JoyRead #4

Should I Invest for Capital Gains or Dividend Yields? by KCLau.com - KC wrote a wonderful post regarding why we should invest for dividend yields. He shared 9 reasons while investing for dividend yields is a better choice and I totally agree with him.

How To Start Working From Home In 6 Steps by Out and Beyond - Aisha gave a good step-by-step guide on how to start working from home. The post is very practical because she has done it.

How to save money for your kids and teach them about finance by Think Save Retire - I always believe in financial literacy and it should be learned from young. Thus, I find this post most informative as to how I should guide my little one.

* Note to the authors of the featured article, it would be great for you to grab the following image and link it back to Radical Ringgit.

Frugal Living

When I learn about financial independence, I have started to adjust my life according to this new goal. What I didn't know is the life that I am living in now is call frugal living. Frugal living means adjusting the priorities of life by focusing more on things that are important. As a husband and a father, my top priority would be to provide for my family, both now and also in the future.

But how does frugal living works?

Frugal living works in 3 different areas:

1. Smarter Money Management
2. Smarter Spending
3. Smarter Lifestyle

Smarter money management

When you know what is going on with all your money, you would be able to make smarter decisions. You will know if you should save or spend it. You would know if that something is really worth your money or not. And the only way to know what is going on with your money is to have a cash flow records (aka track your money).

Record all the money that comes in and go out. Over a month, you will find some surprises on where did your money went to. And you will start to be more mindful of how you are spending. That is what we call smarter money management.

Smarter spending

As mentioned, once you know where you are spending your money, you would be more mindful of how much you are spending. You would start to look for alternatives whereby you would still get the same result but at a lower price. This is what we call stretching the money.

You will also start looking for possible ways to get cashback, discount coupon, rebate, and up to possible buying in bulk and stockpiling certain items that you found at an unbeatable price. Another way of smart spending is when you know when you would not spend it. When the purchase doesn’t fit into your budget, you would wait until the item goes on sales before buying it. That is what I call smarter spending.

Smarter lifestyle

Do you know that the supermarket/hypermarket/retail stores are charging you RM0.20 for each plastic bag that they provide for you? It may not seem much but if every 3 days, you would go for grocery shopping, 1 one year, you will be paying RM24 just for 1 plastic bag. What if you are taking 2 plastic bags? That is RM48! So, instead of continuing using plastic bags, use a recycle bag. It is much more convenient and cheaper and stronger too.

Also, instead of eating out every other day, cook the meal at home and enjoy the more wholesome meal. Have fun during the process. Or bring your lunch from home and you can skip driving out of office to buy your lunch. That is what we call a smarter lifestyle.

Why Live Frugally?

Frugal living unlocks a world of possibilities. You can pay off all your debts, pay for your child's education, retire early, travel the world, etc. It may not be an immediate result but eventually, you will get there.

Are you with me?

JoyRead #3 - 21 February 2020

This time around, I would be sharing 3 articles written by our local blogger.

The Actual Cost Of Owning A Car in Malaysia by The Money Magnet - When we think about buying and owning a car, we usually think about the cost of the car alone. What many of us didn't realize is that there are other costs involved too, such as fuel, maintenances, spare parts, car washings, insurance, road tax etc. Michelle did a good job of writing out most, if not all, the additional costs that we did not think about.

Balancing Consumption by Aishah Kamaluddin - We, humans, have a certain instinct that we didn't realize. We would not want to waste our time, and indirectly, we would want to get the best out of everything. So, we would try to consume something all the time. Have a read of how we could/should balance our consumption.

Luxury cannot be low-cost. True? by kopiandproperty.com - There are many rich people in the world. And there are also those people who are not so rich too. Either way, all of us are consumers and we would want something out of our money. What this article share is more about how different people would consume the same thing at the different standard. Read the article and you should understand what I am saying. This article is one of my favourite articles for February 2020.

* Note to the authors of the featured article, it would be great for you to grab the following image and link it back to Radical Ringgit.

Insurance 101 - What is Insurance anyway?

Insurance is an arrangement whereby a company or government agency would provide a guarantee of compensation for specified loss, damage, illness, or death. In return, those that bought the insurance will make a payment to the company call premium periodically. 

For Malaysia, we also have Takaful, the shariah compliant version of insurance. The concept of Takaful insurance is based on the Shariah laws whereby a group of participants mutually agree among themselves to guarantee each other against a defined loss or damage that may inflict upon any of them. These participants will be contributing a tabarru’ or donation into the takaful funds. Takaful emphasizes unity and co-operation among the participants.

JoyRead #2 - 14 February 2020

How to Find a Financially Responsible Partner by Casual Money Talk - Finding the right partner is really crucial for all of us. Financially, it will make or break our bank. Thus, it is really important to find a financially responsible partner. This guide by Flora Pang will help you do it from every angle.

After working for 35 years, we get many millions of ringgit, good? by kopiandproperty.com - If we really count all the money that we earn, we should earn a lot of money, right? But the issue is that we have expenses that we have to pay. Still, there are some people more privileged than others. This article look into that perspective.

Maximize Fixed Deposit Placement With 4 Simple But Useful Tips by The Money Magnet - Michelle shares 4 useful tips on how we could maximize our fixed deposit (Cash Deposits for some) placements.

A Quick Investing Perspective On The Novel Coronavirus (2019-nCoV) by The Good Investor - With the Novel Coronavirus pandemic that makes people panic, what we, as investors, should know? This is a very good article by Ser Jing of what we should expect and do during this period of time.

4 Morning Habits of Successful People by MoneyNing - If we want to be successful, we should learn from those who are already successful. David Ning shares four-morning habits of successful people.

* Note to the authors of the featured article, it would be great for you to grab the following image and link it back to Radical Ringgit.

Investing vs Speculating

A lot of people have a misconception between investing and speculation. Many thought that both are one and the same. But that is not actually true.

JoyRead #1 - 07 February 2020

When I decided to realign the direction for Radical Ringgit, I wanted to add a weekly "articles to read" list that I hope will help you to improve your knowledge.

Thus, let me present to you the first JoyRead for your coming weekend.

1. Three Ways Bank Negara Malaysia’s Rate Cut May Affect You by Ringgit Genie - Gavinesh has an article about how the recent rate cut by BNM would actually affect each and every one of us. Is it a good thing or a bad thing? For me, it is a bit of both.

2. Paying Debt vs Investment. Which Should Be Your Priority? by Black Belt Millionaire - A lot of times, your friends would tell you that it is better to start investing and just pay the installment as scheduled. Well, Raymond has an article about which one should be your priority and I highly recommended it.

3. The Wedding Proposal: Malaysian Chinese Wedding Planning by Marcus Keong - Marcus wrote about planning for the wedding proposal, including the financial side. This is super important for all the guys out there who would be popping that question to your girlfriend in the future because you would not want things to go wrong and your girlfriend rejected your proposal right? So, have a read and better plan your wedding proposal.

4. Wealth Is What You Don't Spend by Collaborative Fund - An interesting article about how wealth is not preserved by many and why we should be more intentional with our money.

5. How Much Money Should I Keep in Savings for an Emergency Fund? by Frugal Asian Finance -The title says it all. How much savings should we keep for an emergency.

* Note to the authors of the featured article, it would be great for you to grab the following image and link it back to Radical Ringgit.

Who is Dave Ramsey?

In the world of personal finance and money, chances are, you already know who is Dave Ramsey. He is a radio personality turn author and public speaker who uses his own story of financial turmoil that followed by tremendous wealth as a way to teach others about personal finance.

The reason why he is so popular is that he understands the motivation people need to get out of debt. He breakdown the steps into 7 steps that he calls the Baby Steps:

• Step 1: RM 1,000 in an emergency fund.
• Step 2: Pay off all debts except the house by utilizing the "The Debt Snowball" method.
• Step 3: Three to six months of savings in a fully-funded emergency fund.
• Step 4: Invest 15% of your household income for retirement.
• Step 5: College Funding (e.g. SSPN-i)
• Step 6: Pay off your home early.
• Step 7: Build wealth and give.

Step 1: Save RM 1,000 in an Emergency Fund

Dave recommends starting off by focusing all your attention and energy on saving up $1,000 in an account and label it for emergencies only. By doing this he is able to get people to have a “small” win first, which will encourage them to continue the next baby step.

Step 2: Pay Off All Debt Except Your Mortgage

Baby Step 2 is all about psychology. This step is one of the most important ones that show his power of motivation by using something he calls “The Debt Snowball“ method. This method gives people quick wins from the start and keeps people motivated because the majority of people will be staying in this step for several years before they can get rid of their consumer debt altogether. The quick wins will help to keep the people motivated so they can continue to stay the course.

"The Debt Snowball" method is where you would list down all of your debts (except for your mortgage) from smallest to largest. Next, you would make minimum payments on all the debts and put every extra Ringgit towards the smallest debt until it is gone.

After the smallest debt is paid off, you would move on to the next smaller debt on your list. With this second debt, you would add what you were paying on the smallest debt plus the minimum payment you were already paying until it is paid off. Repeat this process with all the debts on the list until you are consumer debt-free.

When you start paying off the debts one by one, you will see that the snowball would start growing. It will cause the brain to release dopamine and serotonin (neurotransmitters) whenever you win something. These neurotransmitters will cause you to want to continue the process more and more.

Baby Step 3: Finish The Emergency Fund With 3 To 6 Months Of Savings

Once you are debt-free, you would have a good stash of ringgit(the money you used to pay off your debts) for other use. On Baby Step 3, this stash of Ringgit is best used to build up your emergency fund of 3 to 6 months of savings. Dave claims that by doing it this way, we're reducing the risk of having to go back into debt if we experience an emergency. If you do not do building up this emergency fund, how would you handle an emergency? Would you pull money from your children's college fund or get into debt again?

Once you have completed this step, you are now able to protect your family from major financial emergencies.

Baby Step 4: Invest 15% Of Income Into Retirement

It's natural for us to want to put our kids ahead of ourselves. But what if you end up without sufficient retirement income because you made the college funding a higher priority? You would have to depend on your kids to take care of you. Won't it be better for you to take care of yourself?

So before you begin doing anything with the excess money left over from paying off the consumer debt and building the emergency fund, Dave suggests that you invest 15% into your retirement accounts. For us Malaysia, this is in addition to our KWSP/EPF. If you are not sure where to invest in, you can look into the articles I have written on Wahed Invest here and here.

Baby Step 5: College Funding For Kids

By the time you reach this step, you should:

• have an emergency fund with 3-6 months of expenses
• be debt-free (except a mortgage)
• be investing at least 15% or more of your gross income

Now that you have your finances in order, it is time for us to put some money into our children's college education. It is a good thing that we actually have SSPN-i and SSPN-i Plus which are tax-advantaged accounts for educational expenses. How much should the amount be is up to you to decide? Tertiary education in public universities would be much cheaper compared to private colleges or universities. It is best to save more.

Baby Step 6: Pay Off Your Home Early

Dave recommends that you take any extra money coming in after you've progressed through the other Baby Steps in order, and throw it towards the mortgage. The faster you pay off that mortgage, the more interest that you would be saving once you have clear it.

Baby Step 7: Build Wealth And Give Generously

Yes, you have finally made it to Baby Step 7. You don't owe anyone anything and now it is time to really start building wealth and help others.  Dave actually wants us to reach this step and become financial independence.

Dave mentions that to build wealth, one should invest in both mutual funds and real estate but before you move in and start buying shares in every single company in Malaysia, read up on investing books or search the internet for what those who are financially independent do with their money.

Never forget about giving. The meaning here is to give to help others