En Bursa and You

En Bursa is a businessman. If you are participating in the stock market, he is your business partner, whether you like it or not. For your information, he has bipolar disorder. 

Each day, with the exception of the weekend, En Bursa will knock on your door and presents you with an offer. On a good day, he is full of optimism and believes that the future is so bright that he will offer to purchase your stake at a premium. But when he is on the depressive mode, he sees nothing other than a dismal future for your partnership. He wants to get out of it as soon as possible. Thus, he is prepared to sell to you his stake at a highly reduced price. 

The metaphor above is developed by Benjamin Graham (and localized by Yours Truly) which reflects how the stock market will radically change according to the emotion of all the participants of the stock market. Those who participate in the stock market would often find themselves caught up in waves of over-optimism. This can quickly lead to greed and, in turn, would drive the price of stocks through the roof. There are also those days where investors would find themselves weighed down by pessimism and rapidly being overtaken by fear. As a result, stock prices plummet, often to lows never seen before. We, investors, are human beings after all, and all of us are not immune to various emotions that can create havoc.

The Green Ringgit Challenge

Hello 2021.

We are now in a new year and to kick off this new year, let us have a look at this challenge that I did personally for 2020.

More than a year ago (2019), I came across this Challenge to save money. I felt that it could be fun, so I told myself that I would do that challenge for 2020.

The challenge is very simple. I will keep every RM 5 (that is why I call it the Green Ringgit Challenge) that pass through my hand (if it belongs to me). It started very slowly because I don't use can much but somehow, at the end of 2020, I managed to keep 50 pieces of RM 5. When I did the maths, it means that I managed to save up RM 250 in 1 year. It may not be a lot to some but still, I'm proud of myself to be able to save up this RM 250.

With 52 weeks in a year, it means that I almost find one RM 5 every week.

The only thing that I can say is that if I'm able to save RM 250 with this method, you can do it too. If you want to bring it up a level, you can do the following challenges:

The Red Ringgit Challenge (RM 10)
The Orange Ringgit Challenge (RM 20)
The RM 50 Ringgit Challenge

As for me, I have decided to continue with the Green Ringgit Challenge for another year. Will try to beat the 50 pieces records.

Would you want to join me in this Challenge?

Is lottery our God of Fortune?

Who are not intrigued by the thought of striking a lottery and get rich? Chances are, you would have bought some lottery tickets before just to test your luck. Maybe you are still buying it religiously every week.

Many people that went to buy the lottery would view the seller at the counter as their God of Fortune. But is it really as what you think? God of Fortune supposed to be giving you a fortune. But when you are buying the lottery, are you getting any "fortune" from them? Or are you giving your "fortune" to them? 

But if you really look into the possibility of winning the lottery, you would soon realize that the odds are actually against you. For a game of four digits (4D), there are a total of 10,000 combinations so, if you buy one number, the probability of winning is 1 over 10,000 or 0.01%. I am not sure about you but for me, that percentage is very, very low. 

Do note that it does not mean that you will win it once after buying the same number for 10,000 times. Every time you buy, you have the probability of 0.01% of winning.

So, the best thing that you should do is to save up these monies and invest it in right places, such as SSPN (if you have a child), money market or investing in REIT or some of the blue chips stocks such as PBBANK, MAYBANK, or TENAGA. This way, your money would be able to grow.

The Side Hustle Series 3 - Use other people's Ringgit

As discussed in the previous posts, it does not take money to make money. What it actually means here is that you don't need to use your own Ringgit to make more Ringgit for yourself. Don't get me wrong here, I am not asking you to steal other people's Ringgit. It is another method of doing business.

For some business idea, it is possible to use someone else Ringgit to makes Ringgit for yourself. I don't mean it in any way that is deemed illegal, such as robbing the bank or cheat someone off their lifetime savings. I am not asking you to go and take a loan from the bank or loan sharks. Those are technically suicide for your side hustle and yourself. So, please don't... It is not worth it.

Rather, I am referring to get part of the Ringgit from your customers first. Let me share an example.

Makcik Kiah is starting a homemade nasi lemak business. It is a make upon order business to make sure that the nasi lemak will be freshly cooked. When an order of 100 packed of nasi lemak comes in, Makcik Kiah might not have the Ringgit to buy for the required ingredients. It is unwise to borrow from others. What do you think is the best option for Makcik Kiah?

The best thing that she can do is to take a deposit from the customer. Maybe around 50% upon confirmation. That way, Makcik Kiah will have enough Ringgit to pay for the ingredients.

Another advantage of this is actually to get the commitment from the customer. Imagine if Makcik Kiah pay for the ingredients and once the nasi lemak are made, the customer have a change of heart. He didn't honour his part of the deal. When this happened, Makcik Kiah will have 100 packs of nasi lemak that no one wants. She can still sell it somewhere but it needs to be cheap so that people will buy. The unsold nasi lemak will be considered a loss in the business.

With the advance payment, the chance of default by the customer will be much lower. Even when the customer defaulted, Makcik Kiah still has the advance payment to cover for the ingredients.

It is also very important for us to keep our end of the deal. Else, the customer may make a police report, and we will land into a bad situation.

If you have not read the rest of the Side Hustle Series, you can check out Part 1 here and Part 2 here.

The simple maths to achieve Financial Independence.

Financial independence is where your stash of Ringgit is able to provide you with enough Ringgit to pay for all your expenses without the need for you to work at all (unless you want to). The stash of Ringgit would usually be invested somewhere with a minimum return of at least 4%  (the higher, the better).

For you to be able to achieve financial independence, there is only 1 factor only. And the factor is (drum rolling), your savings rate, as in the percentage of your take-home pay.

WHAT? WHAT IS THAT?

To put it simply, it is how much of the pay that you are saving.

For example, if your salary is RM 36,000 per year and after all the expenses are being deducted, you still have RM 3,600, then your savings rate is 10%. If you still have RM 18,000 after all the expenses, then your savings rate is 50%.

To find out how long would it takes to achieve financial independence, we would have to make some assumptions to proceed.

• Assumption 1 - You can earn a 5% investment return after inflation during the savings years.
• Assumption 2 - You will live within the 4% safe withdrawal rate after retirement.
• Assumption 3 - You will want your stash of Ringgit to last forever.
• Assumption 4 - Your net worth is RM 0.

Below is how many years you would have to work until you achieve financial independence according to the different savings rates. 

As you can see, if you can increase your savings rate, you would be able to achieve financial independence faster. 

So, how do you increase your savings rate?

There are two factors:

1. Increase your income.
2. Reduce your expenses.

While both of the above are important, you can start working on increasing your savings rate by cutting down on your expenses. Tracking down all your monthly expenses would give an idea of how much is your expenses (and how much you are saving at the moment). Look into your expenses and think of how you can reduce it. The more common methods are changing mobile phone plan to a cheaper one, eat at home instead of eating out, cut subscriptions that you don't use often (gym, Astro, Netflix), and take public transport if possible. The reason is simple to start reducing your expenses because of its double effect:

1. Increase the amount of money you can save.
2. Reduce the amount that you need every month for the rest of your life.

With this, you would be able to achieve financial independence faster!

The Side Hustle Series 2 - Don't Just Sit There, Take Action

This is part 2 of the side hustle series that I am writing to guide those that want to take the side hustle method to increase your income. If you have not read part one, the link is here.

Now that you have validated your idea (or even if your idea is not validated), it is time for you to make your idea into something concrete. With the advancement of technology, especially the internet, it is possible for you to start something without paying a single cent. Remember that your main aim is to create a mini-experiment, not the final product. This mini-experiment will let us know if the idea that we want can become a viable side hustle or if it is not something that the market is looking for.

Storytime

When we started The Malaysia Dividend Champions List, we started with the most basic structure. We only have a few parameters that are critical to our needs. We didn't focus on the aesthetic factor because it was not important yet. It took a while for us to get it to be acceptable for our soft launch. We called it the beta version. Once it was launched, we continue to improve it week after week. By the 10th issue, what we deem good has been created. Thus, we launched the official product on our 11th issue. Still, improvement continues to take place with feedback from our subscribers.

The main idea here is that it is okay to launch a not complete product as long as there will be continued improvement taking place. Let your customers know about it. If it does bring value to them, they will not mind. The customers may even help by giving constructive feedback to improve it.

 

It is important to get the product into something tangible or it will continue to be an idea in your mind only. And when someone else does the same thing and succeeds, you would only have yourself to blame because of your inaction.

But if your side hustle actually takes off, you will have to think of the following:

1. What do you think about your side hustle?

2. Do you like it?

3. Do you mind taking the time and effort to continue this side hustle?

4. Does it bring you the joy that you hope for?

5. What now? Do you have any plans for the future?

6. Would you want to continue with this side hustle?

7. Would you want to bring it up to the level of a full-time business?

Again, take action. At least even when you failed, you can tell others that you have tried but it was not meant to be.

If you have not read Part 1 of the Side Hustle Series, you can click here.

The Side Hustle Series 1 - Validate That Idea

There are many ways to increase our income. Some prefer to invest in the stock market for passive income, and others would work on a side hustle. There is no right and wrong way. Each has its pros and cons. This article will be a series of articles that will discuss mainly on starting a side hustle.

Let's admit it, we all have that one big idea that we believe will change the world. Some of us may have more than one. I personally have quite a few and at least one of it has become a small side hustle for myself. I was lucky because I took action on the idea. And the results are showing that I am on the right track.

Have you taken the action for your big idea?

Many of us would not dare to take action because we have been told that to start something, we need to have Ringgit first. (And for those that did, chances are, it didn't work out.)

This thought came from the saying that "It takes money to make money" but it is not real. Do you know the origin of the saying? It was to by a comedian for a play as a joke! And yet, many of us actually choose to believe that it is true.

And because of this saying, there are a lot of "starting a business" guide on the internet would tell you that you would need a business plan prepared by a professional first because that's the way it should be. In the business plan, you will put in a lot of information. You would find out that you need a lot of Ringgit to start because you will need to rent/buy an office (not forgetting the furniture and all related office items), registered the company, print name card, etc. according to your business plan.

I am sorry to tell you that this is all BS. It is on the internet to makes you believe that it is real so that you would engage the professional to write a business plan for you. What happened in the end? You will pay a certain amount of Ringgit to the professional even before you start.

You don't need a business plan to start. You need an idea to take action on. With the power call internet, it has become so easy to take action without breaking the bank. I started mine with 0 (zero) Ringgit.

But I have so many ideas. Which one should I focus on?

It is easy to feel overwhelmed because we are not sure which idea we should focus on. It was the same as mine and in my opinion, the best way is to focus on an idea that came about from our own needs.

In early 2020, I was looking for ways to find the right companies to invest. I was particularly intrigued by the idea of dividend growth investing where we invest in companies that pay out increasing dividends on yearly basis. This concept leads to the creation of the US Dividend Champions List and many similar lists have been created for a few other countries. Unfortunately (or should I says, fortunately), there is no such list in Malaysia yet (at least I don't know). So, I took the time to start researching the market and after a few months, I have established basic criteria and more than 30+ companies are able to meet these criteria.

With some help from my partner, we work out the concept into "The Malaysia Dividend Champions List" and we start promoting it to the world. It takes a while for it to start moving (people signing up) but things have been steady now. All these are done without using a single Ringgit to start but it does take a lot of our time.

Our own story for "The Malaysia Dividend Champions List" is just one of the side hustle that was started without putting in a lot of money. Some started without any Ringgit and yes, it can be done.

So, if you have an idea that you wish to test if it is workable, you can try to pitch the idea to your relatives and friends. Most of the time, you will not get real feedback because they don't want to hurt your feelings. To counter this, tell them how much you are charging for it and ask if they will sign up right there and then and become your first customer. When real Ringgit is involved, you will get their true feedback. If they rejected your idea, don't be dismayed. Use the feedback to improve your product/services or the reason to stop and focus on the next idea.

If there is at least one who signs up, you already have a winner. You have validated your idea.

Side note - even when you didn't confirm your idea, it is okay to move on to the second stage to build up your idea.

Check our Part 2 of our Side Hustle Series here.