My Very First Blog

Are you investing in Amanah Saham Malaysia (ASM) and Amanah Saham Wawasan 2020 (ASW 2020)?

3.33 billion units are up for grabs for ASM starting April 21st (which was yesterday) and 2 billion units for ASW 2020 starting April 27th. However, each account holder is limited to only 20,000 units for both ASM and ASW 2020 respectively whether it's for additional or new subscription.

I have bought units from both ASM and ASW 2020 and I think they are pretty good investments to fight inflation!

I bought ASW 2020 units back in 1996 just before the financial crisis in 1997.

Here's the dividend paid out at the end of August every year thereafter.

Year Dividend
1997 - 10.10%
1998 - 9.80%
1999 - 8.20% + 2.00%* = 10.20%
2000 - 8.80%
2001 - 7.25%
2002 - 7.25%
2003 - 6.60%
2004 - 7.00%
2005 - 7.10%
2006 - 6.80%
2007 - 7.00% + 1.00%* = 8.00%
2008 - 7.00%

*Special additional dividends

I still remember a close relative of mine bought 100,000 units at RM1 per unit back in 1996. (50,000 units for himself and 50,000 units for his wife). When they received the dividend payout of a little over RM10,000 (it's 10.10% returns in 1997), they spent the entire amount for a holiday in USA. It's like a completely free holiday to them!

I bought ASM units in year 2000, and here's the dividend paid out at the end of March every year thereafter.

Year Dividend
2001 - 7.80%
2002 - 7.00%
2003 - 6.60%
2004 - 7.00%
2005 - 7.20%
2006 - 6.75%
2007 - 6.80%
2008 - 7.80%

What do you think? Are these good investments or not?

If you have lots of money kept in the fixed deposit or savings accounts in the bank, it may be a wise move to take those money out and transfer into these higher yielding unit trust funds!

I wish I can buy more units but unfortunately, I do not have enough extra cash at the moment for investment! How sad!

Well, don't be like me! If you have the money, grab this opportunity and invest your hard earned money!

Is it possible to achieve a 12.08% annual returns from your investments risk free?

At 12.08% per year, your money is doubling every 5.96 years and RM1,000 invested a month would grow close to RM1 million in just 20 years.

Most of you will probably think like this.

12.08%? Maybe.

Risk free? Impossible! No investment is 100% risk free!

Well, according to Adam Khoo in his book “Secrets of Self Made Millionaires”, it is entirely possible!


However, you cannot achieve this by investing in individual stocks, or simply choosing any unit trusts funds. Instead, Adam Khoo suggests this - invest in the whole of the US stock market!

"What?! Are you nuts?" you exclaimed.

Well, here’s a fact. The US stock market averaged an annual return of 12.08% per year for the last 20 years. This of course does not mean that every single stock in the stock market went up by 12.08%. It’s the average we are talking about.

For the uninitiated, stock markets are actually measured by an index. An index is a portfolio of stocks that is designed to represent the whole market. The US stock market is represented by many indexes, but the most popular is Standard & Poor 500 Index (S&P 500). This index consists of 500 of the largest companies in the US stock market and represents over 80% of the total stock market value. So, this index actually indicates the average price of all 500 largest companies in USA and can be said to represent the overall performance of the whole US stock market.

If we look at the S&P 500 index graph from year 1952 to 2003, we can see that it keeps moving up over time. Yes, there were some ups and downs, there were bulls and bears, but overall it keeps going up.



This could be due to inflation as prices always increase over time, and this include stock prices. Secondly, due to the inevitable population growth, companies will always have more and more people to sell to so there will be increase in profits and therefore, an increase in stock prices too.

Adam Khoo says that if we were to invest in a mutual fund that tracks the S&P 500 index (aka Index Fund) and keep investing, in the long term, we will have 100% chance of gain and zero chance of loss!

The key word here is LONG TERM. And long term means at least 10 years and above.

It seems the longer you invest, the lower the risk. If you invest for one year, you have 20% chance of losing your capital. If you invest longer for 5 years, your risk of loss is reduced to 10%. But if you invest for 10 years and more, the chances of losing is virtually zero! In other words, you can only gain and profit by investing for 10 years and more.

According to Adam Khoo, you can buy the US Index Fund through online brokers available at Ameritrade.com, OptionXpress.com, or etrade.com. Just open an online account, send them the necessary documents and transfer funds into your account from your home country.

Another alternative is to buy Exchange Traded Fund (ETF) that tracks the S&P Index 500. ETF is a kind of investment security that is constructed like a mutual fund but trades like stocks. It charges lower fees and can be bought or sold anytime of the day. You can buy ETF through online brokers at interactivebrokers.com.

Well, what do you think? Would you want to invest in the US Index Fund if you have that extra cash every month? With the stock market falling to an all time low, this may just be your golden opportunity to buy cheap and make huge profits in later years.

Now I am not an expert on investments. I only learnt about this from the Adam Khoo's book I mentioned above. If you are an expert on this, please comment and share with us your opinions and suggestions.

A lot of us never bother too much about how much we need for retirement. Maybe because we are too busy living our lives at present that we don’t have time to think about the future.

Yet, the day will come when we need to retire. When that time comes, do you have enough money to live comfortably for the rest of your life?

Here’s how you can calculate how much you really need for retirement.

First, you need to decide how much money you will need every month during your retirement age. To have a rough idea, you can use your current monthly expenses as a basis. If you spend RM3,000 every month at present, you probably need about RM2,000 per month after you retire. The amount is less because you would have already paid off your house loans and life insurance. Furthermore, you may eat less and go out less during your golden age so expenses are naturally lower.

However, don’t forget that you have to take inflation into consideration. Let’s say, by the time you retire, the value of money has dropped to 50% of present day’s value. Then, what you really need is no longer RM2,000 but RM4,000!

Next, you will need to decide how many years you will live after retirement. Let’s say you retire at age 65, and you think you can live up to 85, then you need an amount of money that can last you 20 years!

So based on the calculation above, you will need RM960,000!

RM4,000 x 12 months x 20 years = RM960,000

If you are 40 years old now, and you retire at age 65, then you only have 25 years to save RM960,000!

But if you are 20 years old now and you retire at age 65, you have 45 years to do so. That’s why the younger you are, the better it is to start saving for retirement!

Note that the inflation rate fluctuates every year, so this calculation is just an estimate. Also, you may decide to retire earlier and your life span may even be longer. All these variables will affect how much money you will need to save for your retirement.

Do you think you can save that much? In this case, don’t save your money in the Fixed Deposit Account. Instead, you should try placing your money in unit trust funds to gain from the higher returns.

But before you do anything, please make sure you already have an Emergency Fund ready that can last you up to 6 months. Read more about it in my Emergency Fund post.

There are two types of bloggers.

The first are those who blog for money. Their aim is to make money and lots of it!

The second are those who blog purely for the love of blogging. Money is not their real motive. They just love to blog and share their thoughts with others while they themselves love to read other people’s blogs.

Which type of blogger are you?

Picture from tutor2u

Actually, there’s also a third type, that is those who love blogging but at the same time would want to make money out of it. Like killing two birds with one stone.

As you can see from My Very First Blog, my intention is not to make money. Do you see any ads (except for the one on the top right) in my blog? No AdSense, no Nuffnang, no banner ads, no ads hidden behind any words in my post. None!

So I must be the blogger from the second category ie. I am blogging just for the love of blogging, right? Well, yes and no.

You see, I’m still very much a newbie in the blogging world. I do love blogging. I love writing out my thoughts. I love to share with others. I love to read comments from other bloggers. But I also love to make money. Who doesn’t?

However, as much as I love to make money, I don’t see making a few US dollars a month from AdSense or any other ads really interest me. At least, that’s what I think most bloggers earn. I mean, you could easily earn that amount from your job in a day!

Unless of course, you happen to be one of those bloggers who are already earning a few hundred or a few thousand US dollars a month from your blog. You, who have the “know how” which the majority don’t.

I would love to earn hundreds or thousands of dollars from blogging. But not from this blog. No, I would just keep this one free from ads (I may even take the one and only ad out later) and any other money making tools. I want this to be my personal blog, and to be non-commercial in any way.

Because to seriously make money from blogs, the very first thing you need to do is to get your own domain name and pay for a good web hosting. Do not use a free host. The reason is a free host can sometimes ban or close down your blog for whatever reasons they like and you cannot do anything to stop them! If your blog is making you huge money every month, would you want to risk losing your passive income from something that is out of your control?

Picture from Party in a bag

So what's the secret in making money from blogs? If there are bloggers who did it, I know anyone can do it too.

Wouldn’t you love to earn steady, passive income from your blog or blogs without the need to post new articles every week? I heard that it is very possible to do so. Now that’s what I like – just do some posting once a month and wait for the money to roll in. Sounds wonderful, no?

Well, you will need to learn how to make your blog rank high in the page ranking on search engines. Only then you will be able to attract much needed traffic to your blog. Of course, there are many other things you should know too besides page ranking.

But guess what? I can’t tell you 'cos I’m still learning. Unless you already knew and you don’t mind telling me – I will greatly appreciate it.

Still, that day will come. While I will continue to blog to my heart's content with My Very First Blog, I will also have several other blogs running high on Google's search engine that are solely aimed at making big bucks for me.

Making money from blogs is not too out-of-reach or impossible for the average people. Many are already doing it, so why not you and me?

In one of my previous posts, I talked about the Rule Of 72. I mentioned that placing money in Fixed Deposit account is like losing money as the interest rate offered by the banks are much lower than the current inflation rate.

A lot of people already knew this and they are looking for investment vehicles that can earn them 8%, 10% , 12% returns or even higher. Nowadays, you can invest your money in so many things. There are the stock market, unit trusts, properties, forex…. and many more.

But what most people forgot is to have an emergency fund before investing in anything at all.

Emergency fund is extremely important. Unexpected things can and do happen. What if you lose your job? Or what if you meet with an accident and cannot work for the next few months? Without an emergency fund, you may have to incur credit card debts which will take years to settle.

Imagine having no money to buy essential items like food! You won't want that to happen just because most of your money is locked up in properties or in stocks. You may not be able to sell your properties in a short time. And you won’t want to sell your stocks at a time when the market is not favourable. That would be a major nightmare!

So how much do you need? You should have an emergency fund that is equivalent to at least 6 months of your monthly expenses. That means if you spend an average of RM2,000 every month, you will need to have at least RM12,000 in your emergency fund.

Where’s the best place to keep your emergency fund? You may want to place it in liquid investments, so that you can take your money out at short notice. A good place will be the Fixed Deposit Account. Savings Account is suitable also, but since Fixed Deposit offers a higher interest rate, the latter is preferred. In Malaysia, you can also place your money in the Amanah Saham funds managed by PNB as it offers a much higher returns.

If you do not have an emergency fund, forget about any forms of investment! Forget about the share market, the unit trusts and buying properties. You are certainly not ready yet until you have an emergency fund that can last you for 6 months.

Start building up your fund today. It’s never too late! Every month, save 10% of your take home pay and use it to build your emergency fund. Once the fund reaches the required amount, then and only then can you start the real investment game!

Do you know what is The Rule Of 72?

In finance, the rule of 72 is a method to estimate your investment’s doubling time. The rule of 72 states that if you take 72 and divide it by the annual percentage returns, it will give you the number of years your investment would double.

For example, if you invest RM10,000 at a 4% annual interest rate, it will take 18 years for your investment to double to RM20,000.

72 divide by 4 equals 18

Most banks in Malaysia currently pay up to 4% interest for money placed in Fixed Deposits.

Now you know how long the money in your Fixed Deposit will double in amount!

18 years is a long time, isn’t it? Don’t you wish you can double your money faster? You can! Just place your money in investments that give higher interest rates, like in unit trusts, for example.

The rule of 72 can also be applied to calculate the time taken for the value of your money to be reduced to half. Just take 72 and divide it by the inflation rate.

For example, if the inflation rate is 4%, the RM10,000 that you have today will be worth only RM5,000 in 18 years time.

Again, it is 72 divide by 4 equals 18

Now, you will no doubt notice that if you keep your RM10,000 in the Fixed Deposit account in the bank today, in 18 years time, the amount will double to RM20,000. However, in the same number of years, the inflation will see to it that your RM20,000 is halved to RM10,000 in value.

In other words, your money did not really double! What a bummer!

What’s worse, the Government recently announced that the Malaysian inflation rate is at 7% !! With the rise in petrol price and just about everything else, your personal inflation rate may be even higher than 7%!

Using the rule of 72, your RM10,000 in the example above will be reduced to RM5,000 in value in the short span of about 10 years!!

72 divide by 7 equals 10.2

Is there any point then, in putting your money in the Fixed Deposit? Your money is losing value even as it sits there!

So how do we ensure that the value of our money grows at a higher rate than the inflation rate? The answer is to invest your money with an investment rate that is higher than the inflation rate.

Looking at the current high inflation rate of 7%, you will need to invest your money in things like unit trusts for example, that can give you annual returns that is higher than 7%.

Credit cards are like symbols of wealth. Almost every working adult owns a credit card nowadays. Some own more than one. Me? I own just one. Why? I’ll let you know in a moment.

Is credit card good or bad? It really depends on how you use it. However, there’s certainly no doubt that it is very convenient and user friendly. Banks are currently aggressively promoting their credit cards. And why not? It’s a huge money maker for them as the interest rate charged are the highest at 18% per annum.

If you are a seasoned credit card user, I’m pretty sure you already knew some of the things I’m going to reveal. But I won’t bet my money on it. That’s because most credit card holders are really ignorant people. And who stand to benefit from this but the banks themselves!

Do you know...

1. You can spend over and above your credit limit?
Yes, it’s absolutely true. And banks don’t want to tell you. The reason? They can charge you RM50 for exceeding your credit limit. So, if your credit limit is RM3,000 and you accidentally spent RM3,015 thinking that the transaction won’t go through if it’s above your limit, then don’t be surprised when you see RM50 charged to your account in the next statement.

2. Banks can transfer funds from your other accounts (eg. Savings, Current) from the same bank to pay off your credit card debts without the need to inform you?
Yes, it’s legal and have been done many times. For example, if you are a Maybank credit card holder and you have a savings account with Maybank. If you owe Maybank RM8,000 in credit card debt, Maybank has the right to take RM8,000 from your savings account to pay your debts. And they don’t have the obligation to inform you! My advice? Don’t open any accounts with the bank that issued you the credit card. But the best option is of course, don’t owe any credit card debts!

3. Banks can increase your credit limit at their own discretions without asking for your consent?
True again. Of course, you can reject, but few people will take the trouble to do so. Once you continue using your card, you are deemed to have consented to the increase in credit limit. I should know because I started with a credit limit of only RM3,000 8 years ago. Today, my credit limit has reached RM14,000! Now you know why I said earlier I only own one credit card? Because ONE is enough. I don’t want to be tempted in spending more than RM14,000 a month!

4. You can choose not to pay the annual renewal fee?
Yes, it’s very true. Because credit card is such a competitive business, most banks usually allow you to skip the annual payment to prevent you from switching to other banks. However, this is provided you call them up and insist that you don’t want to pay the annual renewal fee. Believe me, they don’t want you to call!

5. You will be charged RM10 or 1% on the total outstanding balance(whichever is higher)for late payment effective 1st July 2008?
Presently, the minimum charge for late payment is RM5 or 1% on the minimum payment due(whichever is higher). But effective 1st July 2008, the minimum charge will increase to RM10 or 1% on the total outstanding balance(whichever is higher) (subject to a maximum of RM100).

To compare the old and the new rate, let's say you have an outstanding balance of RM500. The minimum payment is 5% of the total outstanding amount which is RM25. If you pay just one day late, you now have to pay RM5 in late payment fees, but with the new rate, your late payment charges will double to RM10.

On the other hand, if you have an outstanding balance of RM20,000 the minimum payment is RM1,000. If you pay the RM1,000 late, you now have to pay only RM10 in late payment fees, but with the new rate, your late payment charges will increase tenfold to RM100 (the maximum allowed)

6. You can pay lower interest rate starting from 1st July 2008?
This is supposed to be good news and really it is, until you read No.7 below. Yes, Bank Negara will be implementing the Tiered Interest Rate on 1st July 2008. With this ruling, you can lower your card interest rate from 18%p.a to 15%p.a.
It works like this. If for 12 consecutive months, you are faithful in paying the minimum amount on time, your interest rate will be reduced to 15%p.a. from the 13th months onwards. (This is known as Tier 1).
If for 12 consecutive months, you manage to pay minimum amount on time for 10 or 11 months, your interest rate will be reduced to only 17%. (This is Tier 2).
Those that are not in Tier 1 or 2 will be in Tier 3, where the normal 18% interest rate applies.
But this good news is sinking as fast as the Titanic. To know why, read No 7.

7. All credit card holders who don’t make the full payment on their cards will not be able to enjoy the 20-day interest free period effective 1st July 2008?
Don't you think it's too much of a coincidence to have this implemented also on the same date ie. 1st July 2008? I have already mentioned about this ruling in my older post (Read it here). In other words, if you are supposed to pay RM2,000 for last month and you paid only RM1,500, then any purchases you made with your card this month would be charged interest starting from the date of your next statement. Don’t you agree this makes a complete nonsense of the reduced interest rate plan (No.6) above?

So, dear credit card holders, be smart and use your credit cards wisely.

With the rising cost of petrol and the cost of everything else that will rise with it, I can see only 3 options.

Option #1 : Earn more money

Option #2 : Spend less money

Option #3 : Combine both Option #1 and Option #2 (the most ideal option)

Now I’m not terribly good at Option #1, but I’m even worse at Option #2.

But I gotta start somewhere. So, today I’m going to focus on Option #2 ie. Spend less money.

It’s actually easier said than done. I notice that before the end of each month, I always run out of money. Luckily for me, I always pay myself first. That means I always save 10% of my monthly income and put it into my savings account which I don’t touch. (Yes, I make sure this savings account cannot be accessed by way of ATM machines!)

But after deducting the necessary expenses like house loan, car loan, insurance, petrol, food, household bills and the like, I am usually left with a small amount to spend. From this small amount, I try to place some money into investments, and then use the rest for other spendings.

The trouble is, my spending always exceed my budget for the month. I just don’t know where I spent all those money!

According to Azizi Ali in his book, The Millionaire In Me, not knowing where your money goes is BAD NEWS! From his book, I found a method where I’m able to trace where my money goes every month. Azizi called it the Money Tracker.

Here’s a snapshot of the Money Tracker from his book.



Everyday, list down what you spend. Big or small. It can be for big items like buying a TV or small like parking charges. List down everything. Once that is done, fill up the Priority Codes.

There are 4 codes, namely:
1 – Mandatory Oxygen
2 – Essential Food
3 – Nice
4 – Junk Crap

For example, petrol and food comes under Mandatory Oxygen. It is for the things that are absolutely necessary for us to survive. Next, books may come under Essential Food if you like to read. Going to the movies and yoga classes may come under Nice. And cigarettes or clubbing may go under Junk Crap.

Of course different people have different priorities. You may like clubbing and place it under No. 2 Essential Food. Or you don’t read books, so spending money on books is Junk Crap to you! Some people are gym junkies so for them, spending on the gym’s monthly fees is Mandatory Oxygen to them.

But really, do re-think your priorities very carefully in view of the escalating expenses. I hope you don’t put clubbing under Mandatory Oxygen and food under Junk Crap! Then you surely have your priorities wrong!

Even for food, it does not mean all food goes under Mandatory Oxygen. For example eating at a lavish buffet in a 5-star hotel surely qualifies under No.3 Nice or even No.4 Junk Crap if the food is lousy.

Thanks to this Money Tracker which I started using 3 months ago (I wished I had started sooner), I am able to know exactly what I spent on. And I have managed to stop spending on those Junk Craps. You’ll be surprise how much money you can save by making use of this Money Tracker.

So, let’s not procrastinate. Identify your Junk Craps today!

GOING UP, UP ... and UP!

I'm not referring to the number of hits my blog received, nor the amount of income I'm getting, nor the direction of the stock market. Neither am I referring to Mariah Carey's voice hitting the glass shattering octaves.

Nope, I'm talking about the price of petrol, or fuel or gas, whatever you want to call it. It's going up like nobody's business.

Just yesterday, it was announced that the Government will allow market prices to determine petrol prices after introducing a new subsidy scheme for the lower income groups in August. (I wonder if I qualify for the lower income group subsidy - I have a heavy feeling that I don't)

I really don't know how they are going to do it, the Government I mean. Imagine we are now paying RM1.92 per litre and come August, we will be paying over RM5 per litre! Are they insane?

And the real trouble here is not whether I should continue to drive or at least cut down on travelling (which I can assure you it's impossible) BUT whether I can survive when the price of everything else (and I mean everything else) rises in tandem with the petrol price.

The way I see it, things are going to get real tough. Perhaps the Government should increase the petrol price gradually. Otherwise, we will see a dramatic rise in unemployment, and robberies.

(Note: At the time of writing, I received this latest news - petrol price increase to RM2.70 per litre at midnight tonight!)

In the meantime, more bad news coming our way. From what I heard, Bank Negara will be introducing the new Tiered Pricing Structure for credit card holders on 1st July 2008.

Under this new structure, the 20-days interest free period will no longer be enjoyed by credit card holders who don’t make the full payment on their credit card bills.

Yes, you read that right.

If you only pay partial or minimum payment, interest will be charged on the day the new purchases are posted on the card accounts.

For example, if your last month’s card account shows an outstanding balance of RM2,000 and you can only afford to pay RM1,500, then sorry to say any purchases you make this month with your credit card will be charged interest starting from the date of your account statement. No 20-day interest free period for you!

Sometimes I wonder if Bank Negara is helping us or actually helping the banks make more money. With only one-third of cardholders in this country settling their credit card amount in full every month, it is easy to see how profitable this new price structure will be to the banks.

Coupled with the increase in petrol prices, Malaysians are in for a really tough ride. Best of Luck, everyone!