Individual Personal Finance

Change your words, change your destiny

When it comes to personal success in wealth generation, most people think that if we can copy what the successful people do, we can be successful. Is that right?

How can words change your destiny? Test this out, excitingly tell your family members that you are happy. Do you feel sad after telling them this statement? When you receive an invitation to go out, tell the person that you are not free. You will soon realise your brain will find something to justify that statement.

Words can affect your brain. How the brain thinks will affect your emotion which in turn affect your action.

When it comes to wealth generation, most people gain wealth from only 2 things – investment or business. Can we just copy these to gain wealth? The answer is absolutely yes! We don’t just copy the action, we need to copy the mindset too. Most of the time, it is not that we do not know the method, it is because we are not willing to take action.

There are fears within us. We are doubting whether we can do it. Do we have the skill? Do we have the knowledge? What if we fail? See, we have not even started doing it and we have so many negative thinking about it. How can we copy the action?

Let’s talk about investment. What is the first thing that comes to your mind when you think about investment?

Do you treat it as opportunity or risk? Observe your thinking pattern. What did your brain tell you about the investment? The answer will affect your emotion and subsequently your action. If your brain is thinking about the risk, fear emotion will be created. It will then be followed by inaction. This is normal. What if your brain thinks that it is a great opportunity? You will feel excited instead and you cannot wait to start investing. This is what causes the success or failure.

We are not able to copy the action of most of the successful people do is because we are not able to copy the thinking. Understand why they do everything is more important than how they do everything. Understanding the how might not help if we are not copying the reason which affects the emotion and action.

The faster way to overcome this is to use powerful words. If you like to copy people’s success, try using the sentences or words they use. When you speak the same words, you will notice your brain will suit to match your words. If you think that how your brain works currently is not supportive to what you want to achieve, change your words instead.

When there is a great investment opportunity, do not say “I do not have the capital or I can’t take the risk.” Instead, say “I would like to take part and I’m now thinking how to arrange the capital in few days’ time”. And you will find that your brain is now thinking how to get it done instead of justifying why you are not taking action.

Doing nothing and staying within the comfort zone is easy. Taking action is hard. Changing your words will be the first easiest way for you to try out. Test it out and let me know whether it works.

Watch the Youtube video here on this topic.

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

You can receive broadcast message relating to wealth creation to financial freedom through Telegram. Click here to subscribe to the telegram for the weekly newsletter and get updates on regular free classes on wealth creation topic.

5 quick ways to check your finance

When it comes to checking whether your finance is good, most people always judge by how much one is earning or what car he is driving. When you hear that someone is earning 5 or 6 figures a month, you will automatically think that he or she is rich. When you heard one has a big car, most people will think his finance situation is good too!

In fact, it is not always true. When it comes to finance, it is not how much money you earn that matters, it is how much money you save that matters.

When a person is able to buy a big car, it doesn’t mean that he / she is rich. You do not know whether he is buying it with loan which he / she is struggling to pay off the loan installment every month. When a person can earn well, it does not mean he / she can save well. If he / she is spending greatly every month, there could be not much money left in the bank every month. Do you think this type of person have a lot of money after 10 – 20 years? I think the answer is clear.

You want to check whether your finance is okay, the followings are the 5 ways:-

First: Check whether you have at least 3 – 6 months’ emergency fund saved in the bank. Without emergency fund set aside there is no sense of financial security. How can you have good finance if there is no financial security?

Second: Check whether you are saving at least 20% of your income every month for medium and long term goals. We know that we cannot work forever, failure to save means we will need to work longer. We will not have enough retirement fund when we are reaching our retirement age. It is critical to save every month whether you like it or not.

Third: Check whether your monthly expenses (excluding the loan payment) are less than 40% of your income. If your expenses are more, it is time to review and re-balance back. Identify the top 3 expenses and start from there.

Fourth: Check whether you are able to pay off your credit card and minimum loan installment for car loan and house loan every month. Loan interest especially the credit card is super high. Missing paying or paying only the minimum payment for credit card means your money is working for the bank and working against you. This situation also means that your loan will roll into a bigger loan which you will soon really getting harder to pay off. Your finances will surely be affected in the medium to long term.

Fifth: Check whether you have extra monies for leisure activities, for example travelling, doing sports, watching movies, buying books, etc. Having extra monies for these means you have lesser stress with money. You have enough to do what you love to do. You do not need to take additional personal loan to pay your simple lifestyle.

So, how many of the items mentioned you have achieved? If you are unsure what is the percentage of your saving and expenses against your income, it is time to do some tracking. Find the worksheet here to track your expenses. You cannot improve without tracking the numbers. Let’s start doing it for better financial future!

Watch the Youtube video here on this topic.

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

Tapping into technology sector to increase your investment yield?

Do you know technology sector is the best performing sector for the recent few years? Due to the current pandemic, the demand for technologies has increased even more which contributed to higher revenue for the technology companies.

Source: Google: XLK sector fund performance

Based on the above, you can see the technology sector has been growing steadily since 5 years ago. The sector has grown nearly 150% for the past 5 years. If you are a potential investor thinking which fund you can tap into to increase your investment yield, here is the suggestion – TA Global Technology Fund managed by TA Securities (this is for education purpose and talk to your investment advisor before investing). Why this fund?

This is one of the oldest active managed funds available in Malaysia which can show consistent return over the past 10 years. In the recent few years, there are few more funds being introduced in Malaysia such as Principal Global Technology Fund launched in 2018 and United Global Technology Fund launched in 2017.

Part of fund fact sheet for TA Global Technology Fund: Up to July 2021

As shown above, the TA fund has grown more than 400% since the inception about 10 years ago, this translates to 18% annualized return. This is a fantastic return. For the past 5 years, the return is 173.53%, it is above the XLK sector fund.

Principal Global Technology Fund has delivered return of 117% over the past 3 years (as of June 2021) and United Global Technology Fund has over 105% return over the past 3 years (as of August 2021). Both these 2 funds have slightly better return than TA fund. However, these 2 funds have been launched only recent few years, the consistency of fund performance over longer term cannot be assessed.

Part of fund fact sheet for TA Global Technology Fund: Up to 30 July 2021

Part of fund fact sheet: Principal Global Technology Fund (up to June 2021)

Part of fund fact sheet: United Global Technology Fund: Up to August 2021

By looking at the above, TA Global Technology Fund and Principal Global Technology Fund focus more on big and established companies while United Global Technology Fund focuses more on emerging companies. Hence, United Global Technology Fund has higher volatility compared to TA fund.

Principal Global Technology Fund is quite a country focus fund with more than 88% of investment in US while TA Global Technology Fund has near to 80% of exposure in US with slightly more diversified regional portfolio.

By investing in the TA fund, investors can invest in the big and expensive companies like Google (Alphabet), Microsoft, Apple, Facebook, Amazon, Visa, Adobe, etc. easily without needing a big capital.

Amazon share price now is USD 3500

Google share price now is USD 2800

Microsoft share price now is USD 300

Apple share price now is USD 150

Facebook share price now is USD 370

Adobe share price now is USD 660

If we are to invest 1 share of the companies above, the total capital required will be USD 7780. It shows it will be more affordable for retail investors who want to start with lesser capital. The minimum investment for this fund is RM 1,000 or RM 100 monthly investment.

Charge of this fund is up to 5.5% for front end sale charge. The management fee is 1.8% per annum. Even with considering the management fee, the fund is performing better than the Technology SPDR fund for the past 5 years.

If you are interested to know more about this, you can contact me.

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

China Investment? Which fund to choose?

Since the suspension of Ant Group’s IPO, China government has introduced unprecedented regulations to govern several sectors including the technology, food delivery and education sector. This does not seem to stop but continue for the past few months. Due to the regulatory crackdown, many retail investors have dumped the shares massively. The institutional investors have also reduced their exposure to the related shares to avoid the volatility.

As you can see the chart above, the MSCI China Index dropped 32.65% since the highest point. Does this freak you out?

If you have invested in Chinese equities, stay invested as the fundamental of Chinese equities remains intact. Subject to your investment portfolio, you can choose to top up to average down the price for the Chinese equities.

If you have not invested in Chinese equities, it could be a good chance to have some in your long-term investment portfolio. Be greedy when others are fearful!

So, what fund you can select for the China equities? You can look into Principal Greater China Equity Fund (this is for education purpose and speak to your investment advisor before investing). Why this fund?

Performance

Source: Morningstar

In terms of performance, comparing with other few peer funds, Principal Greater China Equity Fund has higher return short term and long term. As you can see from the Morningstar, the fund has been performing consistently above the benchmark since 5 years ago. It is also performing greatly compared to the similar category funds.

Return vs reward

Source: Morningstar

In terms of risk vs reward, you can see it has average risk compared to the category but with high return. It has high alpha compared to the similar funds, which is the excess return in relative to the return of benchmark index due to the active investment approach.

Others

This fund has been awarded 5-star by Morningstar and the fee level is below the average. Total assets are now approximately RM 2.6 billions so it is a good size for investors to consider.

If you are interested to know more about this, you can contact me.

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

The true definition of wealth

Before seeking to create more wealth, we must first know what wealth really means. When I asked others what is the definition of high networth individuals, the answers I got shocked me for a while. Generally, many people think that a person’s wealth is defined by how much he earns. Some think that it is defined by the house he lives in and by the way he lives. Obviously, people still think that the more a person earns, the richer he is. This is not true at all. If a person can earn well, but is not able to manage the money well, not much wealth can be maintained with the person.

A person’s wealth is actually defined by how long a period of time he / she can sustain their lifestyle if they stop working. The longer one can go on living his / her life without working, the richer the person is. Therefore, wealth is defined by 3 things

the monthly expenses: the lower the monthly expenses, the better wealth one can attain
the liquid assets: liquid assets refer to how much cash or liquid investments such as stocks, bonds and fixed deposits
the passive income: passive income is the income that one will receive even after he / she stops working. Example of this include interest from savings or bonds, royalties payment, stock dividends, property rental income and regular profits from a business.

2 examples here.

Albert who is earning RM 20,000 a month as a high management executive director in a multi-national company. However, his monthly expenses are RM 18,000 per month due to his luxurious lifestyle. Because of this, he is saving roughly RM 2,000 per month. Due to his lifestyle, he is upgrading his car every now and then and spend money to repair / upgrade his house as well. Not much money left even after working for 5 years. So, if he stops working, his available cash / investment is only his last month salary, i.e. RM 20,000. He cannot survive without working after 1 month.

Sue, on the other hand, is a senior executive in a small company. She earns RM 5,000 a month. She spends 80% and save 20%, i.e. saving of RM 1,000/month. She invests the saving into paper assets which gives her 8% return per year. She is also silently building up e-commerce business while working full time, she is able to get passive income of RM 3,000 per month after 5 years. Her investment turns RM 73,000. If she stops working today, she continues to receive RM 3,000 per month from her e-commerce business and she has RM 73,000 from her savings / investments. She can sustain 73 months without worrying. Hence, Sue is much more wealthier than Albert.

Why 73 months? This is the formula.

Level of wealth (number of months can sustain without working)
= Liquid asset ÷ (Monthly expenses – monthly passive income)

You can start monitoring your wealth using the formula above and start improving your wealth now. From the above example, I hope you can see how much one earns does not define how wealthy one is. Do not chase having more income alone. Learn how to manage your money better so that you can improve your wealth better.

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

How to have enough wealth to have happy life?

How to have enough or more money to be happy seems to be a popular question asked by many. If you think carefully, the answer will be “You will never have enough!”. When you first graduate, you might think that when you have a million, you will be happy and comfortable. When you finally have a million, you will realise you need 10 million. The more you have, the more you want. That’s the truth.

Happiness cannot be pursued and it is impossible to be pursued. If we think that once we attain certain wealth, we can be happy, we are wrong. Totally wrong! This means that we put a condition to our happiness. We cannot be happy before we achieve certain level of wealth.

When I have no money to buy a house, I always think that once I have a house, I will be happy and comfortable. Once I bought a house, I realized I only feel happy for a while and it doesn’t last long. Then, I realised that the house is too small. Are you one of them? After achieving something, you found that the happiness last only for little while. Perhaps, you are not alone!

We often have unlimited desires and it is not easy to control our desire when we work extra hard to get to our goal. We usually will have the feeling that we ought to be spending some money to reward ourselves for working hard. Else, there is no point to working hard if we cannot enjoy our fruit of hard work. Without realising, it becomes a vicious circle.

No one tells you that when you have more money, different problems will also arise, it will lead to greater sense of the fear of losing it. Will you be happy? Never!

The economist in mid-70s, Richard Easterlin, showed that economic growth does very little to improve human happiness. The Easterlin Paradox states that at a point in time, happiness will increase when there is an increase in income. However, after some time, happiness does not increase when the income continues to grow. This finding concludes that we do need money during the initial phase of wealth generation. This is purely for survival and security purpose. Beyond that point, more money does not necessarily bring us more happiness.

The key is to always have basic financial security. As long as we do not spend more than what we earn, the security is being established. You won’t feel fear. We got to trust that we have enough wealth at all times. We need to acknowledge that our desire will be bigger and bigger. Take one step at a time to improve our earning and automate our earning to create some passive income streams.

Never put a condition to our happy life. Enjoy your life regardless of our wealth condition. Happiness is short-lived after achieving a goal. Why not choose to be happy during the journey to achieve a goal? Watch the Youtube video here on this topic.

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.

7 income streams that you can consider building for yourself

We often hear that the rich are having more than 1 income stream. This is entirely true as it is just too dangerous to only rely on 1 single source of income. To grow our wealth at lower risk, we need to have several sources of income streams.

The first type of income stream is earned income. This is the primary income source most of us have. When we work, we get the income. When we don’t work, we don’t get the income. This type of income has a ceiling because it is based on the time we work. We have only 24 hours a day, very soon we will find ourself being not able to increase our working hour and hence limiting the earned income stream.

The second type of income is profit income. This is basically the profit we get from doing sale or business. We get profit when we sell products or services, as long as it is lower than the cost. The higher the price we sell, the more profit we get. We can also engage other people to help us to do the selling, this can help us to increase our profit income. Profit income can be increased very fast if we know how to acquire talents and have a system to help us sell.

The third type of income is the interest income. We can earn interest income by putting our money in the bank or borrowing our money to individuals or corporate. The fixed deposit interest is one of the examples of the interest income. Bond coupon is another type of interest income. The interest income is mostly fixed when we place the money with the borrower or bank. Hence, it provides better income stream stability to us.

The fourth type of income is dividend income. We get this income when we invest into stocks. Dividend is the income distribution by the companies we invest in when there are profits announced by the companies. Normally, companies which give high dividends are big, matured companies which have consistent revenues and profits. REIT, which is real estate investment trust is another vehicle which gives high dividend income. The dividend income is not necessarily stable as the dividend pay-out depends on the company performance every year.

The fifth type of income is rental income. It is generated from the real estate. When you buy a property and rent it out, you will receive the rental from the tenants. This type of income is mostly quite stable as well compared to the dividend income.

The sixth type of income is capital gain income. It is obtained when you buy an asset at a lower price and sell it at a higher price. It can be gained via real assets such as gold, properties, antiques or paper assets such as stocks, index funds, mutual funds, etc.

The seventh type of income is royalty income. You can get royalty income by designing, creating some intellectual properties such as books, franchising license, music or movies.

Out of the 7 types of income illustrated above, 3 of them are active incomes, namely the earned income, profit income and capital gain incomes. For the profit or capital incomes, if you can use a system to make it automatic, it can be considered as passive incomes. The remaining 4 of them are passive incomes, namely the interest income, dividend income, rental income and royalty income. Passive incomes mean you only need to do the work once and you shall get the income continuously without much effort later on. Passive income generation is one of the goals during the wealth creation journey because no one wants to work forever. Passive income streams will ensure we can earn money when we are sleeping.

Remember, all of us have only 24 hours a day. Let’s start to have more income streams especially passive income streams so we can let our money works for us rather than we work hard for our money. If you are not having income when you are sleeping, you will need to work forever.

If you wish to watch the video instead of reading this long post. Check out 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.

1 2 3 4 ›»