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Our Financial Plan

as for us,

bank saving accounts - for routine ins and outs money
unit trust - for medium to long term saving
insurance - for protection
others - for other reasons

for Hafiy and Adik, we don't go for saving accounts (most banks has kids' saving accounts) because of the above concepts. Hafiy and Adik won't able to withdraw money (even if both of you can but we won't allow it before you are 18) so there is no use for such account. futhermore, returns from saving account is only from 1.8-3% per annum.

we don't open insurance account for both Hafiy, adik dan the 3 following fellas, because:
- insurance is NOT an investment, it is for protection (even tho it is investment link, only half of the money invested in unit trust).
- we don't need medical insurance bcos medical expenses for 5 children will be taken care by our company.(*the 6th and rest will get this i guess.. 6th???)
- little kids don't have dependants for life insurans. (buy it yourselflah later, after you get married & have kids)
- education insurans gives smaller return than unit trust.

insurans, for us, on the other hand is a 'force-saving'. for those who are 'hard to save money' or 'hard to pay for themselves', insurans is a good instrument. this is because they have to commit the payment everymonth. for people who love to save money, i think other instrument gives better return. if you can save at a better place for a better return, why not?

in Malaysia, generally we have 2 types of unit trust (amanah saham):
1) the one managed by PNB.
2) private unit trusts managed by unit trust companies like Public Mutual, CIMB Mutual, MAAKL, etc.

rule of thumb in unit trust investment (in other investment tho), the higher the risk, the higher the return. the highest unit trust fund is those invested (by the fund managers) directly in stock market such as index fund, equity fund, etc. during bear market (like what we are facing now) most (even all) equity funds go down. the safest (bear in mind that every investment has its own risks) are funds like bond and money market. but to respect the rule of thumb, those funds give low return.

for Hafiy and Adik, we opt for PNB's unit trust (ASNB) because it just meant for saving and we don't bear the risk of ups and down of stock market. plus, the price for ASW2020 is fixed RM1 for buying and selling, and no service charge. then, we have nothing to lose if we retrieve the saving before 2nd or 3rd years, or even tomorrow. it's return totally depend on divident and bonus, but at least we don't lose the initial investment if we want to retrieve it in short time.

it's different with private unit trust's equity funds. it should not be put as 'save today to retrieve tomorrow', unless you are interested in trading. this kind of fund, suitable for long term, say 15-25 years if not for trading. involving in this kind of funds, either for trading or long term, needs self knowledge rather than depending 100% on the agents. the best funds are managed by the best unit trust company, not only will give higher return, but also it won't go bangkrupt (it is another risk of funding with private unit trust).

where to invest?

saving/investment instrument won't be the same for unique individuals. thus, ones should know themselves before deciding to put the money on which basket.

that's the answer for why we don't invest in real estate/property. with our current salary, we are not ready to commit in property investment (not REITs), plus our limited knowledge, it will put us in high liability than collecting assets.

just wanna share what happened is US recently. since July, housing price in US declined to almost 20%, and now, US in undoubtly in recession. the speculation made the price (house and other buildings) goes up, and people keep on 'trading' housings and at a stage where the price came to 'unreasonable', the 'trading' cut down, the owner wasn't able to pay the mortgage, and banks lose their money.

thus, many US banks were closed. and this gives domino effect to all economic aspects. when people are unemployed, the buying power is less, consumer industry losses customers, supply is more than demand, people worry and sell their shares, stock market falls etc (just a brief review). as an economic taiko, US recession more or less give a pinch to other countries especially China and India, those are actively doing trading with US. to Malaysia? i don't know but the stock market now is giving discount to the investors!

what i wanna say is, when people keep on telling 'housing price won't go down', i beg to differ. property market is just like other market, it has its cycle, just maybe the circle is big, so the effect is not as significant as other market i.e. stock market, and it takes longer time. for people who 'beli tanah hutan 10tahun dulu 5ribu seekar sekarang this and that beli 50ribu seekar', is not an investment but gambling. investing is strategise, planned, has objective.. how the person knew 10 years back that certain people would buy the land with that price? we can keep on hoping but what is the basis? investment has its basis.

thus, a person with income rm1800 should has different objective and different instrument than another person with rm3000 and rm50k per month. the financial knowledge should be learnt by everyone who like to multiple their money rather than earn and keep (bawah bantal pun boleh). bear in mind that we have to deal with inflation and recession.

now that oil price goes down to more than 50% (this will trigger questions like "why the fuel price still high?" :D it's another long story). we know that Malaysia depends on oil & gas industry for more than 40% of its national income. when the oil price goes down... you know what does it mean..

look like i started to merapu bukan2 :P.

what i wanna tell you, Hafiy & Adik, use your money wisely. pay yourself first before you pay the supermarket tokeis. don't say money isn't everything, without money you won't able to eat, or even go to school.

wake up that in future we don't know what will happen. will our future generation get scholarship? will we be living for them then? thus, the preparation is a vital, start saving from now, especially for kids' education.


return & risk:
saving account - 2-3% p.a. low risk (bank ada PIDM).
unit trust - medium return, varies from 5%-30% depending on funds types with medium risk.
insurance - low return but good for protection i.e. accident.
stock market - high return. can get 200%. but high risk, can bangkupt as well :D
properties - high return especially during boom market, but slow. low risk.

saving account - 100? 300? depend on bank and type of account.
unit trust - private from 500-1000. ASNB from 100.
stock market - tak malu kat remisier ke kalo beli sikit2? koman2 mau 2-3k above huhu.
properties - kena tanya bank berapa dia bagi pinjam.

our manner:
saving account - save whenever you like & sleep.
unit trust - save whenever you like & sleep. but if doing trading have to watch the market out.
insurance - save monthly and sleep. wait until something happen or its maturity.
stock market - buy and ready to get heart attack!

as i said, we have to be realistic and be in our own shoes. like us, we don't need medical insurance, so why pay? and for our kids who has no dependants, they don't need life insurance.

bear in mind that those things above are only tools, and it's not restricted to one-for-all. anyway, the choice is on us, whether we want to focus on our current needs or want to focus on our future needs. to me, knowledge in personal finance is good, at least minimum knowledge about 'WHERE SHOULD I PUT MY MONEY?'. unit trust agents, insurance agents, this and that agents will say anything to make you buy their policies, but how do you know it fits you? remember that we don't need all others need. if you need rice once a day, i might need more! so, seek for that knowledge before we accidentally buy this and that, than later we knew we don't need it, but have to commit with it!

check your needs and start saving now!

Abu Hurairah, r.a., reported "Rasulullah had said: richness does not lie in the abundance of worldly wealth but richness is the richness of the soul (heart, self).

"hai orang beriman! Janganlah kamu saling memakan harta sesamamu dengan jalan yang batil, kecuali dengan jalan perniagaan yang berlaku dengan suka sama suka di antara kamu. dan janglah kamu membunuh dirimu, sesungguhnya Allah adalah Maha Penyayang kepadamu" (4:29).