July 2021

How to spend wisely and save more?

Saving is crucial to retirement planning. If we cannot save, we are not able to achieve financial stability and for sure, we are not able to retire as well. Imagine, if we have no saving, when an emergency event happens, how are we going to deal with them? We will be panic, we are not financially stable in that case. If we want to retire, we will need stop work in the future, so we will use the saving to fund our retirement expenses. If there is no saving, how to stop work?

The key to saving is wise spending. The culprit of not being able to save is the inability to control spending. Well, we are all human beings. We have desires and wants. We want comfort, we want freedom, we want fulfilment and many many things. But, seldom we sit down and rank the list and check what are our priorities. In fact, we have one important purpose in life – we all want happiness in life. I assume happiness is our top priority.

By knowing this, whatever money that we spent on things that don’t make us happy is wasted. This concept is powerful if we want to spend wisely. Some simple questions to let you know the real meaning of this.

How many of you have purchased things after seeing the advertisement without evaluating whether you need the items?
How many of you have purchased something expensive and found it to be too precious and you keep it rather than use it?
How many of you have things turning expired and unused?
How many of you have bought something because of your friends or family members?

There are in fact many things that we buy which we don’t use, hence they are not contributing to our happiness level. And worse, we found out that we have lesser money to do the things we want – we are sad. But, why are we buying these things in the first place?

This is what I call “the mismatch of the priorities”. We overlook the reason why we buy them. Shopping will normally increase our happiness for a while but they are not permanent. Our desire is being manipulated by advertisement and our environment.

To avoid this, we need to be more careful when we spend. We evaluate the purpose first when we spend. If we understand our priorities that make us happy, we will be able to select things to buy more meaningfully. The following shows the list of items for you to consider to decide your priorities:-

Mental health
Physical health
Spouse
Kids
Parents
Friends
Colleagues
Communities
Freedom
Comfort
Status
Recognition
Social contribution
Hobbies
Personal growth

Spend more on the things in the top priorities. If our health is on higher priority than friend, we should buy a sport equipment for better health than spending on social event with friend. Product itself does not increase our happiness level, the experience will. Spend only on things that can create the experience that can increase our happiness level.

Start to understand your priority and you shall be able to make informed decision on spending. Have less thing or nothing being wasted. Increase your long-term happiness level by wise spending and you shall be able to save more. Watch the Youtube video here on this topic.

************************************************************************

You can receive constant broadcast message relating to wealth creation to financial freedom through Telegram. Click here to subscribe to the telegram for the weekly newsletter.

Chinese stocks are crashing, what should we do?

Chinese stocks have tumbled into negative territory for the year. Chinese internet giants like Tencent, Alibaba and JD.com dropped in price to their lowest in 52 weeks’ time. What has happened?

The declines are caused by the step in by the Chinese regulators to oversee in education and technology sectors. This causes the education related stocks dropped more than 80% in price and tech giant stocks to drop more than 40% in price from their all times high. Didi, the e-hailing company has also dropped more than 40% since its IPO in US because they did not listen to the regulator’s recommendation not to be listed before addressing the internet security issue.

The single 2-day decline (Monday and Tuesday) for the Hang Seng index was significant. We have never seen such significant drop since financial crisis. When the drop is so fast and significant, it might be too late to exit any investment when everyone is panic selling.

After doing some research and calculations on the companies’ real values, it is found that Tencent, Alibaba and JD are undervalued. Their revenues have been rising despite the pandemic. This shows the strong and right business model. Even though their upcoming revenues might be affected by the Chinese regulations, but the impact is viewed to be minimum compared to the expected growth of the revenue. I believe they will still remain as leaders in the sector. As such, the decline can be a good time to accumulate more shares.

For the education and e-hailing Chinese businesses, the model needs to be re-looked. The interference of the Chinese government on these companies could impact their business models and revenues significantly and hence the future prospect of these businesses is questionable. Despite the above opinion, the Chinese stock market is expected to be volatile. Investors are advised to deploy proper asset allocation on their investment portfolio to avoid great loss. Whichever drop will rise up and whichever rise will drop again. Stocks are not moving in straight line up or down, they are moving in waves. Volatility in share price is always expected and hence it gives investors great capital gain opportunity. Stay calm always in the investment journey and stay invested on good and sound companies. Let the time does the magic on your wealth.

************************************************************************

You can receive constant broadcast message relating to wealth creation to financial freedom through Telegram. Click here to subscribe to the telegram for the weekly newsletter.

Hacking the bad habits for managing personal finance

According Nir Eyal, habits are formed based on the hook model as follow, with 4 elements, i.e. trigger, action, variable reward and investment.

Triggers: Triggers can be external or internal. It is the spark of an habit.
Action: Following trigger comes the action, the behaviour done in anticipation of a reward.
Variable rewards: Human have desires and wants. Right rewards will be able to suppress the areas of the brain associated with judgement and reason and activating the parts associating with wanting and desire.
Investment: Investment phase increases the odds that the user will make another pass through the Hook cycle in the future.

While understanding how a habit is formed via the above 4 stages, it would be easier for us to break the bad habit and form a new good habit.

In order to have stabilised personal finance, we need saving and investment habits. The reason why many of us cannot save is because we are spending. We can either suppress the habit of spending or we build the saving habit.

Based on the above “hook model”, to build the saving and investment habits, we need to start by introducing the trigger. The suggested trigger will be the income credit into the saving account. We need to start the habit of transferring portion of the saving out from the salary to investment when we see the money comes into the bank account. When we have done this enough time (about 66 times to 90 times), a new habit will be formed. We also need to install the rewards into our brain by doing the action. Suggested rewards would be the picture of our happy family with stabilised financial situation or happy retirement. If we have built strong emotion tie associated with our habit, it is highly likely we will follow through.

Also, simultaneously, we need to break the spending habit. The trigger for this habit is “seeing beautiful things” and the reward is the pleasure of having the item(s). We can break the habit by being aware about the triggers and eliminating the chances of seeing those triggers. Also, we can re-adjust the “pleasure of buying the things” to “pain of having lesser money after buying the things”. Having a better personal finance stability is indeed beyond just managing finance but to master the psychology. Hope the above can help you to understand how habit is formed and let’s break the bad habits.

************************************************************************

You can receive constant broadcast message relating to wealth creation to financial freedom through Telegram. Click here to subscribe to the telegram for the weekly newsletter.

How this concept helps me to acquire more than 10 properties

In order to retire early, we need to know about this important concept – assets and liabilities. The wealthy people often spend more on assets than liabilities. A lot of people think that saving is important but spending on the right thing is equally important. The wealthy people don’t just save, they use the saving to spend on assets.

I learn the concept of assets and liabilities from Robert Kiyosaki’s book. For him, assets mean things that can put money into our pocket and liabilities are things that take our money away from our pocket. The following shows the cash movement:-

Another thing you might not be aware is assets can generate automatic inflow for us while liabilities will generate automatic outflow from us. The more assets we have, we are more relaxed as we do not need to work that hard. The more liabilities we have, we are more stressed because we need to work harder to pay for the automatic outflow.

Because of this concept, I make sure more of my money goes into assets. I only save enough for my emergency and the rest of my money goes to assets. One of the assets for me is property which can generate rental income for me. I prefer to buy more properties to rent out than upgrading my own stay house. So, my most expensive property is not for own stay but for investment.

I will try to reduce my liabilities by reducing spending on things that cannot generate income for me such as car and credit card loans. Credit card interest is high and I will never pay late, I will ensure the full payment is made on the last day of the due date.

My friends often ask me, why not I buy a bigger house or bigger car? But, I really cannot justify the decision. For me, a bigger own stay house will take more money out from my pockets. For example, I need to pay more electricity bills because I need to install more air conditioning units. I also need to pay more maintenance fee because the house area is bigger. I do not like fancy car as I don’t enjoy driving. The bigger car I have, the more I need to pay for insurance and the fuel. It keeps taking money out from my pocket.

Investment properties are different. If the property is the right one, it gives good rental yield and the income is regular. It might not be a fancy or beautiful property but it gives rental monthly income.

To be able to retire faster, this is the basic concept that you need to understand. Let’s start to buy more assets and reduce liabilities. Before that, understand also what are considered assets and liabilities. Never treat your own stay house and own used car as assets anymore!

Watch the Youtube video here on this topic.

************************************************************************

You can receive constant broadcast message relating to wealth creation to financial freedom through Telegram. Click here to subscribe to the telegram for the weekly newsletter.

Retire early: the why, the when, the how and the what

The WHY: Every success starts with the strong reason why. Why do we want to retire early? The strong reason should not be just money. A strong reason needs to be associated with emotion. When we have money, we can buy time. We can buy what our family members need. Researches have shown that people with strong reason will succeed better than people who don’t know the reason why they want to do something.

The logic behind this is that what we want to achieve is beyond our comfort zone. Mostly, we need to do something different from what we are currently doing. If we don’t have a strong reason, we will easily fall back to our old self. Retire early can help us have more time. Time is powerful, when we have time, we can sleep more, we can network and build relationship with people we care, we can do what we love to do, we can help others who need. Many are not aware that when we have time, we can also build our wealth to a greater level. If you survey around, the richest people mostly have more time for themselves. We should not be stuck by being busy and not able to get the wealth that we need.

The WHEN: If someone is offering you a million Ringgit with no strings attached, do you want it now or next year? Obviously, the answer is NOW. We need to act now for the planning to retire early, not tomorrow, not next year. Marianne Williamson quoted this before:

Our deepest fear is not that we are inadequate.

Our deepest fear is that we are powerful beyond measure.

It is our light, not our darkness, that most frightens us.

We ask ourselves, who am I to be brilliant, gorgeous, talented, fabulous?

Actually, who are you not to be?

Understand who and what are stopping us from taking action now to retiring early. Makes our dream come true by doing something now.

The HOW and the WHAT: the how is actually the least important on early retirement. We just figure out the WHAT, the HOW will surface. To retire early, these are the following simple WHATs:-

Save everyday, have sufficient emergency fund for rainy days (3-6 monthly expenses)
Invest the rest

You might be surprised how simple is the WHAT. In order to save more, the how is to spend wisely and plan wisely on cash outflow. In order to invest, the how is to understand how each type of investment works, understand the objective of the investment and to determine the right investment strategies. The initial investment strategy shall focus more on capital gain because our starting capital is lesser. When it is growing to the required amount, it is time to switch to investments that can offer consistent dividend return, rental return that can help to offset the retirement expenses. Learning the investment risk management is also important to make us win in investment most of the time.

************************************************************************

You can receive constant broadcast message relating to wealth creation to financial freedom through Telegram. Click here to subscribe to the telegram for the weekly newsletter.

How to improve your wealth by just changing your identity

George Akerlof, a famous economist, in his book explained that how you see yourself plays a huge part in how much you earn, and indeed how much wealth you believe you deserve and gain eventually. So, how you see yourself is how you project yourself to others which forms your identity. So, you need to have supportive identities if you want to grow your wealth and retire early. This can be the easiest to change because what it requires is only YOU, nothing else.

People always think that they must have money first then they can do what they love to do such as retire early. After that, they will be rich. This is the wrong thought and contrary to the law of success. If one doesn’t think like the rich, he can’t even be able to attract and see the opportunities to grow his wealth. We first need to think like the rich, believing that we can retire early, then we will start behaving like the rich, after that, you will realize money starts coming in. It might sound magical but it really works that way. Things work best from inside out and not the other way.

It is like scoring good grade in school. We don’t first score good grade. We believe we are good students, and we behave like good student which we spend time reading and doing what a good student needs to do. And finally we have good grades.

It is also like building relationship with others. We first need to believe we are sociable, then we will act friendly, hence we are attracting more friends. If we think that we need more friends to become sociable, it can never work. If you think that we need to have money first for wealth, we can never be rich. This illustrates the importance of who we believe we are, which is our identity.

What are the identities that we need to install for early retirement? The quick way is start visualizing yourself have retired earlier, how would you think? How would you carry yourself? How would you act? Then act accordingly.

People who can retire early has multiple sources of income, they save and invest heavily. When you have such identities, you will slowly change your action. If your identity is a saver and investor, will you be saying investing in risky? Will you be asking how to save? No! because you already believe you are doing it. You would start to saving and investor straight away. This is the shortcut of changing behaviour. You won’t need strong motivation.

Change your identities, change your wealth destiny.

Watch the Youtube video here on this topic.

************************************************************************

You can receive constant broadcast message relating to wealth creation to financial freedom through Telegram. Click here to subscribe to the telegram for the weekly newsletter.

How applying the loan moratorium can affect you?

Bank Negara announced the six-month moratorium beginning July 7, 2021 which individuals and SME owners can opt in to apply for it. This announcement is indeed good for individuals or SMEs who are having tight cash flow during the pandemic. It said banks will not charge interest on interest, or profit on profit (i.e. compounding interest/profit), or any penalty interest/profit during the period of assistance.

The repayment assistance packages for individuals are as follow:-

However, banks will still be charging interest on the loan outstanding amount. Only the compounding interest is excluded. For example:-

The original loan amount: RM 500,000

Loan interest per annum: 3.10%

Loan tenure: 30 years

Loan monthly instalment: RM 2,148.68

After 10 years, the outstanding loan amount will be RM381,090.63. If one starts to apply for the 6 months’ loan moratorium, one will be charged additional interest for these 6 months, i.e. approximate RM 100+. The planned repayment of the principal with interest is RM 12,892.08. Please note that the full repayment with the additional interest can be immediately payable upon the end of 6 months’ loan moratorium. If you need to postpone the repayment of this amount, you need to arrange with the bank and more compounded interest will be incurred and spread over to the remaining loan tenure. If you are not having cash flow problem, you should continue paying your normal loan instalment as normal. Delaying it will cost you more and upon the end of 6 months’ moratorium, you will face bigger outstanding amount to be paid.

Different banks will have different treatments. You can check the following links for different banks.

************************************************************************

You can receive constant broadcast message relating to wealth creation to financial freedom through Telegram. Click here to subscribe to the telegram for the weekly newsletter.

3 mindsets that you should have for money mastery

In the previous article, we talked about fixing the financial problem. It has been explained that we should identify the root cause and not just busy getting more incomes fixing the immediate financial issues. The first mindset you should have is: make money important for you. What I realize over the years is people often ignore the importance of money. Many make career more important and they forgot the main reason why they go to work? They spend time working, doing the work better and they often do not track the end results which is the money. Some might think that having more money is evil and rich people are bad. This makes them ignore the money even more. They just go back to work, hoping they can get enough money to survive. If that’s what they think, they will only get enough money to survive.

When I talked to many of my prospects about setting financial goals, i.e. how much money they need for retirement or for their children, many of them have no clue. Some even told me that it is still too long to plan and they will postpone this when they are free to do the planning. You see, people are too busy working without knowing why they need to work. It is a never-ending cycle. If money is important, why is it not being prioritized? Why people want to postpone it to a later dater. When people want to start planning, unfortunately, it is because something has happened. The fire fighting cycle start happening. I’m not suggesting that you should worship money. I just want you to realize that money is a very important tool to help us get freedom and solve many of our family issues. If we have money, we can use the money to engage other people to do something for us and free up our time. We can then spend more time with our family members. Change your priority from working to money.

Number 2 mindset, allocate time for our personal finance every day. If it is important, we need to have time thinking about it. Not tomorrow, not after 1 week and not after 1 year, do it everyday and start today. Robin Sharma is one of world’s top leadership experts who coaches many billionaires and top world athletes said “Consistency is the mother of mastery”.

If we want to master the money, we got to do something consistently. Nowadays, many are spending too much time on working, some don’t even track whether they are working productive to get the money they deserve. Many will just spend without tracking. If we can just allocate 15 mins everyday for this important matter. I can assure that everyone of us will do better in personal finance. 4 things that we should be doing everyday. First, save everyday. We know that we cannot work forever, hence we need to start saving for our future. We do not postpone this action to next week, next month, next year or next 10 years. It is a top priority that we take care of our future. We spend 1-2 minutes transferring our money to our future retirement account, it can be an investment account so that it can give us a better yield than normal saving account. As the investment might need minimum amount, so I normally set up a separate banking account which I transfer money into it on a daily basis. Every month, I will transfer this money in the banking account to another investment account once it reaches the minimum amount for investment. Read here for how I set up a separate goal in Maybank to save money everyday.

Second, spend time planning and budgeting of the expenses. Spend 5 minutes or so tracking the daily expenses and reflect. Know how much we are spending and improve the way we spend our money. Third, spend 5-10 minutes everyday learning something about personal finance. You can learn about loans, saving, budgeting, investing, general market situation which affects your money. You can get new knowledge via watching YouTube Video, reading books, reading article, listening to podcast, etc. Fourth, spend 10-20 minutes every month to plan for your investment and grow your wealth. We certainly do not want to continue trading our time for money. Start to find ways to earn money while we are sleeping through leveraging on productive assets.

Third mindset that we need to have is always think long term and never give up. Personal finance takes time to master and improve. It requires discipline to maintain it. No one knows everything and we are improving every day. It is not a sprint but a lifelong journey. Never expect that we can earn a huge amount in one shot and then rest forever. This hardly can happen if we don’t master the money transmission process. People who get big fortune within a short period of time and not spending time managing the money will eventually run out of money again. Then these people will need to work hard again to get more money.

Once you have these 3 mindsets and you will be able to apply all the strategies to grow your wealth. Remember, strategies alone are useless without the correct mindset.

Once we are able to master the money skill, it will help you forever. Do the required action everyday, you will be a money master in no time. You can watch the Youtube video here on this same topic.

************************************************************************

You can receive constant broadcast message relating to wealth creation to financial freedom through Telegram. Click here to subscribe to the telegram for the weekly newsletter.

One book that changed my life

Recently, there is one friend who asked me to write on books that have impact on my life. In fact, there are a lot of books that I felt that have changed the way I do things which transformed me to who I am today. However, out of so many books, I would like to share 1 book that have changed my life the most. The book is written by Robert Kiyosaki. The book is not the popular “Rich Dad Poor Dad” but “Retire Young Retire Rich”. I personally feel that this book is much more powerful than the “Rich Dad Poor Dad”. The below is the cover picture of the book.

In the book, it mentioned the reason why we need to retire early. Our focus should be on regaining our control on finances as fast as possible and we will have plenty of time to accumulate the wealth we need for our wildest dreams. In the first chapter, it mentioned everyone has the potential to be rich even though one started without any money. It is all a matter of leverage.

There are 3 types of leverage mentioned in the book:-

Leverage of our mind: we first need to believe that retire young and retire rich is possible. It does not take money to make money. Getting rich begins with our word, and words are free. In the book, it mentioned that people who say “investing is risky” are some of the biggest losers in the investment markets. Robert mentioned that we will soon find out what we think is real becomes our reality. Change the words we choose, our wealth destiny will change accordingly.
Leverage of our plan: Robert mentioned about investing is a plan. We need to have a plan so that we are moving towards the right direction. Most people have the plan to be poor. That is why so many people say “When I retire, my income will go down”. In other words, they are saying “I plan on working hard all my life and then I will become poorer after I retire”.
Leverage of our actions: There is an overused story about three birds sitting on a fence. The question is, “If 2 birds decide to fly away, how many birds are left?” The answer is “3 birds are left”. The lessons is, because we decide to do something does not mean we will do what we decide to do. Implementing what we plan is crucial to our financial success!

The above are the three main messages conveyed by the book. Because of the book, I have changed my mind that we have the rights to gain wealth. I understand that we need to change our mindset to be retiring early rather than following the majority who are struggling financially. If we want to have different destiny, we need to change our mind, have a plan towards it and implement according to the plan. We need to think and act differently from the majority since the majority cannot retire early. After reading the book, I have started investing and investing even more aggressively over the time. I shall share more the book review in the upcoming article. Stay tune!

************************************************************************

You can receive constant broadcast message relating to wealth creation to financial freedom through Telegram. Click here to subscribe to the telegram for the weekly newsletter.

Can getting more income solve our financial issues and lead us to where we want to go?

These are the popular questions relating to personal finance: What are ways to have more money? Which stock can help me earn few thousands this month?

Em…why do we need to keep thinking how to get more income? I start to feel that it is a never-ending issue. We can have unlimited desire on wealth, how much money is actually enough for us?

To illustrate this, let me share with you a story. On one heavy rainy day, water came down from the ceiling. I put a bucket below the leaking place to hold the water so that it would not spill over to the floor. After 30 mins, the bucket was full, and I emptied the bucket and put the bucket back to the same place. However, thing was not getting better. In fact, thing was getting worse, and the bucket would be full after 20 mins. I changed the bucket to a bigger bucket. However, I realized that it didn’t solve my problem. I got to spend time emptying the bucket every now and then. If you were me, what would you do? You might be wondering why didn’t I call someone to find out what happen to the ceiling or roof and fix the problem.

Calling the roof specialist might be the permanent solution, right? This issue mostly happens to our personal finance as well. Every month, we are spending money. This is like roof leaking. We are finding ways to earn income to cover our expenses. Over the years, our expenses increase. We are finding better way to earn more money to cover our bigger expenses.

Do you realize that we keep finding ways to earn more money, similar to finding a bigger bucket to hold the water? This is similar scenario like finding a bigger bucket to hold the water. We are stuck, we are busy emptying the bucket and finding a bigger bucket.

How do we solve this problem? To stop this cycle, we should look for someone to help us to check the real issue. If we keep fixing the immediate issue without looking at the root cause, the issue can get more serious over time. It can turn into a financial disaster. However, if we can spend a little bit of time checking on the root cause, we will be avoiding the financial disaster. Why don’t we examine our spending habit that cause our expenses increase so much? Why don’t we invest to have multiple streams of income? This can help us to have automatic process to empty our bucket since we cant stop expenses anyway?

This concept is simple but it is not easily understood by many when it comes to finance issue. Not enough money, cannot save, having too many debts are the symptoms of the issue. We need to find the root cause. It is most likely our money mindset which are stopping us from achieving what we want to achieve. Start to look at the root cause to avoid financial disaster and stop just fixing the financial issues that kept appearing to us. Fixing the financial issues is just temporary measures, it won’t lead you to where you want to go.

I have compiled a video on this too. Watch the Youtube video here.

************************************************************************

You can receive constant broadcast message relating to wealth creation to financial freedom through Telegram. Click here to subscribe to the telegram for the weekly newsletter.