidangan dan Pameran Setiap Orang Boleh Bersara Dengan Baik 2010 (ECRWCE) di sini hari ini. Turut hadir Presiden FPAM, Wong Boon Choy.
Persidangan dan pameran itu berlangsung selama dua hari bermula hari ini.
Ketika ditanya peringkat umur yang sesuai untuk mula menyimpan 10 peratus daripada pendapatan bulanan, Beng Wah berkata, ia boleh dilakukan pada bulan pertama individu mendapat pekerjaan tetap.
Malah, umur paling ideal untuk melakukan simpanan secara disiplin adalah 30 tahun.
Beliau berkata, pihaknya mendapati ramai komuniti Malaysia menyedari kepentingan simpanan untuk persaraan pada usia 40 tahun hingga 45 tahun.
Jelasnya, pada waktu itu, tempoh simpanan menjadi singkat dan ia tidak mencukupi bagi menampung kehidupan selepas persaraan.
Ketika ditanya relevan umur persaraan yang lewat iaitu pada 60 tahun dan ke atas, Boon Choy pula berkata, persaraan pada usia lewat memberi lebih peluang untuk bebas dalam faktor kewangan.
Katanya, mereka yang bersara melebihi usia 58 tahun akan menikmati 'tahun emas' dan menikmati kehidupan yang lebih sempurna.
Menurut Boon Choy lagi, taraf hidup pesara mungkin berbeza sekiranya dihabiskan di kampung atau kawasan pedalaman berbanding di kawasan bandar.
Katanya, di kampung, para pesara tidak perlu berbelanja lebih sebaliknya berpeluang menggunakan sumber alam seperti ternakan dan tanaman sebagai bahan asas makanan harian keluarga.
''Apa-apa pun, ia bergantung pada gaya hidup seseorang dan kawasan yang didiami selepas persaraan,'' ujarnya.