Sunday, December 11, 2011

Using Price per Earning (P/E) Ratio to Analyse Stock

Price per earning or P/E ratio is another useful financial indicator that you can use to analyse your stocks.  It basically tells how many years it takes for you to earn back one share price that you buy. 2 assumptions are being made here for simplification:

  • You do not sell your stock
  • The stock dividend equals to the earning per share. 
For example, company A has the share price of $10 and the earning per share is $2 per year, you will need 5 years to earn back $10.  However B has the share price of $20 with the same earning per share (i.e. $2), you will need 10 years to earn back the $20. This tells you in fact company B is over-priced and company A is under-valued. In short, the lower the P/E ratio value, the better. The P/E ratio formula is:

P/E Ratio = Share Price / Earning Per Share (EPS)

Note 1: For more information on EPS, you can read my previous post: Using EPS to Analyse Stock

The earning per share should be based on yearly and NOT quarterly.  Another important thing about this EPS is, it is better to use the latest EPS rather than the one you get in the annual report unless you really don’t have a choice or you simply lazy. The technical term for this is called “Trailing Twelve Months” or TTM which means the most recently past 12 months.

Where to get P/E ratio data?

If you do not want to calculate yourself and would like to get the latest information about P/E ratio, you can just search for P/E ratio (TTM). Usually when you see P/E ratio without mentioning the “TTM”, it means the EPS is based on the last fiscal year. For example when I look at my stock trading online account on a particular stocks, the P/E ratio information doesn’t have the TTM. This means the P/E ratio is based on the last fiscal year. In short:

P/E Ratio = Current Share Price / EPS based on the last fiscal year (e.g. as stated in annual report)

P/E Ratio (TTM) = Current Share Price / EPS based on the most recently past 12 months (e.g. latest last 4 quarter)

Airasia Bhd. vs MAS Bhd. (Case Study)

The first this is to get the P/E ratio(TTM) for both Airasia Bhd. and MAS Bhd. However, you will notice that there is no P/E ratio(TTM) for MAS. This is because MAS is making lost in the past quarters. In other word, the EPS (TTM) for MAS is negative. In this case, you cannot compare the P/E ratio between these 2 companies.
  • P/E ratio (TTM) for AiraSia = 13.60
  • P/E ratio (TTM) for MAS = N/A
So let’s look at without the TTM which is based on the last year 2010 EPS data. You will get the following:
  • P/E Ratio for Airasia Bhd =  9.56 (Under-valued)
  • P/E Ratio for Mas Bhd = 18.67 (Over-priced)
Even if we use the last year EPS data to compare this 2 companies, the P/E ratio tells that Airasia is under-valued as compared to MAS and MAS is over-priced as compared to Airasia. Given that EPS analysis for these 2 companies and also based on the poor performance of MAS (i.e. making lost in the past few quarters), there is no reason to buy MAS stock.


Earning per share tells you the company performance but we need to study their track record by looking at the past years and look at the EPS growth instead. After that, you can perform use the price per earning ratio or P/E ratio to compare companies that are in the same industry. The lowest P/E ratio basically means it is under-valued and ot is good to buy. If both EPS and P/E ratio analysis show positive for that particular stock (e.g. in this case is Airasia), that means based on the fundamental analysis, we should buy that share
The challenging part is if you get good EPS but bad P/E ratio and not both. Which one has the higher weightage? I will probably wait until the stock price goes down first since the EPS is still good. If EPS is bad, I probably won’t got for this stock at all. Does this make sense?

P/S: I’m still learning but I find this EPS and P/E ratio analysis are pretty awesome but require some amount of works before you decide to buy the share. I welcome you to share your investing experience here especially you are the fundamental investor. Other than EPS and P/E ratio, what else do you look at?

Sunday, December 04, 2011

Remember to Pay Your Land Tax (Cukai Tanah)

In case you do not know, you need to pay the land tax (cukai tanah) once a year for all the properties that you own in Malaysia. However in some cases,  the land office doesn’t have the address information about you so they won’t send you any statement reminder.

This is especially true if you buy your new house or new property from the developer. By right, the developer should instruct the land office to change the address to your new house but this doesn’t happen to all the cases. So they can’t send you the statement as a reminder. You will have to update the address by your own at land office.

Anyway I checked with the land officer(for Kedah only), they told me even though they have the address, they won’t send out the statement as well. The homeowner needs to come the land office to pay for their land tax. Huh, what a crap? You will get the penalty too if you don’t pay and they also won’t send you any penalty statement as well. What a crap?

Assuming if you take the loan for 30 years, your land tax fee is RM80 and the penalty is RM20 yearly. So for 30 years, you will owe the land office RM3000. You will need to pay this when you want to settle your loan with the bank or else the bank will not release your house title to you. You also need to pay this this one shot if you want to sell your house.

This happened to me this year when I wanted to settle my loan but luckily it was only for 4 years so I did not need to pay a lot. Assuming for those who do not know about this, they will have to pay large amount of money including the penalty fees. Why we need to waste such money right?

Few Tips:
  • Make sure you pay your land tax (cukai tanah) every year if you own any properties. If you do not get any statement or make any payment for your land tax (cukai tax) before, I think it is better for you to check it out at the land office.
  • For strata buildings, you have 2 titles (i.e. Master title and Strata title). You have 2 payments to made. The first payment is land tax / quit rent (cukai tanah) for master title. The second payment is door tax (cukai pintu) for the Strata title. See note (1) below.
Note (1) : Master title refers to the land where the building the land is shared between the unit owners. The Strata title however belongs to the individual unit owner which refers to the door tax (cukai pintu) of which payment is not shared.

Hope this is something useful to share. I'm not sure what "Cukai Pintu" should be called in English, so I just call it "Door Tax" but it sounds funny. Please check your land tax (cukai tanah) payment with the land office if you haven’t paid a single cent before and the worst thing is you need to remind yourself to do such payment every year!

Also, this probably most applicable for those who has landed property because usually for Strata property, everything will be taken care by your property management and they will request you to pay for it.

Sunday, November 27, 2011

Personal Finance: Tips for Those with Bad Credit

In order to achieve financial success, everyone needs to start by building good credit. The best way to insure that you have good credit is to make good financial decisions and build good credit from the beginning, but sometimes, situations arise that make a bad credit score unavoidable. For those who have bad credit, starting to improve your financial situation may seem like a daunting task, but you need to realize that your credit goals are achievable.

Follow a Budget

This is probably the most basic tip to help anyone get ahold of their financial situation, but it is also the most curtail. In order to build a better credit score, you need to pay all of your bills on time and in full. The only way you can do that and still be able to save money and feed your family is by following a strict budget. You need to break any bad habits you may have, such as spending more than you earn or living on credit cards, in order to move forward, and you can only do this if you make the daily decision to stick to your budget. You need to find every possible way you can save money each month, even if that means saving $.25 with a coupon at the grocery store. Every little bit will add up to a lot of savings in the end. It may not be easy or fun, but it is the only way you can get your finances under control.

Pay Cash

If you find that you are overspending or that you have made a habit of not following your credit card purchases, use cash for all of your purchases instead. Most people find it much harder to part with their money when they physically see it leaving their hands, and when you always pay with cash, you will be more likely to avoid buying something you can’t afford. Set aside money every month for your savings and to pay all of your bills, and then keep enough cash on hand to cover your budgeted amount for other items (groceries, entertainment, etc.).

Keep Track of Your Credit Report

No one else is going to check your credit report for you, unless they are checking it when you apply for a loan, an apartment, or even a job. It is up to you to know exactly what others will see when they review your credit report, and do everything you can to make sure that that information is up to date and accurate. You can get a free copy of your credit reports every year, so you should have no excuse as to why you can’t check your credit. When you get your credit report, you will need to find the negative items, find out why they are negative, and fix the problem before more of these items show up. Most negative items on your credit report should be removed after seven years (ten years if you file for bankruptcy). If there is outdated or false information, you have the right to notify the credit bureaus and request that they fix the mistake.

Seek Outside Help

If you have tried everything imaginable and still can’t seem to get your finances under control, it may be time to seek help from a professional. There are many credit counselors who would be willing to help you find a way to get out of debt. It may take some time and money, but you will feel much better when you know that you are debt free. Make sure you find the best counselor for you, and be aware of scams and untrustworthy people who will try to prey on those with bad credit and debt.

This is a guest post by Amanda Clark who is an author who writes guest posts on the topics of business, marketing, credit cards, and personal finance. 

Monday, November 07, 2011

Forgotten Wealth Formula - Have You?

It is very funny that I read back my very old post: Health and Wealth and I basically mentioned that although many people aware of the importance of the health, it is still always being forgotten especially in long run. The funny part is this applies to me as well until I did my blood test lately.

I did my full medical body check up 3 years ago, that indicated my cholesterol level (HDL, LDL and Triglycerides) are beyond the range and also had a fatty liver – specifically my SGOT-AST, SGPT-ALT and GGT levels are beyond the range as well. So from that time onwards, I was very concern on health. I controlled my diet very closely and did exercise (twice a week) for maybe for about a year. After that, I think I made an assumption that my health problem was fixed without any further blood test. So 2 years later, which is today – I do my blood test again and the results are similar with like before. So the problem was not really fixed at all and I’m back to square one! :( Here is my my screw up result:

Well, this tells one very important thing. You need to do regular blood test to remind yourself the importance of health especially if your blood test result is not good and you can’t make assumption. If your blood test result is good, it is recommended to do a blood test once a year and do not exceed 2 years. So now, I’m back to the cycle 3 years ago but the difference that I plan to made this time is I will do the blood test every 6 months to monitor my progress until normal. Hopefully everything is fine. So, wish me luck! By the way before I forget, I think this is the forgotten wealth formula:

Wealth = Money + Health +  Relationship

What do you think? However, my previous very old post again on definition of wealth did not include health and relationship (happiness). Somehow I defined wealth is to measure how far you are from financial independence or financial freedom in time unit.  That probably covers only 1/3 of the equations. I used to think of health to be added into wealth formula but I think “relationship” should be included as well because it affects your happiness. Imagine if you have money and health but you screw up your relationship with others, this may not be what you’re looking for.

P/S: Okay, I'm going to swim now. People say I scare of death after getting my blood test result but anyway this is more on improving my own health. :) Let's share your thought on this on topic. What is your definition of wealth?

Sunday, October 30, 2011

Using Earning Per Share (EPS) to Analyse Stock

When it comes to stock fundamental, the first thing in mind is to look at the macro-perspective of the economy (macro-economy) before you even start looking into each individual stock. 2 things are important to understand this macro-economy are by looking at these 2 important key indicators as I mentioned in my previous post:

The next thing what you want to do is to study each individual stock that you plan to invest using “Financial Ratios”. There are many financial ratios out there, the most basic one is called “Earning Per Share” or EPS.

What is Earning Per Share (EPS)?

 The formula is:

EPS = Net Income / Average Outstanding Shares 
Note: Net income is sometimes called “Net Profit” as well. Average outstanding share is sometimes called ”Weighted average number of ordinary shares in issue”.

The EPS can be get from the “Income Statement” of a company which is usually reported in the company’s annual report.  You can go to the company website and look for the “Investor Relations”. It usually puts under the “About Corporate”. The EPS is usually stated in the “Income Statement” and you do not need to calculate at your own. If it is not stated, then you can have to calculate the EPS using the formula above which is unlikely the case I think. :) 

What does EPS mean to investor?

It basically tells you how much you earn or your ROI per 1 share that you invest. So, the higher the EPS the better. This is also called “Dividends” but investor usually do not get all the value as stated in the EPS. It is up to the company to declare how much dividends they want to give and use the remaining profits for their business.

When doing fundamental analysis using financial ratio, one of the key things to compare the companies with the same industry. You usually do not compare 2 independent stocks that from different industry. The following is an example that I get for MAS and AirAsia Airlines in Malaysia for annual analysis comparison.

Table 1: EPS (MAS vs AirAsia)
Malaysia Airlines 2007 2008 2009 2010
MAS (EPS) 58 sen 14.6 sen 25.3 sen 7.2 sen
AirAsia (EPS) 21.2 sen (21.1) sen 20.6 sen 38.4 sen

So, which one is better? If you take the average, it is probably about the same for MAS and Airasia stocks but you can see the trend for MAS is moving down. Thus there is another better indicator is called" “EPS Growth Rate”. This is not stated in the income statement of the annual report. You have to calculate your own.  For example, this is the EPS growth rate for MAS and Airasia for the past 3 years based on the table 1 above:

Table 2: EPS Growth Rate (MAS vs AirAsia)
Malaysia Airlines 2008 2009 2010
MAS -74.8% +73.3% -71.5%
AirAsia -200% +198% +86%

So, which one is better? Probably Airasia? You can also see that it recovered with +~200% EPS growth rate in 2009. Same to MAS but it dropped again with minus ~70% in 2010. Thus, AirAsia is better? :D Not true? You can try to confirm the data in 2011. :) Past 3 years may not sufficient, when you look beyond past 3 years, MAS was in fact having low or negative EPS. Anyway, if you are really a serious investor, you should also look closely at the quarterly report. It may gives you any signs of weakening profit.


EPS may not tell the consistency performance but the EPS growth rate will. If a company always has positive EPS growth rate in the past few years, it means the company is fundamental strong - a least is not losing money and growing.  Also, don’t forget that when you perform the analysis, you should always compare companies within a same industry. Then, you will have some ideas who is performing better.

P/S: Are you the one lazy to read annual or quarterly financial report because the content is so damn long? This is because you do not know what information that is really useful to you. So now, you at least know “Earning Per Share” – just do a search in the annual report and you do not need to read all the content. Also, if you really interested in a particular company, just use a simple excel spreadsheet to keep track of their current and past performance. :)

Sunday, October 16, 2011

How Paradigm or Work Process is Formed?

When you are taking new role or joining a new company, you usually are very motivated because you have a lot of things to learn. So you ask around here and there.Unfortunately, you always do not get the answers that you want. Then, slowly you get demotivated....

Let's check it out the following series of picture which I got it from a friend many years ago that shows an experiment being carried out by scientist. I find that is very true especially in the working culture. So, let's check it out!

Now, does the answer sound familiar to you? It happens to me lately and in fact if I think of it, I got a lot of this kind of answers in the past too. So I'm having tough time to figure that out by myself. It is a very time consuming activity in fact.

Guess what, the worst thing is sometimes I give this kind of answer too! :) Well, sometimes there is a trade off that you have to make especially when you have too many plates on your hands. You can't understand everything in and out, and prioritizing is the key here. Therefore, sometimes I have this kind of answer too although I always try my best to avoid.

Having said so, for the things that completely owned by you, you shouldn't give this kind of answer. In other words, you just being not accountable. Don't you think so?Or you just take the answer as it is?

P/S: In personal finance or investment, you sometimes will get this kind of answers too. Well, that depends on how deep you want to go too. :) 

Sunday, October 09, 2011

Malaysia 2012 Budget - Nothing Much for Personal Finance

It seems to me nothing much from a personal finance perspective. Anyway, let's go through it which I think maybe useful to you personally...

(1) Exemption of Import Duty For Hybrid & Electric Cars

This is from the previous year and will be continue until 2013. I'm not sure if this is a good thing because the net spending in not decreasing if you buy hybrid & electric cars. So, think twice if you really want to go for Hybrid & Electric cars.

(2) Free Primary & Secondary Education Fees

I do not aware that we need to pay for primary & secondary education fees. All the while, I thought that is free! :) Perhaps I'm wrong now.  How much exactly is being save here? Anyone knows?

(3) RM500 for Households Monthly Income Less Than RM3K

It is one time payment. So monthly, you will have RM  41.67. Alright, this is still better than nothing especially if you have low income household. Besides that, there will be one-off RM100 schooling assistance for primary and secondary schools(up to form 5) and also one-off RM200 book voucher for private & public tertiary institution and form 6 as well.

(4) Additional Bonus for Civil Servants and Pensioners.

There will be 1/2 month bonus for all civil servants and RM500 bonus for all pensioners. Bonus to be paid by December 2012. This sounds good for civil servants.

(5) Increase to 10% for  Real Property Gains Tax.

Real Property Gains Tax (RPGT) will be increased to 10% from 5% if the property is sold within 2 years. The 5% remains as previously - if the property is sold between 2 to 5 years, there will be 5% RPGT and nil for 5 years and above. This may not be good for speculator but if you really want to sell, just wait for 2 years. Property investment is meant for long term anyway, in my opinion.

Sharing: Do you know the RPGT used to be 30% before 2010? Then later it was then revised to 5%. It seems to me the forming of property bubble is somehow indirectly caused by the government.  Don't you think so? Now, they're fixing it?

(6) Some other stuff...

  • Retirement ages increases to 60 from 58 for civil servants. 
  • Free Papilloma Virus immunization for cervical cancer prevention.
  • EPF increases to 13% for Employer Contribution but that is only for those earning below RM5K.


Well, what? As usual, there is no beneficial to me at all. It is worst than last year! That's why I think this round for Malaysia 2012 budget is really nothing much at least to myself. Is that the reason why many of us are migrating to other countries? 

If you are civil servants and have low income household, this budget will be beneficial to you. Hope you can enjoy this benefits. If you wonder what are the previous years Malaysia budget, you can visit the following links:
P/S: If I missed out any key items, feel free to share....

Saturday, October 08, 2011

What Does GDP Growth Mean to You?

GDP stands for Gross Domestic Product. It represents the total value in the respective country currency of all goods and services produced over a specific time period. GDP is calculated will not be discuss here because that is kind of complicated. We will let those economist to do their job. What really important about GDP is, it help investor to tell how well a country is doing or how healthy is the economy.

GDP is usually expressed as a comparison to the previous GDP value in percentage. That is called “GDP Growth Rate”. It is either based on yearly or quarterly. For example 3% GDP growth rates in 2010 means the economy grows by 3% as compared to 2009. On the other hand, –3% GDP growth rates means the economy declines by 3%

What is recession?

When GDP growth rate is negative for 2 or more consecutive quarters, economist calls that as “Recession”. Let’s look at Malaysia GDP growth rate below, we’re having recession in the early of 2009.

(You can also get the GDP data for your country here) 

Now, let’s look at the KLCI index below. Do you see the similar trend with the GDP growth rate?

It basically tells you that when recession happens, stock market crashes. Usually significant change in GDP growth rate will affect on the stock market. Investor look at the GDP data very closely to understand the current economy situation and then react to their investment’


Given all these high-level explanation of GDP, what is your take away? For me,  I use the GDP growth rate as a recession detector. When recession happens (i.e. 2 consecutive negative GDP growth rate), I will quickly withdraw my investments and then watch out the GDP growth rate very closely when the economy will recovered. When it happens or when I think when it will happen (i.e. economy start to recover), I will start investing again. :)

P/S: For most updated Malaysia GDP report, you can refer to

Sunday, September 18, 2011

4 Stages of Stock Market Cycle - So What?

I just read around and I found this 4 stages of stock market cycle by Stan Weinstein. It basically means no matter how the stock will look like, it can never go out of these 4 stages. These 4 stages are very powerful because it can apply to all time frames whether it is 1 day, 1 month, 1 quarter, 1 year or 5 years. Powerful or not? Also, it will be repeated over and over again. For example it goes back to stage 1 from stage 4. Now let’s look at what are these 4 stages about:

Stage 1: Consolidation & Accumulation

This is also called base building stage or a depression stage. Basically, It is the most bottom point of the stock market cycle where majority of investors have lost confidence at this stage and are reluctant to invest their money in stock market. Smart investors at his point are waiting to use their reserved cash to start investing when it starts moving to Stage 2.

Stage 2: Uptrend &  Mark-up

This is also called the expansion stage or mark-up stage. At this stage, the stock has been stable for a while and starts to climb up. Novice or inexperienced investors are still hesitant to get in because they are still haven’t recovered from the stage 1. Smart investor will start investing at the early of stage 2 as shown in the graph.

Stage 3: Distribution & Peak

This is the stage where you can hear all the good news and the economy seems like it has never been better. At this stage, most novice or inexperienced investors jump into stock market because they think the prices will go even higher. This is exactly what happened to me when I owned an US stock with USD100 price in year 2000. I was still expecting it will go even higher! Smart investor at this stage are getting ready to exit.

Stage 4: Downtrend & Mark-down

This is a declining stage but nobody believes the downtrend especially at the early stage. They believe the downtrend is just a correction and it will go up pretty soon. On the other hand, smart investors have mostly taken profits and sold all their shares causing the share prices to drop. Novice investors will either take losses or turn to long-term hold if they reluctant to sell.

Note: These 4 stages of stock cycles are always correct because it is based law of nature. What is the law of nature? The law of nature is: what goes up must come down, what goes down must come up. So no matter what, the 4 stages are always correct!


So what? You may ask because no one will know exactly which stage they are in and this makes the whole thing pointless. Basically you still do not know when is your best time for buying and selling. The purpose of this article is to let you know there are these 4" stages. What you need to do next is how to identify or at least to make your best guess to identify where you are in this 4 stages based on whatever data that you have.

P/S: A technique called “Technical Analysis" is one of the ways you can predict the future based on the past historical data. However, I have not used or researched on technical analysis yet. So for those who have used technical analysis before for your stock investment, what do you think of this technique? Can technical analysis predict the future or at least help you to make a right investment decision?

Thursday, September 15, 2011

Single People Need Budgets Too

Many financial experts highly recommend a household budget in order to keep family spending and savings goals on track. It makes sense that proper money management for a household is a necessity to ensure financial security for all family members. For those who do not yet have families, it is equally important to establish a budget to prepare for the future as well as survive day to day, especially when single individuals are just starting out on their own, financially independent from their parents.

Why Singles Need Budgets

Overspending income is the reason why so many people are facing debt problems. With a budget you can properly account for where all of your money goes on a weekly or monthly basis. Without a budget, it can be all too easy to spend cash as a single person because outside of basic financial obligations, there are likely no other responsibilities to tend to such as children who need things or spouse who should have a say in money matters.

As a single person without a budget, it is also easy to lose sight of the big picture. Spending what you earn as you earn it leaves little room for saving for the future or building a truly solid financial foundation.

How to Start a Single Person Budget

A budget is simple to get started. Sticking with the methods is what gets many people who end up ceasing their good financial habits. It makes sense to develop a simple budget that allows you to make simple entries that doesn’t waste time. A weekly review of a budget is all it really takes to ensure you are on target.

Developing a budget requires that you gather all of your financial obligations for a month including utility bills, credit card bills, mortgage or rental payments, and any other monthly expense paid out on a regular basis. You will also need to gather your income statements so you know how much you bring home each month.

These amounts along with the creditors who receive your monthly payment should then be listed on a personal budget worksheet. Once all of the information is entered, the total amount of expenses should be deducted from the total amount of income. If the difference is negative, it is a clear sign that you need to make cuts to your budget or find a way to earn more money. If there is an overage, the funds that are ‘left over’ each month should be allocated into a proper savings account for emergency situations, vacations, or retirement.

In addition to the compilation of expenses and income, single consumers should also take a solid month to track the money they are spending and where they are spending it. This is for all expenses outside of regular financial obligations, including coffee stops, dining out, and transportation-related expenses. By tracking every penny spent in a month’s time, you are able to develop a more accurate budgeting system and as a result, establish a much more solid and reliable financial foundation for the future.

This is a guest post by Tisha Tolar.

Sunday, September 11, 2011

Understand Market Trend Before You Trade - NASDAQ and KLCI

If you have no idea what is stock at all, I suggest you read the following first: Stock Market 101: Understand How Stocks Get Started.

To be successful in stock investing, the first thing that you want to do is to analyze the entire stock market as whole and learn how the majority investors behave in the stock market. The stock market index is the indicator to tell you how the market moves. It represent everyone present in the market place. :D

I personally invest in US stock and Malaysia stock market. So 2 stock market indices that I"m interested are Nasdaq Composite Index and KLCI.. The following charts show the 1 year histrory trend.

KLCI - FTSE Bursa Malaysia Large 30 Index

KLCI comprises of 30 largest companies in Malaysia with approximately 70% of the total market capitalization of the FTSE Bursa Malaysia 100 Index.

Nasdaq Composite Index

Nasdaq Composite Index comprise of over 4000 innovative and fast growing technology companies in United States of America.

Note: What I like about this chart is when you click on it, it shows you the technical analysis of the chart. You can then perform the "Technical Analysis" on those chart. Basically technical analysis helps you to make investment decisions based on the study of charts rather than the stock fundamental. Interesting isn't it? But this is still something new to me but I will share with you more later on once I"m familiar with it. :)

What I don't like about this chart is only able to display up to 1 year trend. To view more than 1 year trend, you will have to use Yahoo Finance.  But Yahoo doesn't have a way to embed the stock chart in a website or blog.If you know, feel free to share with me.

P/S: What about you? There are lot of stock market indices out there. Which market index do you refer?

Sunday, August 21, 2011

4 Steps to Set Your Investment Goals

Some people just feel lost in investment especially when they start investing in stock or when they don’t make a lot of money out of their investments. They will start wondering, what the hell am I doing here? This is all because of they don’t set clear investment goals.

When you do not have investment goals, you basically do not have measure of success.. When you do not have the measure of success, you do not know whether you’re at the right track. When you do do know whether you’re at the right there, you do not take actions (e.g. sell your stocks or mutual funds) and lastly you are lost because you simply do not know what to do. So, I hope this makes sense to you that why you must have investment goals for each investment that you make.

Let’s look at the following 4 steps on how you can set your investment goal. Check it out…

Step 1: Identify Your Personal Inflation Rate – X%

Well, before you even start thinking about setting your investment goals, you must first understand one of the most important elements in investing is to protect yourself from inflation killer.  Thus, it is important to identify your personal inflation rate before you start investing. Let’s look at my previous article how you should get your own personal inflation rate rather than the reported inflation rate by your government:

You identify this as X% and don’t be surprise if your personal inflation rate is a lot higher than the reported national inflation rate especially if you’re a big spender. The chances this will happen is high too if you keep earning more and more every years. 

Step 2: Identify Your Safest & Highest ROI – Y%

Your safest ROI could be your saving, fixed deposit (i.e. FD), or your retirement saving fund such as EPF in Malaysia, CPF in Singapore or 401(K) plan in United State.  I don’t know what the rest of the countries call this. :) Usually the retirement saving fund (e.g. the EPF) has the highest ROI as compared to your FD or your savings. You identify this as Y%

Step 3: Identify Your Minimum Investment Goal – Z%

Once you have identified X% and Y%, your minimum investment goal that you set should be based on which one has the highest %. For example, if your Y% > X%,  you minimum investment goal should be Y%. Hopefully your X% is less than Y%. If that doesn’t happen, you may want consider to change your lifestyle. If you don’t want to, that’s fine too. Then your minimum investment goal should be Y%. In short, Z% = MAX(X%, Y%). Hope this is not too engineering for you… :)

Step 4: Set Your Investment Goals

This is the final step is to set your investment goal after you have identified Z%. Basically, there are 2 types of goals that you can set. One is normal and another one stretch investment goals. If you achieve your stretch investment goal, you have basically exceeded expectation. Sound something familiar like your focal? Hahaha…

Well, no hard rules how you want to set the investment goal as long as you make sure it is > Z% but this is what I think normal and stench investment goals should be:

Normal Investment Goal  = 2Z% (2 times of Z%)

Stretch Investments Goal = 3Z% (3 times of Z%)

Note: Z% is your mininimun investment goal.

Let’s take myself as an example. If my Z% = 6% (based on the latest EPF data in 2010) , my normal investment goal will be 12% ROI. If my actual ROI is 12%, I’m meeting my goal. However, what if my ROI is > 18%? I’m basically exceeding my investment goal because I”m achieving my stretch goal.  In order to meet these goals, I"m investing in mutual fund or unit trust, stock, gold, property and etc.

This is how my investment goals look like. So whatever I invest in mutual fund/unit trust, stock, gold, property and etc, my measure of success is based on 2Z% and 3Z%. What about you? If you don’t have any investment goal, probably you can start having one now…


What do you think of my formula? Sounds reasonable or unreasonable to you? If not, what do you think how one should set their investment goals? As mentioned before, setting investment goal is essential which as important as that you need to have clear financial goal. Without goals, you do not know your direction. In this article, I show you 4 simple steps how you can set your investment goals for both normal and stretch goals. Of course, you can define your own formula. Good luck!

P/S: Hope this is something useful to you guys. I”m going to take vacation off in 4 more days and will not be blogging for about 2 weeks. Yeah! Feel free to comment on this article and hopefully I can get back to you before my vacation. :)

Saturday, August 13, 2011

Refinancing Your Mortgage: What You Should Know Before You Do

Refinancing your mortgage may seem like a godsend at the moment, but before you jump in headfirst, there are some things you should know. For instance, are you prepared to shop around with at least three different lenders and three different title companies? Even though you might do less paperwork with your current lender, others might be able to offer you better rates, so it's definitely worth checking them out.

Here are some of the other things you should think about with a refinance.

There may be extra fees involved

All too often homeowners get caught up in that one little number – the interest rate. Sure, a drop of a half a percentage or more can save you big bucks on your monthly payment and on the total interest you'll pay for your home. However, you have to remember that refinancing comes with some of the same fees involved in buying a home originally, so the interest rate change may not end up saving you all that much after all.

Another thing to consider is something plaguing homeowners today: do you owe more on your home than it's worth? A high loan-to-value ratio these days can mean extra fees for your refinance, as the company doing your refinance has to protect itself, too. You might even end up paying private mortgage insurance, which can increase your monthly payment by $100 or more a month.

So, before you refinance, make sure you look at all the numbers and take everything into account. Unless you're getting significant interest rate savings, the refinance may not save you that much money after all.

You could tack more years onto your mortgage

Another thing to consider with a refinance is what loan term you'll use for the refinanced loan. Many homeowners who have been in their homes for five years or more take out another thirty year loan, not considering that it will be yet another five years before they pay off the house. Thirty-five years is a long time to be paying on one home!

In some cases, a longer-term mortgage may make sense, especially if the lower monthly payments mean keeping your home instead of going into foreclosure. In some cases, it may be in your best interest to pay extra on another thirty year mortgage, which will pay it off earlier and save you money. However, in many cases, it's better to take out a shorter-term loan – like a fifteen or twenty year – depending on how much you have left to pay off after the refinance.

Just keep in mind that by taking out another thirty year loan, it will take you some time to get traction in your mortgage and start paying off the principle significantly, so this is really only a good option if you plan to stay in your home for a while.

Find your break-even point

The best way to determine whether or not a particular mortgage deal is a good one for you is to find your break-even point. This is the point at which the extra costs of refinancing will break even for you. If you plan to be in your home through or well past your break-even point, then a refinance could be a good option for you. If not, though, it's probably better to hold off and just sell the house when you're ready.

There are plenty of great online calculators that will help you determine your break-even point with the best refinancing deal you can find.

Keep your credit score up during the refinance

Finally, just like when you're buying a house, when you're refinancing, you need to be sure that your credit score stays up the entire time – until your rates are actually locked in. Most lenders will quote you a rate at the outset of the refinancing process but will check your credit score again before locking in that rate.

One of the best ways to keep your credit score high during a refinance is to cut back on credit card usage. Use your cards responsibly, and pay off new balances every month. If you can, try to pay down your balances a little, too, so that your credit score is even a little higher at the end of the refinancing process than it was at the beginning!

This is a guest post by Katheryne Taylor.

Sunday, July 31, 2011

Latest Malaysian Tax Scheme for ESPP is Stupid

If you do not know what ESPP is, you may skip this article.  Basically, ESPP stands for employee stock purchase plan. ESPP is one of the company’s compensation which allows you to purchase the company share with discount (e.g. 15%). Your company may or may not have this benefit and every company has slightly different way to implement this ESPP.

How this ESPP works is you can enroll this ESPP program for about let’s say 6 months. During this 6 months window, your company will deduct up to maximum certain percentage (e.g. 10%) of your salary every month and use this money to purchase the company share at the 6th month - the closing window (e.g. June 30) based on the “Subscription Value” with discount (e.g. 15%).

Let’s assume number of shares you have purchased with this ESPP is 50 shares and see the following example to illustrate the previous and the latest tax scheme for ESPP:

Subscription value                       = $30
Purchase price at 15% discount   = $30 X 0.85% = $25.5
Stock price on June 30 (highest)  = $51
Stock price on June 30 (lowest)   = $49
Stock price on June 30 (average) = $50
No. of shares purchased              = 50

Previous Tax Scheme for ESPP

Based on the previous tax scheme for ESPP, the taxable gain  is based on the discount (e.g. 15%) the company gives you.  In this example, the taxable gain will be $225 -  see the calculation below. This tax scheme makes a lot of sense because if the company doesn't offer you the discount, you will still need to purchase the share price at $30 not at $25.5  Because of the 15% discount, $225 is the extra money your company gives to you. Thus,  $225 to be considered as taxable income makes a lot of sense.

The taxable gain calculation based on previous tax scheme:
   = ($30 – $25.5) X 50 or ($30 X 15%) X 50
   = $225

Latest Tax Scheme for ESPP

However based on the latest tax scheme for ESPP, the taxable gain is no longer based on the 15% discount. but based on the average price of the last day of your ESPP closing window (e.g. 30 June). In this example, the average price on June 30 is $50. So it is automatically assumed that you gain $50-$25.5 = $24.5 although you didn't sell the share at June 30. Huh, what a crap?

The taxable gain calculation based on latest tax scheme:
   = ($50 – $25.5) X 50
   = $1225

So technically speaking, if you sell your ESPP share later at price lower than $50, you're actually being taxed more. Well, you may argue that what if you sell higher, then you're getting taxed less. Isn't that a good thing?Well, don't you know that capital gain in Malaysia is not taxable? If it is not taxable, why I sell higher, then I need to be taxed more? Think again!


Honestly if you ask me, there is something wrong with the latest Malaysian tax scheme for ESPP. The previous tax scheme is  reasonable but definitely not the latest. Although similar tax scheme is being applied to the restricted stock units (RSU) and stock options, I'm still okay with that because we do not fork out our own money. It is just like you're getting less compensation, not really that a big deal. However for ESPP, we basically fork out our OWN money to purchase the shares and now you simply tax me. This is not acceptable!

Well, what can you do? You can protest to the government or  just be alert of the price at the ESPP closing window (e.g. June 30) and if the price is high, you may want to consider a quick sell rather than keep it. I know this is suck...

[Update: 19 August 2011]: Let's look at the comment in this post from "HS Ooi". He gave a very good explanation why market gain is classified as the compensation instead of capital gain. Thus, it should be taxed. What do you think?

P/S: By the way, please don't confuse that you can claim back your money if your sell your ESPP share at lower price. I"m talking about taxable gain here and not the tax deduction in your monthly payslip. If there is extra tax deduction, you can only claim them back but this is not the case. The $1225 is reported as a taxable income in your EA form and it is part of your income.

Sunday, July 24, 2011

Veterans, Baby Boomers, Gen X, Y and Z

I do not know about this generation stuff after I have gone through a training. So I think that is worth to share with you all about these 5 generations (i.e. Veterans, Baby Boomers, Gen X, Gen Y and Gen Z). I think it is important to understand the behavior or characteristics of these generations which may help you in all aspects. Here you go the high-level summary of all these 5 generations:

High-Level Summary

Veterans Baby Boomers Gen X Gen Y Gen Z
Born Year < 1946 > 1946
< 1964
> 1995
Behavior Very conservative and discipline
                  Very respect law and order
Very optimistic and work-centric
          Believe employment is for a life.
Well educated generation
            Not interested in long-term careers
Very technology wise
         Expect great workplace flexibility
Never known a life without the internet
   Communicate through social network.

Veterans are very comfortable with directive, command and control management style. They prefer live to be predictable and not willing to change and not flexible. This is probably due to the effect of world war I and world war II because they have seen the worst.

Baby boomers tend to be very optimistic and work-centric. They will never think the employer will fire them. The reason why it is being called as baby boomers in this generation was due to the sudden increase of birth rates after the world war II.

Gen X has the “slacker” or “lazy” mentality because they born with almost everything ready. They are the first generation that has gone through day care, tuition and etc. Thus, most of the Gen X people are well educated. Loyalty is no longer in their mind, they change job or career frequently as long as they;’re unhappy. Work-life balance was invented by this generation!

Gen Y is very technology wise. They love gadget! They are way optimistic than the previous generations. They really want to do something that they really enjoy. Similar to Gen X but more extreme, they don’t give a damn about loyalty at all.

Gen Z is also know as Internet Generation. Most communication are gone through social network (e.g. Facebook, Twitter) and they do not understand or have not experienced the life without an internet.


Well, there is no hard rule. Let’s say if you’re Gen X, you must behave like Gen X. From one generation to another, they are always an overlap. Let’s take myself as an example – I belong to Gen X but I do not change job often, does that mean I”m baby boomer? At the same time ,I love gadget every much too! Well, I love to communicate through social network as well! It seems like I overlap 4 generations!

What it really means here is I can understand all types of generations and be part of them. lol When you’re one of them, it is easier for you to communicate or manage them.

Which generation you belong to? I bet you’re from Gen Y. : ) If wrong, then it should be Gen X! :) lol Hope article is useful to you!

Monday, July 11, 2011

My Boss is Weak In Technical

My boss doesn’t know what I”m doing! My boss is lack of technical skills! I lazy to talk to my boss because he is weak in technical. A good boss supposes to know better than me, why he still ask me? Does this sound familiar to you? Well before you complain, let’s look at what are the management skills needed from a single contributor to first-line, middle and top managers in a company.

  1. Technical skill is a skill to perform each single detailed tasks. Human skill a skill to deal with human and resources to accomplish the company’s goals. Conceptual skill is a skill to understand the business need and set directions for the company.
  2. The area of the shape tells you how much the role should spend their time in technical, human and conceptual. The total area for each role or shape should be the same. We have only 24 hours a day. :)

Is My boss Really Weak in Technical or….

Well I agree your boss is weak in technical. So you expect your boss should be better than you since he/she has worked so many years in the industry? If this is the case, you’re really in deep trouble because when your boss is better than you technically, you’re actually underperformed. Let’s look at the diagram above, a first-line manager supposes to spend less time in technical than a single contributor. How could you expect your manager is better than you since he spend less time than you? Yes, you’re underperformed!

If you look at the other way, let’s assume you’re not underperformed and you boss is really damn good in technical. You should start asking if your immediate boss focus on the right things? He should spend more on the human side for the skills. Does he do that? That is the reason why not all managers are suitable to be managers. In this case he is probably better to stay in the technical path (e.g. group lead, team lead) rather than in management path.

So think about it again. Is your boss really week in technical? It is expected your boss has less technical knowledge than you, and your role to explain to him and make sure he has the right amount of detail information.


That is the general understanding of management skills. The higher you go, the less technical you’re as you’re now moving towards more human and conceptual management skills. Please set at least the right expectation to your manager. Having said so, one may still challenges this statement. The first argument of this is does this also apply to a technology company? Basically in a technology company, even managers are expected to be strong in technical? Is that true?

I myself work in a technology company and I have seen middle managers are damn good in technical and also both human and conceptual skills? Those are usually the outstanding manager. Is the expectation now set to the manager in a technology company somehow different? If that is the case, looks like being a manager in a technology company is a lot more harder. What do you think?

Sunday, July 03, 2011

Simple Way to Explain Black Swan Theory (Book Review)

You may have heard before the “Black Swan” movie but have you heard of the “Back Swan theory”? At first I thought the movie talks about the “Black Sawn theory". So I went to watch it. But after watching it, it turned out that there are 2 independent subjects. One talks about psychology and another one is economy. :)

The black swan in fact is a book which was written by Nassim Nicholas Taleb, a practitioner of mathematical finance. The book was published in 2007.  Yes, I know it is old book but I only have a chance to read it now after introduced by my VP in few years back. However, I did not finish reading the book simply because I find this book is too difficult to understand. A very simple idea but the author makes it so complicated for layman to understand. I do not know why. Perhaps this is called “expert”?  or it is probably not meant for layman to read. So if you think you’re layman like me, read my following post will do or else you can go to the bookstore to purchase this book for in-depth understanding.

What is Black Swan Theory?

Let’s understand what is black swan. First of all, it is an event and not a bird! lol. The reason why black swan is used is an event is because before discovery of Australia, all swans were convinced to be white. It was then proven wrong. Does this sound familiar to you? That is what happen to the subprime mortgage crisis. Real estate were convinced to be the best reliable asset but it was then proven wrong again. The black swan is used to explain such phenomena that is unpredictable and creates major impact. The black swan event term was then also referred as the Black Sawn theory or the theory of black swan event.

Can You Predict Black Swan Event?

Well if the answer is can, then it is no longer called Black Swan. :) Probably the answer is yes for the economy in 20 years ago. One could still possible to predict future using statistic based on historical data. However during this 21’s century,  this is no longer be true. Statistics has failed!

2 reasons why statistic has failed. The first reason - based on the statistics calculation or any type of economy’s formula, the probability of such black swan event is always very small and nearly impossible to happen. Another words, the formula has failed to model the economy. The second reason - people have build-in physiological biases that make them unable to predict.  For example, I have been getting salary since day one of working and never going to have pay cut for 10 years. Thus, I predict my future will NOT have pay cut as well regardless of my job performance. The technical term for this prediction is called “Inductive Reasoning”.

What is the solution?

At first when I was reading this book, I expected the author will give a better solution to replace the existing statistic formula to model the economy. Unfortunately, I don’t think the book offers such solution. Offering advice, probably yes. This also makes the whole book is completely useless in my opinion at least to me The reason is I have already known all these facts since the day one I learned about physics:
  1. Whatever proven right today, doesn’t mean it will be right forever. It can be proven wrong tomorrow.
  2. Whatever proven wrong tomorrow, doesn’t mean it will NOT be proven right again.
  3. Whatever proven wrong today, doesn't mean it will be wrong forever. It can be proven right tomorrow.
  4. Whatever proven right tomorrow, doesn’t mean it will NOT be proven wrong again.
This books basically in a way tells the same thing that I have learned since my secondary school.:)

What are the takeaways?

You may ask what are the takeaways then? If you ask me, I only have 2. The first thing is you should not deny the black swan events. It happens to everyone. Another important thing to understand is, a black swan event to me might not be a black swan event to you. For example, getting pay cut is a Black Swan event (i.e. unpredictable event ) to me while it could be White Swan event (i.e. predictable event) to you. This is just an example. Black swan event could happen in personal too and not always global.

The second takeaway is plan for the worst case. What could be the black swan event for you? You lost a job tomorrow? You get a job demotion? Property house price bubble burst? Car accident? Something serious happen to your family? Your health problem? You should not be too optimistic but always identify your worst case scenario. Once your worst case is identified, plan for a defense strategy. This is also called "Personal Financial Planning"! :) :) :)


I honestly do not really understand why this book get the New York Times Bestseller. It is definitely not a book for layman. The content of this book is also questionable as the ideas that being brought up in this book is really nothing new. Everyone knows that  the statistic’s formula is just a prediction and it could be wrong. Not to talk about the human’s greediness, whatever statistic data that you have seen out there could be designed to blind you from the truth too based on their own biasness. Basically smart people will know all these technical analysis based on statistic cannot be trusted and you have to use it at your own risk.

This book has 444 pages with plenty of words and very less graphic or diagram explanation that makes me really no mood to continue reading. The worst part of this book is it explains a very simple idea with 444 pages and I could summarize these 444 pages into one sentence below:

“No one can predict the future, so you have to plan for the worst case and do not over optimistic.”

P/S: I have no intention to shoot the author of this book and I was just giving my opinion from a layman reader’s perspective. If you do think this book is good or beneficial to read especially for layman, I’m happy to hear your opinion.

Friday, July 01, 2011

How Do Insurance Companies Determine Your Life Insurance Premium?

Understanding how life insurance companies determine their premium rates can help you get better life insurance rates!
Life insurance companies work with actuaries and underwriters to calculate the risk of insuring your life. There are several factors they consider that influence these rates. You may find that some of these factors are modifiable in your life. In order to fall into a premium classification that offers better rates, all you have to do is work on those modifiable factors.

Life Insurance Rates

Life insurance is a business, and in order for any business to remain healthy, there is a reasonable amount of profit that must be made. Life insurance companies profit from probabilities. A major factor they consider is your probability of dying soon. Looking at your personal profile, life insurance underwriters determine the probable age you will die. If you’re likely to die soon, they will charge you a higher premium rate. Conversely, if you are likely to live a long life, your premium rates will be much lower. To make it simple, life insurance companies will divide people into at least four different groups based on their personal profile and consequent risk of death. In descending order of preference, these are usually referred to as:

  • Best Preferred
  • Preferred
  • Standard
  • Smokers

Factors that determine your life insurance rates

Mortality rates are tools that underwriters use to determine the risk of insuring your life. For this reason, those who are young usually get the best life insurance rates. The older you are, the more likely you are to have health concerns. The premiums for a 20-year old will be significantly higher than premiums for a 65-year old, even in good health. Buy life insurance when you are young and lock those rates in for a long-term period!

The second most important factor that determines your premiums is your health. Those who are young, and in top health, will be offered the Best Preferred rates. By purchasing a level-term life insurance policy at an early age you can lock in those rates for the entire term period.

Most life insurance companies require you to undergo a medical examination that is conducted by a company-appointed medical officer. Being slightly overweight or having a higher than normal blood pressure can knock you down to the next premium rate class. Other factors that are considered are high cholesterol counts, diabetes, any medication taken regularly, and mental health. A company may also look at your family health history to check whether there are any genetic dispositions. Health may not always be an area we can control, but following a good diet, incorporating a daily exercise regime and practicing weight management may help!

Your Occupation
Life insurance companies check out the kind of job you do and your workplace environment. If your job exposes you to dangerous health risks, requires extensive travel, or is considered a high-stress job, be prepared for higher premium rates. A safer job would attract low cost life insurance rates.

Your Hobbies
You may not think it matters, but the type of hobbies you engage in may be considered a risk to your life. Some of these hobbies may include skiing, bungee jumping, rock climbing, scuba diving, car racing, or any other such extreme sports. Engaging in one or more of these activities on a regular basis may cost you in terms of premiums that you will need to pay.

If you are a tobacco user, you will qualify for smokers’ rates. Tobacco, in any form, is dangerous to health, and will substantially increase your premium rates by 20 to 30 percent. To give you an incentive to quit smoking, some companies will offer you better rates if you can prove you have quit smoking for at least a year.

Your Credit Card Score
What does your credit score have to with your life insurance rates? The way you handle your money may give life insurance companies a little more insight on your personality traits. If you’re rash with your spending, you may be applying same principle to your health.

It must be noted that if your risk of death is extremely high, a life insurance company holds the right to deny you any coverage. However, you need to remember that just because one life insurance company gives you standard rates, this does not mean that another life insurance company will not hike you up to preferred class. While life insurance companies generally use the same criteria to determine life insurance rates, they may specialize in some areas in order to give them a competitive edge over other companies. For instance, most life insurance companies will charge you higher premiums if your cholesterol is above normal. But, there are some life insurance companies that will combine this fact with other factors in your life, such as your weight, age, job and lifestyle. If all other factors are favorable, you may be eligible for better rates these life insurance companies.

In many cases, it is possible to obtain better premium rates by kicking the smoking habit, losing a few pounds, or even changing jobs or hobbies!

Compare Life Insurance Rates

Online life insurance quote providers have made it easier than ever to compare life insurance rates of top-rated life insurance companies all in one go! Their huge database instantly locates life insurance carriers that specialize in the weak factors of your personal profile, making it easy for you to obtain the best life insurance quote that suits your personal needs!

This is a guest post by Denise Mancini.

Saturday, June 25, 2011

Worldwide House Price Trend (2006–2010)

This is the worldwide house prices trend in the past 5 years which includes USA, Japan, Britain, China, Australia, Singapore and Hong Kong. Too bad, there is no data for Malaysia but you can kind of guess that  Malaysia should be somewhere  below China and follow the similar uptrend like China. Let’s check it out the graph below:


The house price fell in USA was due to the subprime mortgage crisis in 2006. The house price drops by ~35% after this crisis and has never been recovered until today. By the way, this trend is also similar to Ireland which is not shown in this graph (I don’t want to make the graph too crowded) . As for Japan, the house price has never been recovered after the Japanese asset price bubble from 1986 to 1991. Surprisingly if you look at the house price trend in Britain, it was that badly affected by the subprime mortgage crisis if compare to USA. 

The house price for the rest of countries especially for Asia (except for Japan – i.e. China, Hong Kong, Singapore) and Australia, is moving uptrend. The slight downtrend in 2008 – 2009 was probably due to the stock market crash during that time.  After the stock market crash, investors start moving their target to real estate or property. That is probably the reason why you see the house price has been increasing dramatically after 2009 until today.

When is the next bubble burst?

You can kind of expected the house price in the western countries will probably stay flat in the coming years. But what really interesting here is the property market in Asia. Will it be keep going up or is it already at peak? Bloomberg reported Hong Kong is the world’s most expensive place to buy home. 65 million apartments in China are said to be empty creating “Ghost Cities”. Are these obvious enough to tell the property bubble is going to burst soon?

Well, I do not know but if you ask me about Malaysia, I think generally most of the investors in Malaysia have the strong holding power and this makes me think the property bubble bust is unlikely to happen in Malaysia. Could I be wrong? Another very interesting discussion is the property price in Penang and KL seems to have huge gap as compared to the other states or cities within Malaysia. Can the bubble burst only happen within certain states or cities (e.g. Penang and KL)?

So, what do you think? Do you think property bubble burst is forming in your country? What is the next trend?

Thursday, June 16, 2011

6 Debt Reduction Tips to Keep You in Sound Financial Health

Debt is a curse. The sooner you put in efforts to reduce the level of debts that you owe, the better it is for you. To reduce your debts substantially, the debt relief programs are of paramount importance. This is nothing but partial or total elimination of debt as well as stalling debt growth. Here is a list of some debt reduction strategies that you can follow to curb your debts significantly.

(1) Don't incur debts

In majority of the cases, you fall into debt because of your own imprudent financial behavior. Don't use your credit cards recklessly. Take out loans only to purchase home or car. Try to live within your means. In fact, if you can successfully limit your spending below your income, you will never fall into a debt situation.

(2) Create a realistic budget

It is very important to build up a realistic budget. You categorize your items of expenditures and then allocate money to each category. Make sure that you don’t spend beyond the amount allocated to each category. This will indeed be helpful to keep a lid on your spending behavior. Your budget should be such that you are able to contribute some money to the emergency fund. The emergency fund can be utilized to meet unintended expenses. 

(3) Be well aware of your liabilities

When you have fallen into debts, you have to be well aware of how much you owe to others. You should be well-acquainted with the monthly payments that you have to make, your interest payments as well as the outstanding balances. Don't default in making payments. Only regular payments on your debts can make you debt free.

(4) Close credit card accounts

It is not a wise financial behavior to keep many credit cards. And, if you already have many credit cards, it would be wise to close as many credit card accounts as possible. The underlying rationale to keep less number of credit cards is to curb the temptation to abruptly spend money using cards.

(5) Make more than minimum payments

Make efforts to pay more than your monthly payments. Use the additional amount of money to pay off your lowest outstanding debts. This helps you pay off your lowest outstanding debts even before the scheduled time period. And, once you have successfully paid off your lowest outstanding debts, switch your target to the next lowest outstanding debts. Persist with this process. This helps you clear off your entire debts in a relatively shorter period of time. 

(6) Seek professional help

Sometimes, it is a good ploy to seek professional help to repay your debts. A debt relief company can negotiate a pay off strategy for you after working with your creditors.

These are indeed smart tips that you can start following from today only. Seriously following these tips, will keep you in good financial condition.

This is a guest post by Nancy.

Sunday, June 12, 2011

Open for Guest Posts and Guidelines

I have been receiving many guest post requests in the past and recently getting even more guest post requests in the past few months. I truly appreciate for those of you who interested to write a guest post in my blog. At least this tells that my blog is worth for you to write. Thank you so much! Having said so, I would also like to apologize to you that until today I have NOT even done a single guest post. Sorry, guys!

I usually do not able to get back to you in a timely manner due to busyness of my schedule. I know this is an excuse. So this is my fault then, please forgive me. But I will still definitely get back to you later on with some delays and I usually throw you ton of questions. First, probably I”m new in this guest posting stuff so I have a lot of questions to ask. Second, I want to make sure that whatever you write will be useful to the readers of this blog. Third, I also want to make sure I don’t want to waste your time to write an article that eventually I do not post it here. At the end of the day, I usually do not get any respond from you after that. I guess I have make you pissed off already? Again, sorry if this is the case…

In order to reduce my questions to you, I thought it will be easier for me to come out the guidelines for guest posting in this blog:

[Updated: Feb 7, 2012]: Added perquisite guideline to raise the bar slightly higher to encourage the guest post author to be more interactive and also to encourage the blog commenters to do a guest post. 

[Updated: May 27, 2012]: Added content guideline that the link must be related to personal finance website.. I want ultimately the provided link is the useful one. Sorry for any inconvenient cause.

[Updated: April 29, 2013]: Updated for no link is allowed requirement. Yeah I know, this will turn away you. :)

Prerequisite Guideline

  1. You had posted at least 5 relevant comments in this blog. 

Content Guidelines
  1. Anyone can do guest post (e.g. readers of this blog, other bloggers and etc.)
  2. The post cannot be for advertising purpose and must be relevant to personal finance. The post should be focusing on providing useful personal finance tips to the readers.
  3. Your post must be original and has never been be published anywhere else which including your own blogs or other places.
  4. Your post does not need to be agree with my line of thinking. I love and enjoy to accept different points of view. 
  5. No link is allowed unless I know who you are (e.g. frequent readers of this blog). 
  6. Your guest post is preferable written in simple HTML format. If you would want to submit in DOC format, it is also fine but please avoid fancy stuff. :)
  7. If you have picture, please include your picture in your guest post submission and mark it clearly where the picture or image should be displayed in the content.

Submission Guidelines
  1. If you’re okay with all these guidelines above and still interested to do a guest post in my blog, please send your guest post to me at
  2. I will try to reply within 48 hours and tell you whether I will accept the guest post or not. I may have questions or requests to the guest post and once we get the consensus, I will post that up as soon as I can. If I reject your post (I hope I won’t), you’re obviously free to use it anywhere as you like.
  3. Once I posted your article, I will drop an email to you for you to review.
P/S: Hope I don’t turn you guys off! Have fun writing!

Sunday, June 05, 2011

High Pay with Low Stress or Growth?

A friend of mine resigned from his company last month. So, I asked him why and his answer was very stressful to work there, and he didn’t see a reason to reject since he got an offer with 30% increment and promotion. According to him, the new company (i.e. which is also his ex-company) is a lot more less stressful than the existing one. So the conversation continues:

Me: Are you doing a same job like what you did previously?
Friend A: Yupe. No difference and I know in-out of everything.
Me: Even with a promotion, will you still do the same thing like what you did last time?
Friend A: Kind of. I'm supposed to get a promotion previously but they didn’t give me. I can perform at that level. No problem for me at all.
Me: So, can I say you will be in comfort zone?
Friend A: Definitely. So lucky I am. Get a raise to do an easy job!
Me: What about personal growth? Will the new job help you to grow?
Friend A: Hmm…  Is that important? I don’t take that into my consideration. I will be stupid if I don’t take this offer for doing something easier and less stressful.
Me: Okay. You’re right. Good luck, man!
So, what do you think? Was my friend making a right decision? There 2 things to consider here:

First, you get a promotion with a same job scope before? Think about it carefully, why a company want to do this? It still makes sense assuming if you’ve already over-performed in a lower grade as what my friend told me.

Second, no growth versus money. Which one is the right thing to decide if you can only choose one? Well, this is not an easy decision especially when it comes to you. I bet most people will choose money and sacrifice growth like what my friend did. If you were my friend, what will you do?

If I were my friend…

I will make sure there is a growth for me before I take the new position. I will start discussing with the hiring manager the opportunity to growth. Keep in mind that doing a same job, doesn’t mean no growth. Assuming after the assessment, I find that there is no growth or no significant growth in this new job,  I will NOT take this offer! Ops. but with one exception, guess what? The exception is there is also no growth in my current or existing job.


One more thing is missing here before you consider to switch job is company stability. You don't want to join that no strong in fundamental. Anyway to make the discussion easier, let’s put aside this into the consideration
Well this is what I think. You should make decision based on the following criteria in priority order:
  1. High Pay, Low Stress, and High Growth (Ultimate goal, don’t you think so?)
  2. High Pay, High Stress, and High Growth (Okay, not that bad. Learning to manage stress is a skill.)
  3. Low Pay,  Low Stress, and High Growth (Eventually your growth will translate to money, don’t worry!)
  4. Low Pay, High Stress, and High Growth (Don’t worry again, money will come later.)
  5. High Pay, High Stress and Low Growth (Try to make use of your high stress to become your growth)
  6. High Pay, Low Stress and Low Growth (Yes, only if you really want to be in comfort zone!)
  7. Low Pay, Low Stress, and Low Growth (This should be your retirement strategy.)
  8. Low pay, High Stress, and Low Growth (Too obvious right? Please avoid this.)
Look at 3,4,5 and 6. Guess some of you may disagree with me?

P/S: Btw, guess what is the top 5 high-paying and low-stress jobs? That is Physical Therapist,  Computer Software Engineer, Civil Engineer, Massage Therapist, and Technical Writer (Provided by: Investopedia).

Sunday, May 29, 2011

Check Your EPF(KWSP) Nominations of Beneficiary

If you do not know what EPF or KWSP is, you can safely ignore this post...

Around few years back in 2007 I think, it had been rumours saying that EPF(KWSP) may screw up your nominations when they upgraded their system to the new one. A friend of mine also told me that recently he went to check and found out that his nominations are no longer there. What a crap?

So, I made up my mind to go and check last week. Fortunately, all my nominations of beneficiary were there. BUT, today I look at it carefully again, I notice one of my nominations I/C number is incorrect.  What a crap again? Guess I have to go back to EPF office gain to correct it. :(

This is what you need to do to apply for checking your EPF nominations:

  1. Go to the KWSP/EPF office, tell them you want to check for your EPF nominations. They will give you a form.
  2. After you fill up the form, go to the queue up again and they will give you a number.
  3. Wait for your number, after that they will print out all your EPF nominations for you.

Good luck to you! or else you need to go to the EFP/KWSP office to correct it again like me. You know what, even all your nominations are correct, I suggest you to check again perhaps after 2 years.

P/S: But, I feel like kind of stupid to check this in every 2 years. Is that necessary? Why can’t they do a better job? Some say they do it in purpose, what do you think?

Tuesday, May 24, 2011

Malaysia Property Market ROI by States in 2010

When you buy a property, the first thing that come to you mind will mostly likely to be “What is my potential return of investment (ROI)? However you know that no one can guarantee you the exact ROI. What you really can do is the study the past history or so called track record. What do you think of the property capital gain in Malaysia for all the states? Let’s see…

Malaysian State Average Transaction Value (RM) 2010 House Price Increase (%)
Kuala Lumpur 488,522 25.3
Putrajaya 310,625 -27.2
Pulau Pinang 265,078 17.1
Sabah 222,698 17.4
Labuan 204,852 -11.6
Johor 166,802 12.3
Sarawak 142,927 7.9
Pahang 127,159 8.4
Melaka 127,081 4.4
Kedah 122,772 -5.2
Negeri Sembilan 116,808 -2.4
Perlis 106,562 7.6
Perak 94,764 3.3
Kelantan 82,337 39.5
Terengganu 74,056 7.7
Source: NAPIC, 10MP, RAM Economics
This table concludes few things as in general:
  • The most expensive houses in Malaysia is at KL. Well, I thought is Penang but Penang is not even at the second price. So, can I say Penang property is still considered cheap as compared to KL and Putrajaya?
  • The cheapest houses in Malaysia is at Terengganu and followed by Kelantan. Well, this is not a surprise to me. Want cheap house? Go to Terengganu!
  • The highest ROI of property investment in Malaysia is at Kelantan! Wow, again my impression is either KL or Penang. Another Blogger (i.e. Kris) told me is Sabah which is kind of surprise to me too. It has the same capital gain (i.e. 17%) with Penang.
  • The lowest ROI of property investment in Malaysia is at Putrajaya! Who say property sure make money? Look at Putrajaya, Labuan, Kedah and Perlis. They have –ve ROI. I’m surprise that Kedah is –5.2% or perhaps I should said I”m sad to hear the news. Hopefully this doesn’t apply to my property in Kedah.

Having said so, this data is only for 2010 and if you look at it for long term (e.g. 10 years), the property price should appreciate around 3% to 4% (based on my personal observation), not as much as you think and due to the compound interest you should see the capital gain is around 30% for 10 years or since year 2000. 
The property price went up crazy in the past 2 years (i.e 2009 and 2010) was due to the severe stock market crash of 2008 and therefore investors switched their focus to the property market (safest investment vehicle). 
So what is next? One high possibility is the property market may be stable down for the coming years as now the investors are switching back to stock market. What do you think?

Didn't find what you want? Use Google Search Engine below: