4 Ringgit Myths You Need To Know

Myth 1 - You have to be rich to start investing

In the mind of many, one has to be rich to start investing. Many thought that to start investing, one would need to have a sizable amount of Ringgit. But the fact that with new technology, investing has become easier and the minimum amount is lower. Robo-Advisors such as MyTheo, Stashaway, and Wahed Invest make it very easy to start investing with just RM100.

*Bonus: If you invest RM100 in Wahed Invest using my referral code (limwei1), both you and I will get RM40 bonus each after maintaining the RM100 for 1 month. 

How to Buy a Car Without a Loan

Everyone believes that it is impossible to buy a new car without a loan but that does not mean that it is really impossible. What actually requires is patience, hard works, and the right method.

Why should we buy a car without a loan is because the interest that we have paid by the end of the loan period will actually amount to almost a second car by itself? Also, a car is the type of assets that would depreciate in value over time. So, why pay even more for something that is depreciating in value. 

Firstly, we must work on how much can we afford to pay for the monthly installment. Can you pay RM 500 per month or RM 1000? If you can afford to pay this amount for a monthly installment, you should pay it to yourself first before buying that car.

Instead of buying that dream car of yours straight away, look for a decent second-hand car (as a temporary car) with an affordable value. A second hand Perodua Kancil will cost about RM 4000 (at the time of writing) and the good thing about the car is how fuel-efficient it is. So, if you can pay yourself RM 500 per month first, you can buy it on cash after 8 months of paying yourself.

Living below your means

One of the first pieces of advice for anyone who wants to start building wealth is to live below your means. But what does it means to live below your means?

What is "Living below your means"?

To make it simple, "living below your means" is you must not spend more money than you earn. So, if you spend less or equal to the amount of money you make each month from your job and other sources of income, you’re below your means.

Living below your means does not mean you can’t spend money on the things you love in order to enjoy your life. Instead, if you want to create a more stable financial future while still enjoying that occasional fancy dinner, you can make some conscious financial decisions, such as saving extra money, creating a budget, and cutting back on unnecessary expenses.

How to live below your means?

It is actually not that hard to live below your means. The most important point here is to know how to prioritize all the things in our lives. The first step that I would recommend is to list down all your needs and wants. Those monthly bills, such as electricity and water bills, groceries, mortgage, etc are considered needs. The rest of your expenses should be more of the wants, especially eating outs, movies, Netflix, that cup of Starbucks. These wants are the ones that you would really need to think through if you really want it. A reminder, I am not asking you cut all of them off. Just rethink if you really want it in your life.

Compound Interest

Compound interest is one of the most important concepts to understand if you want to manage your finances. It can work for you (by helping you to earn a higher return on your investments or savings) or against you (when you have interest compounding on the Ringgit that you have borrowed).

What Is Compound Interest?

Compounding is a process of growing. If you understand the “snowball effect,” you already know how something can build upon itself.

Personal Income Tax for 2019 (Assessment in 2020)

It is the end of the year. Have you maximized your tax reliefs?
Below is a simple guide regarding the tax rates and tax reliefs for those who are eligible.

Tax residence status of individuals

An individual is regarded as a tax resident if he meets any of the following conditions, i.e. if he is:

• in Malaysia for at least 182 days in a calendar year;
• in Malaysia for a period of fewer than 182 days during the year (“shorter period”) but that period is linked to a period of the physical presence of 182 or more “consecutive” days in the following or preceding year (“longer period”). Temporary absences from Malaysia due to the following reasons are counted as part of the consecutive days, provided that the individual is in Malaysia before and after each temporary absence:

                               - business trips
                               - treatment for ill-health
                               - social visits not exceeding 14 days

• in Malaysia for 90 days or more during the year and, in any 3 of the 4 immediately preceding years, he was in Malaysia for at least 90 days or was resident in Malaysia; or
• resident for the year immediately following that year and for each of the 3 immediately preceding years.

Emergency Fund - A Simple Guide

What is an Emergency Fund?

An emergency fund is a stash of Ringgit that you set aside for when an emergency happened and it turns your world upside down and you need the Ringgit to do what needs to be done. Having an emergency fund gives you the peace of mind to know that should something truly awful happen, such as losing your job, you can worry about how to deal with the emergency itself and not worry about how you’re going to survive financially.

While a person’s emergency fund will vary from situation to situation, most financial experts agree that a fully stocked emergency fund should hold between three to six months of monthly expenses.

What Investor Are You?

Everyone's investment criteria and risk tolerance are different. Thus, we can be classified into different types of investors. Below are the type of investors that we can be classified in. Have a look at which type of investor are you.

Bigpay - A Review

I am a user of Bigpay for a long time now. I got it when it was launched a long time ago.

I am sharing the good things about this Bigpay Mastercard here for you to decide for yourself...

The Beginner's Guide to REITs in Malaysia

REIT (Real Estate Investment Trust) is a type of investment vehicle that invests in real estate. REIT's portfolio would consist of one of several of the following:

• Office
• Retail / Commercial
• Healthcare
• Hotels
• Industrial
• Warehouse

It is often listed on stock exchanges. REITs usually receive special tax considerations and usually offer higher dividend yields compared to other companies.

Active Income vs Passive Income

Income is defined as how someone manages to earn or make money. But there are two ways of making money. Below are two the two different type of income:

Active income - Money that you must physically work for it, such as your day job.

Passive income - Money that you will earn without you working for it. such as interest in your saving accounts or dividend from an investment.

The Simple Path to Wealth - JL Collins - A Review

The author of the book advocates a self-directed approach to investing and money management. In short, it tells you to avoid debts, save half of your income, invest your savings in low-cost index funds and ignore the news about the up and down of the stock market.

In the book, you will learn that the investment industry is interested in making you feel that the whole investment process is complex. For this reason, you would need help to be successful in the stock market and your only solution is to go for those advisers that, without you knowing, will earn money for themselves at your expenses.

Track Your Ringgit

The first step to start tracking your ringgit is to start listing down all your incomes and expenses. If possible, try to work out your incomes and expenses for the past three months. If you are unable to get all the details for the past months, you can track your current income and expenses.

Your monthly income (inflow) should include your salary, other receivables such as commission from your side hustles, interests from certain investments, bonus or dividends, and rental receivables.

Your monthly expenses (outflow) should include rental payable, mobile phone bills, student loan installments, personal loan installments, housing loan installments, hire purchase installments, meals (breakfast, lunch, dinner, snacks, suppers), drinks (Starbucks, bubbles teas, beers, liquor), subscriptions (Netflix, iFlix, Steam etc), cigarette, entertainment expenses (Karaoke, trips, movies), petrol, car maintenance, cash for your parent, etc.

Saving - The Foundation of Wealth

I am someone who loves to read and one of my favorite books is called "The Richest Man in Babylon". It is a personal finance book that was being made into the story and the lessons learned there are invaluable.

I totally agree with what is mentioned in the first lesson. It mentioned that we should pay 10% to ourselves first for all the incomes that we are getting. The rest would be used for expenses.

Financial Freedom

Financial freedom is different for everyone. But the basic idea is that when you reach financial freedom, you would no longer be constrained financially to do what you want to do. By having enough income from your investments to pay for all your daily expenses, you no longer have to worry to earn enough to put a roof over your head, provide food all that is needed, and maybe something more, for your loved ones. You are basically financially free to do that thing that you want, such as traveling the world, volunteer at that NGO, staying at the tropical sandy beach, etc.

If you think that it is impossible for anyone to achieve financial freedom, think again, there are many people in this world that have achieved financial freedom and are doing things that want. You can do it too.

While I have not achieved financial freedom myself, I can proudly inform you that I am already on my way to financial freedom but it is definitely a long journey.

The 7 Level of Financial Freedom

The Hamster's Wheel

Have you ever realized that we have been repeating almost the same routine every day?

Wake up

Toilet rituals

Breakfast

Commute to work

Start work

Coffee break

Meetings

More works

Lunchtime

Even more works

Tea Break

Finishing works

Commute home

Dinner

Spend time with children

Spend time with wife

Toilet rituals

Hop onto bed

Sleep

Repeat

If you ask me, the above is almost like what a typical Malaysian's daily routine looks like. But imagine that you would be repeating the same thing for 40 years (assuming you start work at 25 and retired at 65), it does sound depressing. That is why many companies would give your annual leaves to break the cycle and make you refresh before putting you back into the same routine again and again. Many would call it the rat race but a more appropriate new term for this is the hamster wheel.

I am sure that many others would have noticed this hamster wheel of life but not many know how to actually get off this hamster wheel. Truth be told, running on the hamster wheel is all that we know. In fact, we were "programmed" to run the hamster wheel. We were told by our parents that we need to study hard to get a good degree from a college and university. Only with that degree, we can get a good job to support our lives. We are also being "programmed" that we must buy things in order to make us happy. On an average day, we would "see" at least a 5,000 ads. All these ads would tell you that you should

- get the new iPhone because it will make you happy.
- buy the latest BMW because it will make you happy.
- buy the biggest house because it will make you happy.
- eat at the most popular restaurant because it will make you happy.
- buy the largest curved TV because it will make you happy.
- watch that latest TV series on Netflix because it will make you happy.
- play the latest game because it will make you happy.