My sister told me about SSPN which she listened over the radio. In Budget 2013, parents with children at school who save their money at SSPN can entitle maximum tax relief of RM6000 starting 2012 to 2017.
This is definitely very attractive to me as I am at 19% tax bracket. RM6000 translates into RM1140 tax saving. Together with my husband, we will be saving RM2280. This is a huge saving!
However, my concern would be the safety of my money at SSPN. I searched the web and know vaguely that SSPN is somehow related to PTPTN. The banks act as their agent to accept the saving only. As for withdrawal, the banks only assist to receive the withdrawal forms and documents supporting the withdrawal. It may take months before the depositors receive their withdrawal. It is also difficult to trace the withdrawal process. On top of that, PIDM does not insure SSPN saving as SSPN is not a bank institution, which doesn't come under the scrutiny of BNM.
On second thought and after discussing with my husband, we decide not to participate in SSPN. This will mean we are unable to save on the RM2280, with fear of unable to withdraw our RM12,000.
Somehow, I suddenly notice that the Genneva Gold case has affected my confidence with the way our country is run. Our ex-XX was at the launching of Genneva Gold, and yet after a few years when 60,000 investors have invested their money in the company, BNM and related enforcement agencies are raiding this company. What is becoming of our country?
Thursday, 20 December 2012
Sunday, 9 December 2012
Unable to pay premium
From my experience in insurance line, when customers are unable to serve their premium, they will stop taking my calls. I normally will make a few more attempts in several weeks.
When customers are unable to pay their premium, bear in mind that you are not owing the agents any money. Talk to your "responsible" agents. Revise the importance of this policy which you took up before. Find out what is the consequences if you stop paying. You may want to stop for a while because you are out of job or because you have other commitments. Perhaps you can change your annual premium to monthly premium, or use your cash value to pay for the next few months, or opt for premium holiday if it is an investment-linked.
Do not just push the policy aside. If it is a medical insurance, you may face a bigger financial problem if you fall sick when the policy lapsed. After all, you have paid premiums, check how you can delay the premium, whether you want to convert to paid-up policy or extended term insurance.
If you think your agent is not giving you good advise, look for academic qualified financial adviser. Seek advise. There must be a strong reason why you took up the policy.
When customers are unable to pay their premium, bear in mind that you are not owing the agents any money. Talk to your "responsible" agents. Revise the importance of this policy which you took up before. Find out what is the consequences if you stop paying. You may want to stop for a while because you are out of job or because you have other commitments. Perhaps you can change your annual premium to monthly premium, or use your cash value to pay for the next few months, or opt for premium holiday if it is an investment-linked.
Do not just push the policy aside. If it is a medical insurance, you may face a bigger financial problem if you fall sick when the policy lapsed. After all, you have paid premiums, check how you can delay the premium, whether you want to convert to paid-up policy or extended term insurance.
If you think your agent is not giving you good advise, look for academic qualified financial adviser. Seek advise. There must be a strong reason why you took up the policy.
Friday, 7 December 2012
Financial MattersTo Teach My Teenagers
It is alarming to know that from 2005 to June 2012, 25% of the bankruptcy was due to default car loan, and about 50% of the bankruptcy due to credit card loan are those below 30 years old.
In Malaysia, cars are expensive purchase next to house. Just compared similar brand and model you pay here to those in US on the web. You would be shock! The national cars are also unfairly expensive. When our government is unable to provide us with good transportation, it is only fair to lower the motor prices!
I came to know that many parents are serving the monthly car loan for their children. I do not quite agree with this. My first car was a 10 year old green colour Honda Civic about 30 years ago. I paid RM6000 for that. As long as it could bring me safely to my office, I am fine. Many Chinese young adults here would not want to drive a used car in KK. They want at least a Myvi or Toyota Vios. It's vanity. :(
According to the newspaper, the government is offering RM0 down payment car loan for final year students. Are we not inviting our young generation to be in debt even before they get their first job? What about petrol, allowance, motor insurance, road toll, parking?
In Budget 2013, the government is also giving RM200 for those above aged 21 to purchase a smartphone. I don't see this a wise move of teaching our young generation in financial matter. While AKPK is pushing "POWER" program to teach our young generation how to do financial planning, the government is encouraging them to spend and to be on debts. What a contrary!
It goes back to parents of how you teach your children about financial matters. I should think that children must learn how to be responsible for their own expenditure. I discuss with them about the car loan, mistake we made in changing car that caused us some losses, mobile phone post-paid and pre-paid, household budget, insurance, bank matters, credit card, unit trust investment, stock investment and so on. We don't hide about our financial status. When my husband was out of job, we told them and they willingly take part in money saving. We believe all these are helpful to instill good financial concepts to them.
We hope when they have their own family in the future, they will make less mistake and be rational in spending, and to do their planning properly.
In Malaysia, cars are expensive purchase next to house. Just compared similar brand and model you pay here to those in US on the web. You would be shock! The national cars are also unfairly expensive. When our government is unable to provide us with good transportation, it is only fair to lower the motor prices!
I came to know that many parents are serving the monthly car loan for their children. I do not quite agree with this. My first car was a 10 year old green colour Honda Civic about 30 years ago. I paid RM6000 for that. As long as it could bring me safely to my office, I am fine. Many Chinese young adults here would not want to drive a used car in KK. They want at least a Myvi or Toyota Vios. It's vanity. :(
According to the newspaper, the government is offering RM0 down payment car loan for final year students. Are we not inviting our young generation to be in debt even before they get their first job? What about petrol, allowance, motor insurance, road toll, parking?
In Budget 2013, the government is also giving RM200 for those above aged 21 to purchase a smartphone. I don't see this a wise move of teaching our young generation in financial matter. While AKPK is pushing "POWER" program to teach our young generation how to do financial planning, the government is encouraging them to spend and to be on debts. What a contrary!
It goes back to parents of how you teach your children about financial matters. I should think that children must learn how to be responsible for their own expenditure. I discuss with them about the car loan, mistake we made in changing car that caused us some losses, mobile phone post-paid and pre-paid, household budget, insurance, bank matters, credit card, unit trust investment, stock investment and so on. We don't hide about our financial status. When my husband was out of job, we told them and they willingly take part in money saving. We believe all these are helpful to instill good financial concepts to them.
We hope when they have their own family in the future, they will make less mistake and be rational in spending, and to do their planning properly.
Thursday, 6 December 2012
Astro
I rejected the idea of installing Astro. When our children were young, I did not want to install Astro because I felt that watching cartoons on national channels and NTV7 were already hard to control their TV time. With Astro, there is a channel with cartoons and children shows round the clock. I would be getting myself into having more scolding to my children to control their TV time.
My husband said Astro can give you instant news break. Who would want to sit in front of the TV whole day long to watch news? My sister-in-law said TV shows are on air before NTV7. Why is it necessary to watch new shows ahead?
I couldn't give myself good enough reason to subscribe to Astro. Partly because we were on tight budget before and Astro was never my priority.
Anyway, I saved on the commitment subscription fee and saved a lot of time doing more constructive things instead of watching TV.
With good internet access nowadays, and my children have grown up, I don't find any reason to subscribe to Astro.
My husband said Astro can give you instant news break. Who would want to sit in front of the TV whole day long to watch news? My sister-in-law said TV shows are on air before NTV7. Why is it necessary to watch new shows ahead?
I couldn't give myself good enough reason to subscribe to Astro. Partly because we were on tight budget before and Astro was never my priority.
Anyway, I saved on the commitment subscription fee and saved a lot of time doing more constructive things instead of watching TV.
With good internet access nowadays, and my children have grown up, I don't find any reason to subscribe to Astro.
Financial Concept
What kind of financial concept do we impart to our children? You may not realize it but we impart our financial concept to our children when we deal about money matters with them.
My friend is a single mother. She has two children, in their early 20s, are working. Their take home pay is about RM1000 monthly. Her son recently announced that he wanted to quit his job (which he has worked for 1 month only) because he couldn't see any future for himself in this company. He wanted to venture into pearl milk tea business together with his friends. He requested his mother to let him change his kancil into hilux so that he has enough room in his car to carry his stocks. To my surprise, my friend agreed with her son. She even told her son that it is alright to try out different business. Whether the pearl milk tea is successful or not is okay.
My friend has already been living on overdraft. Insurance policies and hire purchase have taken a big chunk from her income. Yet she allows her son to spend money this way.
I highlighted to her that we should help our children to stop relying on us for financial support. She should not pretend as though she is their ATM machine which they can always withdraw money from. Starting a business is not easy. Do not expect to recover the capital from first few months. Why rush into having his own business when he can't even manage his own money. Since he doesn't have any saving, he will turn to his mother for money. My friend is digging a deeper hole for her personal loan. There were already a few cases which her children spending her money senselessly, and I feel that she is also guiding them senselessly.
When our children have grown up, they would not cling to us like before. It is wrong to use money to gain their dependency on us. When they have grown up, as parents, we should want to see them to be a responsible and independent individual, like us.
Be rational, my friend.
My friend is a single mother. She has two children, in their early 20s, are working. Their take home pay is about RM1000 monthly. Her son recently announced that he wanted to quit his job (which he has worked for 1 month only) because he couldn't see any future for himself in this company. He wanted to venture into pearl milk tea business together with his friends. He requested his mother to let him change his kancil into hilux so that he has enough room in his car to carry his stocks. To my surprise, my friend agreed with her son. She even told her son that it is alright to try out different business. Whether the pearl milk tea is successful or not is okay.
My friend has already been living on overdraft. Insurance policies and hire purchase have taken a big chunk from her income. Yet she allows her son to spend money this way.
I highlighted to her that we should help our children to stop relying on us for financial support. She should not pretend as though she is their ATM machine which they can always withdraw money from. Starting a business is not easy. Do not expect to recover the capital from first few months. Why rush into having his own business when he can't even manage his own money. Since he doesn't have any saving, he will turn to his mother for money. My friend is digging a deeper hole for her personal loan. There were already a few cases which her children spending her money senselessly, and I feel that she is also guiding them senselessly.
When our children have grown up, they would not cling to us like before. It is wrong to use money to gain their dependency on us. When they have grown up, as parents, we should want to see them to be a responsible and independent individual, like us.
Be rational, my friend.
Tuesday, 4 December 2012
Time With My Teenagers
My elder son has further his tertiary education oversea. My younger son will be sitting for his SPM next year. We have this idea of sending him to Institute Sinaran after his SPM because his current school doesn't seem to plan properly for senior 3 science stream to sit for their Independent Chinese School Exam.
It will be another 2 years to be with my younger son daily. Driving him to school, cooking meals for him, and asking him to take shower! When they have left home for further study, they may settle down for a job away from home as well after graduation. Should they marry someone who doesn't come from KK, I believe the chances of being physically close to them would be rare.
Someone posted on facebook. If he goes home twice a year to see his parents, should his parents live another 30 years, he would see them 60 times only! This make me really treasure my time with my children.
Mummy loves both of you, but I can't keep you next to me forever. I still carry the sweet memory of both of you wanting me to be with you all the time, and wanting to hold my hands when we went out, and wanting to sit next to me when we dined out. It seems like yesterday, when both of you annoyed me because both of you always fought to sit next to me. When I think back, I wish we could turn back the time.
Nevertheless, you need to grow, and look for your own freedom and way of living. Should we have a chance to live together after your graduation, it is a rich blessing from God for me!
God bless both of you!
It will be another 2 years to be with my younger son daily. Driving him to school, cooking meals for him, and asking him to take shower! When they have left home for further study, they may settle down for a job away from home as well after graduation. Should they marry someone who doesn't come from KK, I believe the chances of being physically close to them would be rare.
Someone posted on facebook. If he goes home twice a year to see his parents, should his parents live another 30 years, he would see them 60 times only! This make me really treasure my time with my children.
Mummy loves both of you, but I can't keep you next to me forever. I still carry the sweet memory of both of you wanting me to be with you all the time, and wanting to hold my hands when we went out, and wanting to sit next to me when we dined out. It seems like yesterday, when both of you annoyed me because both of you always fought to sit next to me. When I think back, I wish we could turn back the time.
Nevertheless, you need to grow, and look for your own freedom and way of living. Should we have a chance to live together after your graduation, it is a rich blessing from God for me!
God bless both of you!
Friday, 30 November 2012
Saving Money Using "Great Cash Wonder'
My customer bought a Great Eastern policy "Great Cash Wonder" in December last year. He bought it from a lady agent after she kept calling him, begging him to buy the policy so that she could hit her annual target for a trip.
The premium is RM13,100 annually, paid for 5 years, and matured in 20 years. Sum assured is RM25,000. Starting from first year, he will receive cash payment of 5% of sum insured, and on the 6th year until 20th year, 6% of the sum assured. Maturity benefit of guaranteed plus non-guaranteed is RM100K to RM140K.
After one year, he asked me to see whether it is worthwhile to keep the policy before he decides whether he should pay for the second premium. On replying my question of why he took the policy, he said the lady agent told him that the returns of this policy is very good. Of course, he was also kind enough to help her to achieve her sales target for a trip.
Using Excel spreadsheet to calculate, it is easy to make comparison. Assuming putting the same amount in Fixed Deposit, or Bond Fund, or managed fund, the returns is well above "Great Cash Wonder". Besides, when we "save" through an insurance policy, our money is locked for 20 years. I would say it is not a good way of saving money! In fact, the return is about 4%, which can't even break even with the inflation rate.
Why would consumers commit in such policies when they can make comparison so easily? This puzzles me. Perhaps the agents have good selling skills, perhaps they are good at twisting facts, or perhaps consumers makes decision irrationally.
The premium is RM13,100 annually, paid for 5 years, and matured in 20 years. Sum assured is RM25,000. Starting from first year, he will receive cash payment of 5% of sum insured, and on the 6th year until 20th year, 6% of the sum assured. Maturity benefit of guaranteed plus non-guaranteed is RM100K to RM140K.
After one year, he asked me to see whether it is worthwhile to keep the policy before he decides whether he should pay for the second premium. On replying my question of why he took the policy, he said the lady agent told him that the returns of this policy is very good. Of course, he was also kind enough to help her to achieve her sales target for a trip.
Using Excel spreadsheet to calculate, it is easy to make comparison. Assuming putting the same amount in Fixed Deposit, or Bond Fund, or managed fund, the returns is well above "Great Cash Wonder". Besides, when we "save" through an insurance policy, our money is locked for 20 years. I would say it is not a good way of saving money! In fact, the return is about 4%, which can't even break even with the inflation rate.
Why would consumers commit in such policies when they can make comparison so easily? This puzzles me. Perhaps the agents have good selling skills, perhaps they are good at twisting facts, or perhaps consumers makes decision irrationally.
Staying with in-laws
After 22 years of marriage, we have together gone through many ups and downs. There were arguments and adjusting of lifestyles to suit each other. There were times when we were worried about not earning enough, and there are times when we have rich blessings from God. All of these, we went through together, like the vow on our wedding day.
My in-laws came to stay with us on and off last year because my father-in-law had to receive cancer therapy at the hospital here.
After my father-in-law passed away, my sister-in-law commented to my hubby that in-law was unhappy with me because hubby had to do dinner cooking. In-law said I should not let hubby cooked because he has gout problem, and standing for too long in the kitchen might trigger gout pain.
Hubby said he just laughed over this because I spent more time in the kitchen preparing the food and doing all the washing. All he did was just to cook when I had finished preparing. After all, it is unfair for me to do everything in the kitchen because he brought in income and so did I. He worked and so did I.
I am glad hubby is fair but I still can't get over the feeling of being criticized behind my back. My hubby and I love one another and care for one another. Why should my in-laws make comments about our lifestyle after staying in my house. We are already half a century old. What I want to do is to live my own life without interference from my in-laws. Should they decide to stay with us for good, would I be able to take it?
My in-laws came to stay with us on and off last year because my father-in-law had to receive cancer therapy at the hospital here.
After my father-in-law passed away, my sister-in-law commented to my hubby that in-law was unhappy with me because hubby had to do dinner cooking. In-law said I should not let hubby cooked because he has gout problem, and standing for too long in the kitchen might trigger gout pain.
Hubby said he just laughed over this because I spent more time in the kitchen preparing the food and doing all the washing. All he did was just to cook when I had finished preparing. After all, it is unfair for me to do everything in the kitchen because he brought in income and so did I. He worked and so did I.
I am glad hubby is fair but I still can't get over the feeling of being criticized behind my back. My hubby and I love one another and care for one another. Why should my in-laws make comments about our lifestyle after staying in my house. We are already half a century old. What I want to do is to live my own life without interference from my in-laws. Should they decide to stay with us for good, would I be able to take it?
Saturday, 24 November 2012
Retirement of a School Principal
My friend, Mary, is a school principal at a primary school. Her salary has already reached RM5K recently. When she retires 3 years later, she will be getting at least RM2,500 from her pension.
Since she is single, no dependent, staying at school hostel and having no expensive hobby, she has accumulated at least half a million, and a terrace house monthly rental at RM800.
Another friend, Sarah, approached her to join her successful business in the insurance industry. Sarah is a single mother having 2 children. She worked very hard to raise her 2 children and eventually, successful in her insurance career.
Mary was attracted by Sarah's invitation of becoming an agent. After giving much thoughts about that, my advice to her is this.
Firstly, Mary will have no problem with her financial income after retirement. Other than her pension, she will have dividend from her unit trust investment, annuity from her insurance policy and rental from her house. Since she has no dependent, and no commitment other than her medical policy of about RM300p.m., she will have more than what she needs financially.
Secondly, Mary has been a teacher for more than 25 years, and after that promoted to be school principal until now. If she were in the insurance industry, she will be doing sales. This is totally different from teaching. She is a much respected figure in the school. If she starts calling her circle of friends to buy insurance policy, we believe very soon she will be turned off.
Thirdly, when we have reached 60 years old, assuming our life span is 75 years old, there is another 15 years to live. Does she want her next 15 years having a work like that?
When we are older, when money is no longer an issue, people normally want to do something meaningful in their remaining years. Some may involve themselves in charity work, religious activities or engaging in hobbies that they have always wanted to do.
Since she is single, no dependent, staying at school hostel and having no expensive hobby, she has accumulated at least half a million, and a terrace house monthly rental at RM800.
Another friend, Sarah, approached her to join her successful business in the insurance industry. Sarah is a single mother having 2 children. She worked very hard to raise her 2 children and eventually, successful in her insurance career.
Mary was attracted by Sarah's invitation of becoming an agent. After giving much thoughts about that, my advice to her is this.
Firstly, Mary will have no problem with her financial income after retirement. Other than her pension, she will have dividend from her unit trust investment, annuity from her insurance policy and rental from her house. Since she has no dependent, and no commitment other than her medical policy of about RM300p.m., she will have more than what she needs financially.
Secondly, Mary has been a teacher for more than 25 years, and after that promoted to be school principal until now. If she were in the insurance industry, she will be doing sales. This is totally different from teaching. She is a much respected figure in the school. If she starts calling her circle of friends to buy insurance policy, we believe very soon she will be turned off.
Thirdly, when we have reached 60 years old, assuming our life span is 75 years old, there is another 15 years to live. Does she want her next 15 years having a work like that?
When we are older, when money is no longer an issue, people normally want to do something meaningful in their remaining years. Some may involve themselves in charity work, religious activities or engaging in hobbies that they have always wanted to do.
Thursday, 15 November 2012
Orchid Growing On Mango Tree
I suddenly noticed this beautiful orchid flowering. Thanks to the rainy season. Aren't they beautiful? It is just next to my car porch, and I didn't even notice it!
My sister tied the orchid onto my mango tree about 3 years ago. I have not taken care of it. It just grows by itself. Take note of the fern leaves on my mango tree. I didn't put it there. It just grows by itself, as well. As for the mango tree, I did not grow it too. The previous house owner grew it, and I have had its fruits for almost 20 years. Am I not very lucky?
Tuesday, 13 November 2012
Monday, 12 November 2012
How much do you need to insure-Death Benefit
David was 35 years old, married with 3 children, aged 8,6 and 4. He worked as bank manager. His wife was an administrative executive before she had 2nd child. Rose chose to quit her job to take care of their 3 children. Both David and Rose were happy with the arrangement as the bank demanded long working hours. With one salary, David and Rose were frugal with their spending.
One day, David was involved in a car accident. He passed away on the same day.
Losing her husband, Rose was emotional sad and distraught. The children were afraid. Then came the funeral, medical bills, the housing loan, car loan and living expenses of the family. Rose felt alone facing the financial needs.
From this story, we understand that the emotional loss could not be compensated with monetary term. As for other monetary needs, if David left behind a life insurance sufficient to pay off the housing loan, car loan, funeral expenses, medical bills and at least 3 years living expenses for Rose to take some time to get back to her job, Rose would be very grateful. Even though physically her husband left her, he had taken care of a home, a car and the financial responsibility of a husband.
How much should David cover his life? He could add up all the outstanding loans, and based on affordability, at least 3 years of living expenses.
How long to cover? David did not have to buy whole life policy. Assuming all his children will attain tertiary education and be financial independant at the age of 25, David only needed to cover for 24 years assuming the loans had paid off at that time.
Buy term life is much practical than whole life. Premium is much cheaper.
One day, David was involved in a car accident. He passed away on the same day.
Losing her husband, Rose was emotional sad and distraught. The children were afraid. Then came the funeral, medical bills, the housing loan, car loan and living expenses of the family. Rose felt alone facing the financial needs.
From this story, we understand that the emotional loss could not be compensated with monetary term. As for other monetary needs, if David left behind a life insurance sufficient to pay off the housing loan, car loan, funeral expenses, medical bills and at least 3 years living expenses for Rose to take some time to get back to her job, Rose would be very grateful. Even though physically her husband left her, he had taken care of a home, a car and the financial responsibility of a husband.
How much should David cover his life? He could add up all the outstanding loans, and based on affordability, at least 3 years of living expenses.
How long to cover? David did not have to buy whole life policy. Assuming all his children will attain tertiary education and be financial independant at the age of 25, David only needed to cover for 24 years assuming the loans had paid off at that time.
Buy term life is much practical than whole life. Premium is much cheaper.
Getting Rich
How to define rich? Rich usually refers to abundance of assets and money in personal finance. Whether you are very rich or have enough to be comfortable with basic needs, the feeling varies from person to person.
The old Chinese saying 大富由天，小富从俭. I translate it as "being very rich comes from God (fated), and being well-off comes from thrifty life".
李嘉诚Lee Ka Hing is one of the richest Chinese. He worked very hard to build up his businesses. I believe many people work as hard as Lee but very few succeed like him. Anyway, there is no shortcut to getting successful in business and you need to be "blessed" to be super rich like him.
Not everyone is born business minded. Not everyone is born clever in study. However, everyone can work hard to bring in income, and extra income, for himself. I believe everyone can be well-off financially by being careful with their spending and their investments.
How to be contented with what we have? Be satisfied what you have. 小富即安.
The old Chinese saying 大富由天，小富从俭. I translate it as "being very rich comes from God (fated), and being well-off comes from thrifty life".
李嘉诚Lee Ka Hing is one of the richest Chinese. He worked very hard to build up his businesses. I believe many people work as hard as Lee but very few succeed like him. Anyway, there is no shortcut to getting successful in business and you need to be "blessed" to be super rich like him.
Not everyone is born business minded. Not everyone is born clever in study. However, everyone can work hard to bring in income, and extra income, for himself. I believe everyone can be well-off financially by being careful with their spending and their investments.
How to be contented with what we have? Be satisfied what you have. 小富即安.
Investment-linked statement
Do not chuck away your investment-linked annual statement when you received it normally in Feb. Most of us would have our medical card and critical illness cover attached in investment-linked policies. Therefore it is important to ensure that our premium and the units value are sufficient to cover next year's insurance charges and service charge. DO NOT ASSUME that the premium is level throughout the duration of the policies.
Using the projected insurance and service charges table, work out how much you need for next year.
Giving you a live example of what Mr.A's age 51 Prulink Assurance Account paying RM1800 premium annually.
Death Benefit RM30K
Crisis Cover Benefit RM30K
PRUdisability provider Benefit RM3K
PRUmajor med Benefit 100 (medical card, Daily R&B 100/day, Annual Limit RM50K)
PRUpayor Basic RM1,800
Summary of projected insurance and service charge:
Projected Insurance charges for age 51 is
(4.69 X 30) + (5.34 X 30) + (0.9 X 3) + (360.19) + (8.64 X 18) + (96) = 915.31
Projected Insurance charges for age 52 is
(5.26 X 30) + (5.89 X 30) + (0.9 X 3) + (391.03) + (9.39 X 18) + (96) = 993.25
Projected Insurance charges for age 56 is
(8.27 X 30) + (7.51 X 30) + (0.9 X 3) + (490.97) + (11.19 X 18) + (96) = 1264.79
Take note that there is a 38% rise in the charges from age 51 to age 56, 5 years difference only.
Based on the annual statement received this year, we can only project maximum 6 years later.
Mr. A plans to hold his policy until 70 years old. The insurance charges increase more as a person gets older. When Mr.A is 60 years old, the charges will definitely be more than RM1800 which is his annual premium. The shortfall will be deducted from the units value in the account. If Mr.A has withdrawn his units from the policy account, (which you are allowed to), it is very likely that he will lapse his policy unless he pays more for his premium.
Work out the projected charges carefully each time you received your annual statements. You don't want to be caught by surprise that your policy has lapsed when you need it for medical bills!
Using the projected insurance and service charges table, work out how much you need for next year.
Giving you a live example of what Mr.A's age 51 Prulink Assurance Account paying RM1800 premium annually.
Death Benefit RM30K
Crisis Cover Benefit RM30K
PRUdisability provider Benefit RM3K
PRUmajor med Benefit 100 (medical card, Daily R&B 100/day, Annual Limit RM50K)
PRUpayor Basic RM1,800
Summary of projected insurance and service charge:
Projected Insurance charges for age 51 is
(4.69 X 30) + (5.34 X 30) + (0.9 X 3) + (360.19) + (8.64 X 18) + (96) = 915.31
Projected Insurance charges for age 52 is
(5.26 X 30) + (5.89 X 30) + (0.9 X 3) + (391.03) + (9.39 X 18) + (96) = 993.25
Projected Insurance charges for age 56 is
(8.27 X 30) + (7.51 X 30) + (0.9 X 3) + (490.97) + (11.19 X 18) + (96) = 1264.79
Take note that there is a 38% rise in the charges from age 51 to age 56, 5 years difference only.
Based on the annual statement received this year, we can only project maximum 6 years later.
Mr. A plans to hold his policy until 70 years old. The insurance charges increase more as a person gets older. When Mr.A is 60 years old, the charges will definitely be more than RM1800 which is his annual premium. The shortfall will be deducted from the units value in the account. If Mr.A has withdrawn his units from the policy account, (which you are allowed to), it is very likely that he will lapse his policy unless he pays more for his premium.
Work out the projected charges carefully each time you received your annual statements. You don't want to be caught by surprise that your policy has lapsed when you need it for medical bills!
Sunday, 11 November 2012
Buying Life Insurance
I bought my first life insurance policy when I was 27 years old 24 years ago. My friend in the church approached me to join his Great Eastern group as part-time job. I was working as a programmer at that time after graduated in Computer Science. Life was simple in the 1980s. There wasn't much to do after work. I agreed and took up the first policy as my first business case in this insurance line. In fact, most insurance agents buys for themselves the first policy.
My first policy was GE Economilife, sum assured RM25K with medical rider of RM900 per hospitilisation, max surgical claim was RM15K lifetime, and RM30/day hospital benefit. Premium was RM56.45/mth. I had no idea of the purpose of life insurance. Most of my friends purchased from me because they deemed life insurance a saving tool as the returns from sales illustrative were very impressive. Anywhere, I gave up selling life insurance to focus on my software engineering career in less than a year.
I bought my second life insurance policy when I was 34. I heard about 36 critical illness policy and felt that it was important to have in case I have Critical Illness. My agent sold me Great Eastern Living Care-Whole Life Assurance with Cash Bonus. Sum Assured was RM40K, premium RM109.55/mth.
My 3rd life insurance policy is Prudential Investment-linked, with medical card (daily R&B 200, RM75K per annum and RM225K life time) and critical illness cover (RM80K). RM329.94/mth. This time I bought this policy with very clear purpose in my mind, I was 40. I cancelled my 2nd policy with Great Eastern because the CI premium is cheaper when attached with investment-linked. I also cancelled the medical rider in my first policy. Until now, I am only maintaining 2 policies.
My first policy was GE Economilife, sum assured RM25K with medical rider of RM900 per hospitilisation, max surgical claim was RM15K lifetime, and RM30/day hospital benefit. Premium was RM56.45/mth. I had no idea of the purpose of life insurance. Most of my friends purchased from me because they deemed life insurance a saving tool as the returns from sales illustrative were very impressive. Anywhere, I gave up selling life insurance to focus on my software engineering career in less than a year.
I bought my second life insurance policy when I was 34. I heard about 36 critical illness policy and felt that it was important to have in case I have Critical Illness. My agent sold me Great Eastern Living Care-Whole Life Assurance with Cash Bonus. Sum Assured was RM40K, premium RM109.55/mth.
My 3rd life insurance policy is Prudential Investment-linked, with medical card (daily R&B 200, RM75K per annum and RM225K life time) and critical illness cover (RM80K). RM329.94/mth. This time I bought this policy with very clear purpose in my mind, I was 40. I cancelled my 2nd policy with Great Eastern because the CI premium is cheaper when attached with investment-linked. I also cancelled the medical rider in my first policy. Until now, I am only maintaining 2 policies.
Saturday, 10 November 2012
Using Virgin Coconut Oil
So much benefits have been heard about VCO recently. My mother-in-law uses it to replace her laxative a few weeks ago and she found it good. My husband's cousin sister is using it to reduce weight. I don't know whether she has lost any weight but she is asking my husband to help her buy another 2 bottles.
Seeing that my brother-in-law's dark patches on his face, and his skin looks older than he actually is, a friend gave him 2 bottles to drink 2 tablespoons every morning. He said he didn't like the oily taste and he feels like throwing out after several weeks. I don't see any visual changes yet.
As for myself, my brother-in-law gave us one bottle. Since it comes free, I use it on the old-aged spot on my face. In fact, I am using it for my whole face, hands and legs. I have used it for one week. Let me try for one month and see whether the old-aged spots will lighten.
Next would be oil pulling on my gum. I have a tooth that has gingivitis problem for almost 2 years. The dentist doesn't know what to do. I'll try oil pulling starting tomorrow morning.
Seeing that my brother-in-law's dark patches on his face, and his skin looks older than he actually is, a friend gave him 2 bottles to drink 2 tablespoons every morning. He said he didn't like the oily taste and he feels like throwing out after several weeks. I don't see any visual changes yet.
As for myself, my brother-in-law gave us one bottle. Since it comes free, I use it on the old-aged spot on my face. In fact, I am using it for my whole face, hands and legs. I have used it for one week. Let me try for one month and see whether the old-aged spots will lighten.
Next would be oil pulling on my gum. I have a tooth that has gingivitis problem for almost 2 years. The dentist doesn't know what to do. I'll try oil pulling starting tomorrow morning.
Friday, 9 November 2012
Hair Dyeing
Time flies! My son asked whether when one gets older, time seems to go faster. Generally, yes, he is right. He said when he was small, time was slow. As he gets older, time seems to be fast.
My hair is my monthly calendar. When it is time to dye my hair, with the white hair showing up, I know it is another month!
Many people said that frequent hair colouring can cause cancer. But, who don't mind showing white hair? People above 50 looked old before. However, in the present time, 50s still have a long way to go! People waited for retirement when they were 50 before, but not many people dare to retire early nowadays! How to carry white hair around when you are still active in your business and in the workforce? I do sales. I don't want to look old to see my customers especially when I go out to see much younger customers than I am.
Inwardly, I would feel old if I see myself looking old on the outside. Looking younger gives me much energy to move on. LOL.
My hair is my monthly calendar. When it is time to dye my hair, with the white hair showing up, I know it is another month!
Many people said that frequent hair colouring can cause cancer. But, who don't mind showing white hair? People above 50 looked old before. However, in the present time, 50s still have a long way to go! People waited for retirement when they were 50 before, but not many people dare to retire early nowadays! How to carry white hair around when you are still active in your business and in the workforce? I do sales. I don't want to look old to see my customers especially when I go out to see much younger customers than I am.
Inwardly, I would feel old if I see myself looking old on the outside. Looking younger gives me much energy to move on. LOL.
Thursday, 8 November 2012
Frugal vs Stingy
A speaker from a renowned unit trust company in a Financial Planning session blasted out frugal living as "Giam Siap" (in Hokien meaning stingy).
I have a thought about this. Is frugal life a stingy life? No, frugal life is spending your money wisely, and not wasteful. Stingy life is reluctant to use your money, not spending and not giving.
In fact, frugal life or stingy life is very objective. A person who barely have sufficient income to provide his basic needs has to live a frugal life. Other people may see him as stingy. Another person may have lived a difficult life before. When money comes by, he will safeguard it carefully. Other people will see him as a stingy person who doesn't spend on himself to live comfortably.
I know of a couple who did not have steady income because both of them had never hold a job for long. They were very tight on their budget. They lived with the husband's family. They didn't contribute on any family expenses. I would say that they saved practically every cent. The wife must be feeling insecure financially. Finally when both of them have stable jobs, I would guess their monthly income was at least RM7000. However, they are still extremely carefully with their spending, so much so that they would take every opportunity to let others pay for their bills, even for their children's education expenses. This, I would see as money phobia. Having a negative opinion on them may be unfair as inwardly they are very fearful of parting with their money.
My parents went through the 2nd world war. Life was not easy. Every men had to use their labour to work and earn for the family. My father was very careful with money as there were ten mouths to feed. He worked very hard, and taking every opportunity to earn money. I really appreciate for what he did for the family. By his example, all of us are prudent in money management.
We had gone through difficult time as well. Sometimes life is like that. When things don't go smooth, everything seems to be not right with you. I am very glad that we had some savings to see us through. We also did not have any loans and debts at that time. My husband hired two Indonesian girls to make some home baked biscuits for sell. Life was tiring but I was very happy because my husband's willingness to put off his status to make sure that he brought home some income. I saw the very "man" in him who took the responsibility as the man in the family. After 9 months, he finally got his feet back to his profession.
I thank God for the experience even though I don't wish to go through the whole thing again. I love my husband more and my children also learned to be careful with money. I believe these are valuable to us.
I have a thought about this. Is frugal life a stingy life? No, frugal life is spending your money wisely, and not wasteful. Stingy life is reluctant to use your money, not spending and not giving.
In fact, frugal life or stingy life is very objective. A person who barely have sufficient income to provide his basic needs has to live a frugal life. Other people may see him as stingy. Another person may have lived a difficult life before. When money comes by, he will safeguard it carefully. Other people will see him as a stingy person who doesn't spend on himself to live comfortably.
I know of a couple who did not have steady income because both of them had never hold a job for long. They were very tight on their budget. They lived with the husband's family. They didn't contribute on any family expenses. I would say that they saved practically every cent. The wife must be feeling insecure financially. Finally when both of them have stable jobs, I would guess their monthly income was at least RM7000. However, they are still extremely carefully with their spending, so much so that they would take every opportunity to let others pay for their bills, even for their children's education expenses. This, I would see as money phobia. Having a negative opinion on them may be unfair as inwardly they are very fearful of parting with their money.
My parents went through the 2nd world war. Life was not easy. Every men had to use their labour to work and earn for the family. My father was very careful with money as there were ten mouths to feed. He worked very hard, and taking every opportunity to earn money. I really appreciate for what he did for the family. By his example, all of us are prudent in money management.
We had gone through difficult time as well. Sometimes life is like that. When things don't go smooth, everything seems to be not right with you. I am very glad that we had some savings to see us through. We also did not have any loans and debts at that time. My husband hired two Indonesian girls to make some home baked biscuits for sell. Life was tiring but I was very happy because my husband's willingness to put off his status to make sure that he brought home some income. I saw the very "man" in him who took the responsibility as the man in the family. After 9 months, he finally got his feet back to his profession.
I thank God for the experience even though I don't wish to go through the whole thing again. I love my husband more and my children also learned to be careful with money. I believe these are valuable to us.
Sunday, 4 November 2012
Spanish Food in KK - La Fuente, 1Borneo
Even though staying in KK, I don't explore where to eat much until Groupon.com comes by. I love to try out different food. This time Groupon.com offers this restaurant that serves Spanish Food. I ordered for 4 persons but only 3 of us are going.
Patatas Bravas,potato cooked with tomato paste
European bread
Some spanish picture portraits on the wall
Ceiling wine racks, the menu shows that this restaurant serves a lot of wines
Spring Roll, oriental food
garlic bread
Paella, spanish rice
Overall, my husband and my son didn't like the food much except for the Patatas Bravas. I was there to try out paella. It is like chinese claypot chicken, cooking rice with different utensil, and different ingredients. I don't mind the food, as I like to try out new food.
Mincing Meat
I finally have a food processor to mince pork! I bought this in SenQ in Suria Sabah. RM289, 2 years extended warranty. It only takes me in less than 20 seconds to mince the meat. I am very, very please with it. It used to take me at least 30 min to slice and to chop and it has never come to this fine. My son is also very happy because he knows my recipes will be expanded. This Panasonic MK-5087M is the only food processor I can find in SenQ. Anywhere, I am very happy with this. It is easy to use, fast, and easy to clean. Highly recommended.
Durian
Husband bought two durians on his way back to KK from Papar. We love durians but my children dislike durians. It almost rains everyday these few weeks. It is not recommended to buy durians during rainy season as the durians may dropoff from the tree because of the wind and heavy rain. These kind of durians are not ripe on the tree and therefore don't taste good. Too much rain also make the durians meat soggy. Hubby forgot the rule of thumb because he couldn't resist the sight of the durians.
Banana - Pisang Gelangang
This is Pisang Gelangang. Pisang means banana in Malay word. This is from my uncle's garden in Keningau. He grows fruit trees and rear some pigs, cows, chickens and goats in his small farm. He is a veterinarian and chose to live simple life in Keningau.
Old Town Coffee in City Mall
My husband and I had a cup of NanYang coffee at Old Town coffee house in City Mall last night. The coffee was sour, very sour. I took a few sips only. This tasted bad, and the colour of the coffee was very, very dark. Just wonder why Old Town coffee doesn't taste good but it can go IPO.
The Lady Who Sells Coconut On Lorry
This is the local girl who sells coconut in Taman Foh Sang. Her hand is really fast and sharp. Holding one coconut with one hand, she can crack the coconut using cleaver in one minute. I forgot to bring water container to hold the coconut water. So, she just remove the outer shell for me. However the crust was too hard for me to dig a hole on top. Brought back the coconut for her to crack the coconut for me. She can sell about 200 coconuts in a day. Each week they come on Saturday early morning and return to Kota Marudu on Sunday evening. Tough girl.
Sunday, 28 October 2012
Terap
This is terap. Only found in Sabah, as I was told by my husband.
He doesn't like it. In fact, his whole family does not like terap. They said it smelt like electrical short circuit.
My husband's family came from Perak, West Malaysia. My brother-in-law married a Sabahan. One day, she bought a terap and kept it in a corner in the house. When the terap fruit has ripen, it gives out very strong smell. When my husband's family noticed the strange smell, they thought there was a short-circuit somewhere. Eventually, they found out that the smell came from terap. That was the first time they saw terap. That was a bad first impression. That's why the whole family doesn't like terap until now. lol.
I bought this terap for RM5. I ate it all by myself!!! Superb!!!
Coconut Drink From Kota Marudu
The coconuts are from Kota Marudu. I brought along a water container to hold the coconut water. It will take me hours to open the coconuts with a cleaver. The local trader does it so easier. I must remember to snap a photo for my readers (especially those from overseas) to see how the traders crack the coconuts with a cleaver.
Coconut water is God's gift for us in Kota Kinabalu. The water from 2 coconuts is about 1 litre. The coconut flesh was superb. So original and refreshing!
Local Grown Banana - Pisang Emas
As usual, after church, we went to Foh Sang to buy banana and coconuts. The kadazan (local ethnics in Sabah) from Kota Murudu gather here to sell banana and coconuts.
I bought a bunch of pisang emas (golden banana). It only costs me RM1.50. The banana is very fresh. In the hot climate here, the banana normally lasts at most 2 days after ripen. I prefer to eat banana as compared to imported fruits as such low value local fruits don't use chemical fertilizer and preservative. The fruits also ripe on the tree. Excellent!
Wednesday, 24 October 2012
When Pocket Is Tight
My friend is facing financial difficulty since 2 years ago. Listening to him, I guess it is due to inappropriate money handling in the family.
Our children grow up observing how we handle money. If we give them whatever they ask for as long as we can afford, they learn our way of spending money. My friend has no wise habit of saving. He buys many insurance policies. He has the impression that buying insurance is saving money. When he was in his prime years, he could afford many policies. His earning power is not as good as a few years back. He is now lagging in premium payment. I suppose the policies will lapse one after another.
My friend also brought along the whole family for holiday in Malaysia, Singapore, Taiwan and China. Holiday is costly for his income. His children must have thought that their father is wealthier than their other friends' fathers.
My friend starts to feel the pinch of his pocket when his children ask for new handphone, smartphone, notebook, iPad. When one child asks for it, he has to buy for other children. He has not learned to say no to his children.
Eventually, he starts drawing from his overdraft. When monthly family expenditure is more than income, he feels the chill seeing the monthly overdraft statement. I can see that he is afraid of losing his house which he is drawing the overdraft from. He is worried about his children's spending pattern as they don't understand why their father are moody over their requests now. I really feel sorry for him as the whole family is under a great deal of tension.
My advise to him is to stop satisfying his children's requests. They are all working now and they should live on their own income. The insurance policies need to be revised. My friend has stopped premium payment. Instead of lapsing the whole life policies, my advise to him is to convert the policies to either paid-up policy or extended term assurance. Drawing from overdraft to pay for whole life policies when your children have all grown up don't serve much purpose. And there is no point paying premium for your children's whole life policies.
I believe family should value their relationship. The whole family should understand their situation now, and agree to settle the overdraft by cutting down unnecessary expenses. It is still not too late. In fact, there is nothing shameful to explain to the children of his situation now. Isn't it better to face the problem together, than to to face the situation yourself?
Our children grow up observing how we handle money. If we give them whatever they ask for as long as we can afford, they learn our way of spending money. My friend has no wise habit of saving. He buys many insurance policies. He has the impression that buying insurance is saving money. When he was in his prime years, he could afford many policies. His earning power is not as good as a few years back. He is now lagging in premium payment. I suppose the policies will lapse one after another.
My friend also brought along the whole family for holiday in Malaysia, Singapore, Taiwan and China. Holiday is costly for his income. His children must have thought that their father is wealthier than their other friends' fathers.
My friend starts to feel the pinch of his pocket when his children ask for new handphone, smartphone, notebook, iPad. When one child asks for it, he has to buy for other children. He has not learned to say no to his children.
Eventually, he starts drawing from his overdraft. When monthly family expenditure is more than income, he feels the chill seeing the monthly overdraft statement. I can see that he is afraid of losing his house which he is drawing the overdraft from. He is worried about his children's spending pattern as they don't understand why their father are moody over their requests now. I really feel sorry for him as the whole family is under a great deal of tension.
My advise to him is to stop satisfying his children's requests. They are all working now and they should live on their own income. The insurance policies need to be revised. My friend has stopped premium payment. Instead of lapsing the whole life policies, my advise to him is to convert the policies to either paid-up policy or extended term assurance. Drawing from overdraft to pay for whole life policies when your children have all grown up don't serve much purpose. And there is no point paying premium for your children's whole life policies.
I believe family should value their relationship. The whole family should understand their situation now, and agree to settle the overdraft by cutting down unnecessary expenses. It is still not too late. In fact, there is nothing shameful to explain to the children of his situation now. Isn't it better to face the problem together, than to to face the situation yourself?
Monday, 15 October 2012
My House Is Not For Sale
We bought our house 22 years ago. Before we got married, we looked for a house. Never owned a house before that, and never calculated the costs of buying a house. Two young adults from humble families, looking for a house to start a home. Just so happen that this house is located in today's prime area, cornered house, with ample of spaces for more than 5 cars to park, and a backyard for me to do my washing and grow some vegetables. Perfect for a person like me who prefers to work and stay at home.
Since several years ago, property prices have gone up so fast in KK. Many friends drop by will tell us how much my house worth. Some even suggested that we should sell the house, buy a smaller one, and keep the cash.
We always thank the Lord that we managed to pay off the house in 10 years. Since both of us were from humble families, we do not mind saving every cent to pay the installment. With God's blessings, our payroll enabled us to settle the loan faster than we expected.
Our children grow up in this house. There are many things for them to remember. I am still keeping the markings that they made since they were very young. From the markings, we can see how fast they have grown. The toilet door was slightly damaged by my elder son when he was in the primary. I left him with the Indo maid when I went to work. The maid teased him and he was so angry that he chased after the maid with a ruler. The maid escaped to the toilet and he hit the pvc toilet door with the ruler. The mango tree grew up together with them. Bits and traces in the house bring back memory.
My house is my home. If there is no strong reason, we wouldn't sell off our memory. Other people look at our house as an investment property. We look at our house with sentimental value. After all, assets can be in many forms. Why should I convert my fixed asset into current asset? Property price will sure keep on growing but value of money goes the other way.
Nevertheless, it is not very polite to suggest to anyone to sell their house if they are staying in that house.
Since several years ago, property prices have gone up so fast in KK. Many friends drop by will tell us how much my house worth. Some even suggested that we should sell the house, buy a smaller one, and keep the cash.
We always thank the Lord that we managed to pay off the house in 10 years. Since both of us were from humble families, we do not mind saving every cent to pay the installment. With God's blessings, our payroll enabled us to settle the loan faster than we expected.
Our children grow up in this house. There are many things for them to remember. I am still keeping the markings that they made since they were very young. From the markings, we can see how fast they have grown. The toilet door was slightly damaged by my elder son when he was in the primary. I left him with the Indo maid when I went to work. The maid teased him and he was so angry that he chased after the maid with a ruler. The maid escaped to the toilet and he hit the pvc toilet door with the ruler. The mango tree grew up together with them. Bits and traces in the house bring back memory.
My house is my home. If there is no strong reason, we wouldn't sell off our memory. Other people look at our house as an investment property. We look at our house with sentimental value. After all, assets can be in many forms. Why should I convert my fixed asset into current asset? Property price will sure keep on growing but value of money goes the other way.
Nevertheless, it is not very polite to suggest to anyone to sell their house if they are staying in that house.
Thursday, 11 October 2012
Genneva Gold - A ponzi scheme?
The Edge Malaysia (Oct 8 2012) has a cover story on Geneva Gold.
There is a Genneva Malaysia Sdn Bhd branch in Times Square. I am aware of agents selling Geneva Gold in Kota Kinabalu. Many times, new investors are encouraged by existing investors when monthly dividends are received. Investors normally don't ask mcuh. My relative has a coffee shop in Foh Sang. Many business transactions of all types transact at the coffee shop.
To my surprise, it is estimated that there are 60K Genneva clients with investment more than RM3 billion. It is also selling in Singapore, Hong Kong, China and Philippines. There was a picture of our former PM holding a Genneva gold product at a corporate launch in 2010 in the presentation slides. It is quite hard to disbelief and to forgo such a good investment.
I feel sorry for the investors who have put in so much money, life saving, retiring money, EPF money, perhaps borrowed money from friends or banks to such investment. I sincerely hope that even if the company is running its business not according to law, there is still enough money to pay back to the investors.
Meanwhile, check your other investments with Bank Negara and Security Commission. You could have friends and family members who can assist you to understand what your other investments are. Even your unit trust investment and insurance policies, look for someone else who stay neutral to evaluate for you.
There is a Genneva Malaysia Sdn Bhd branch in Times Square. I am aware of agents selling Geneva Gold in Kota Kinabalu. Many times, new investors are encouraged by existing investors when monthly dividends are received. Investors normally don't ask mcuh. My relative has a coffee shop in Foh Sang. Many business transactions of all types transact at the coffee shop.
To my surprise, it is estimated that there are 60K Genneva clients with investment more than RM3 billion. It is also selling in Singapore, Hong Kong, China and Philippines. There was a picture of our former PM holding a Genneva gold product at a corporate launch in 2010 in the presentation slides. It is quite hard to disbelief and to forgo such a good investment.
I feel sorry for the investors who have put in so much money, life saving, retiring money, EPF money, perhaps borrowed money from friends or banks to such investment. I sincerely hope that even if the company is running its business not according to law, there is still enough money to pay back to the investors.
Meanwhile, check your other investments with Bank Negara and Security Commission. You could have friends and family members who can assist you to understand what your other investments are. Even your unit trust investment and insurance policies, look for someone else who stay neutral to evaluate for you.
Investment in Direct Selling etc
When we do any kind of investment, bear in mind that the money that you part with can bring you more money or can make you poorer. This is investment. If you can't afford to lose your money, don't do any kind of investment.
Special attention is to people who are above 40 years old, particularly for those who can't seem to get a good pay job or who feel that the later part of of their life is impossible to find a job, or to start a business.
For my past 20+ years, I have been invited to listen to 'successful' testimonies from direct sales, 'opportunity not to be missed' investments, at least twice per year.
I don't mind spending some time to listen to them because I don't want to be rude to my friends and relatives. After all, every time when I give them a chance to share, I am giving them a chance to practice their presentations, and to answer my questions to think about what they are sharing. However, I don't criticize them because I know when some one already in the 'investment', they must have put some money into what they think is bringing them hope.
About 3 years ago, a friend in her 40s joined a direct sales selling some kind of supplements magic to eye sight. She has never asked me to listen to her presentation as she knew that I would search the internet for information if in doubt of anything. I also prevailed in my biology class in high school. Since she is an active church member, her prospects are church members of those 40+ and less educated. These people would have developed problems of eye sight at these age. A friend said after drinking the 'potion', he could see clearly. However, it is not a cure. You need to drink daily to 'maintain' your eye sight. As usual, products from direct sales are never cheap. She was quite good at recruiting members and within 2 months, her commission was more than RM10,000 in a month. She showed her statement to my husband.
Anyway, because of the high 'maintenance' cost, most would only buy 1 time to entertain the agent. I don't know how she is now but her husband said that she is now selling Hong Leong insurance. Guess direct sales business did not maintain, in fact, direct selling never lasts long.
I was invited to listen to seaweed investment in Tawau. I was shown pictures of the seaweed farm and photos of both local and oversea investors visiting the farm. The agent told me how I can invest in terms of 'units', contracts will be given, and commission will be distributed, things like that. I personally feel that any firm wants to raise capital to expand their business, it should not be raised this way. I just asked him how much they want to raise. He said no limit. What kind of business when you want to raise money and there is no limit to it? I read in the paper last year that there was such company under investigation. However, I was also told by my husband that his sister was invited to join in such investment last month. I am disappointed that the authority is never strict enough and persistent to stop such activities to let many ignorant to lose their hard-earned money.
Special attention is to people who are above 40 years old, particularly for those who can't seem to get a good pay job or who feel that the later part of of their life is impossible to find a job, or to start a business.
For my past 20+ years, I have been invited to listen to 'successful' testimonies from direct sales, 'opportunity not to be missed' investments, at least twice per year.
I don't mind spending some time to listen to them because I don't want to be rude to my friends and relatives. After all, every time when I give them a chance to share, I am giving them a chance to practice their presentations, and to answer my questions to think about what they are sharing. However, I don't criticize them because I know when some one already in the 'investment', they must have put some money into what they think is bringing them hope.
About 3 years ago, a friend in her 40s joined a direct sales selling some kind of supplements magic to eye sight. She has never asked me to listen to her presentation as she knew that I would search the internet for information if in doubt of anything. I also prevailed in my biology class in high school. Since she is an active church member, her prospects are church members of those 40+ and less educated. These people would have developed problems of eye sight at these age. A friend said after drinking the 'potion', he could see clearly. However, it is not a cure. You need to drink daily to 'maintain' your eye sight. As usual, products from direct sales are never cheap. She was quite good at recruiting members and within 2 months, her commission was more than RM10,000 in a month. She showed her statement to my husband.
Anyway, because of the high 'maintenance' cost, most would only buy 1 time to entertain the agent. I don't know how she is now but her husband said that she is now selling Hong Leong insurance. Guess direct sales business did not maintain, in fact, direct selling never lasts long.
I was invited to listen to seaweed investment in Tawau. I was shown pictures of the seaweed farm and photos of both local and oversea investors visiting the farm. The agent told me how I can invest in terms of 'units', contracts will be given, and commission will be distributed, things like that. I personally feel that any firm wants to raise capital to expand their business, it should not be raised this way. I just asked him how much they want to raise. He said no limit. What kind of business when you want to raise money and there is no limit to it? I read in the paper last year that there was such company under investigation. However, I was also told by my husband that his sister was invited to join in such investment last month. I am disappointed that the authority is never strict enough and persistent to stop such activities to let many ignorant to lose their hard-earned money.
Wednesday, 10 October 2012
Sabah Local Coffee
Sabah is famous for Tenom coffee. There is only one coffee factory in Tenom. My aunty was married to Tenom. Most of the Tenom people earn their living by planting fruits, not much coffee. As I was told, the coffee trees are gone with oil palm trees as the price of oil palm is good, and less care is required for oil palm trees. In fact, most coffee bean used are from our neighbouring country - Indonesia. Since Indonesia is just next to us, there are traders who bring over coffee beans to sell. Mostly Arabica.
You might think that since coffee bean is so easily available in Sabah, Sabahan will have the best coffee. No, no, no. If you go to coffee shop, you will be disappointed.
During my father's time, I remember when I was still young, most coffee shops were owned by Hai Nam Lang （海南人）. The taukeh would make coffee themselves, wearing white singlets and short trousers up to their knees. For every cup of coffee they made, they would discard the coffee powder already used, and spooned fresh coffee powder into the muslin they used to filter the coffee. Then they would scoop hot water to run through the coffee powder in the muslin. The coffee was collected with mug. You could order kopi-O (with sugar), kopi kao (thick coffee with sugar), kopi (with condensed milk), kopi C (with ideal milk). When you walked into a coffee shop, you walked into the aroma of coffee. I can confidently tell you, it beat Starbucks.
How does the coffee shop look like now? The person making coffee are mostly Indonesian ladies. When you order coffee, they WILL NOT discard the used coffee powder. They may or may not add fresh coffee powder into the muslin. They may just run through the used, stale, coffee powder with hot water. What comes out is black liquid sweetened with sugar or condensed milk or ideal milk. Some even soak the muslin in a jug of hot water. When you order coffee, they will just pour for you the 'soaked dark black liquid'.
Most people are not fuzzy about coffee here. They just drink as long as it is dark in colour, including my husband. What a pity! The real coffee culture is gone!
You might think that since coffee bean is so easily available in Sabah, Sabahan will have the best coffee. No, no, no. If you go to coffee shop, you will be disappointed.
During my father's time, I remember when I was still young, most coffee shops were owned by Hai Nam Lang （海南人）. The taukeh would make coffee themselves, wearing white singlets and short trousers up to their knees. For every cup of coffee they made, they would discard the coffee powder already used, and spooned fresh coffee powder into the muslin they used to filter the coffee. Then they would scoop hot water to run through the coffee powder in the muslin. The coffee was collected with mug. You could order kopi-O (with sugar), kopi kao (thick coffee with sugar), kopi (with condensed milk), kopi C (with ideal milk). When you walked into a coffee shop, you walked into the aroma of coffee. I can confidently tell you, it beat Starbucks.
How does the coffee shop look like now? The person making coffee are mostly Indonesian ladies. When you order coffee, they WILL NOT discard the used coffee powder. They may or may not add fresh coffee powder into the muslin. They may just run through the used, stale, coffee powder with hot water. What comes out is black liquid sweetened with sugar or condensed milk or ideal milk. Some even soak the muslin in a jug of hot water. When you order coffee, they will just pour for you the 'soaked dark black liquid'.
Most people are not fuzzy about coffee here. They just drink as long as it is dark in colour, including my husband. What a pity! The real coffee culture is gone!
Choose a unit trust fund
What are the criteria to choose a unit trust fund? When your consultant recommends you, ask the below questions. By the way, don't buy new fund because there is no track records.
1. Past performance - even though past performance is not an indication of future performance, we still believe that it is more likely for a fund with good past performance to perform better in the future. You can also study the sharpe ratio, r-squared, beta, standard deviation if you are savvy investors.
2. Annual Expense Ratio - compare that with other funds of the same group. e.g local equity fund compares with local equity fund
3. Front end sales charge - different fund houses may have different sales charges for the same type of funds. Choose lower sales charge funds so that you have more capital to invest in.
4. Certain funds may have high Sales charge but low annual expense ratio. Others may have low sales charge but high annual expense ratio.
5. Fund size - if the fund size is too small, the fund managers may have difficulties to do diversification and allocation.
6. Top 5 holdings - if you like, you can check what are the top stocks holdings of this fund. Just check. In Malaysia, we may have some listed companies that need attention.
7. Switching fee - When we do asset allocation, switching will occur. Take note that switching can be expensive if you have many funds to switch at asset allocation. Public Mutual gives a number of free switches to their Mutual Gold members but if you have too many switching to do, it will still incur unnecessary expenses.
8. In insurance policies, we can appoint nominees in case dxxxh should occur and the nominees can receive the compensation. How about unit trust? Ask your consultants. Or write a will to cover for that.
1. Past performance - even though past performance is not an indication of future performance, we still believe that it is more likely for a fund with good past performance to perform better in the future. You can also study the sharpe ratio, r-squared, beta, standard deviation if you are savvy investors.
2. Annual Expense Ratio - compare that with other funds of the same group. e.g local equity fund compares with local equity fund
3. Front end sales charge - different fund houses may have different sales charges for the same type of funds. Choose lower sales charge funds so that you have more capital to invest in.
4. Certain funds may have high Sales charge but low annual expense ratio. Others may have low sales charge but high annual expense ratio.
5. Fund size - if the fund size is too small, the fund managers may have difficulties to do diversification and allocation.
6. Top 5 holdings - if you like, you can check what are the top stocks holdings of this fund. Just check. In Malaysia, we may have some listed companies that need attention.
7. Switching fee - When we do asset allocation, switching will occur. Take note that switching can be expensive if you have many funds to switch at asset allocation. Public Mutual gives a number of free switches to their Mutual Gold members but if you have too many switching to do, it will still incur unnecessary expenses.
8. In insurance policies, we can appoint nominees in case dxxxh should occur and the nominees can receive the compensation. How about unit trust? Ask your consultants. Or write a will to cover for that.
Working As Unit Trust Agent
I am an insurance agent and also registered as a unit trust consultant. However I am never very active in promoting insurance and unit trust. For the past 10 years, I only managed to hit my target to maintain my licenses. :)
Nevertheless, I can tell you that I am more knowledgeable than many of the top sales insurance agency managers and unit trust consultant managers out there in the market. LOL.
Ha2. I just like to attend classes, seminars, motivation talks. Both these 2 fields allow me to gain a lot of insight by attending the many free (or minimal) educations they provide. I even obtained Register Financial Planners license and now registered as Financial Adviser.
I gain a lot because my knowledge has enabled me to better my financial situation. I am now well planned with my own financial matters.
How do unit trust companies teach their consultants how to choose funds for their customers? Most common used method would be to pick the high return funds at certain periods to show to the customers. Then, at the launch of new funds, will do a good projection of the funds with some deduction of sales charges. One Agency Manager even said it doesn't matter what fund to choose, they are all the same.
Anyway, it really depends on consultants' experience, knowledge and code of ethics when comes to selling of funds. If you meet a consultant who sees only commission and oversea trip incentive, then the customers would be the loser. I would suggest that if you were to invest a lot of money plus EPF in unit trust, do ask a lot of questions. And educate yourself. There are many useful website to guide investors. Happy investing!
Nevertheless, I can tell you that I am more knowledgeable than many of the top sales insurance agency managers and unit trust consultant managers out there in the market. LOL.
Ha2. I just like to attend classes, seminars, motivation talks. Both these 2 fields allow me to gain a lot of insight by attending the many free (or minimal) educations they provide. I even obtained Register Financial Planners license and now registered as Financial Adviser.
I gain a lot because my knowledge has enabled me to better my financial situation. I am now well planned with my own financial matters.
How do unit trust companies teach their consultants how to choose funds for their customers? Most common used method would be to pick the high return funds at certain periods to show to the customers. Then, at the launch of new funds, will do a good projection of the funds with some deduction of sales charges. One Agency Manager even said it doesn't matter what fund to choose, they are all the same.
Anyway, it really depends on consultants' experience, knowledge and code of ethics when comes to selling of funds. If you meet a consultant who sees only commission and oversea trip incentive, then the customers would be the loser. I would suggest that if you were to invest a lot of money plus EPF in unit trust, do ask a lot of questions. And educate yourself. There are many useful website to guide investors. Happy investing!
Beta
There are 5 principal risk measures of unit trust performance. They are alpha, beta, r-squared, Standard Deviation and sharpe ratio.
Beta measures a fund's sensitivity to movements in the benchmark index.
Before you read Beta, make sure R-squared should be at least 0.85. Otherwise, beta doesn't reflect the fund's sensitivity to the benchmark index.
a fund with a beta of 1.5 tend to gain 1.5% for every 1% rise the market and lose 1.5% for every 1% decline in the market.
Thus, if beta is 1, then it imitates the benchmark index completely.
Beta measures a fund's sensitivity to movements in the benchmark index.
Before you read Beta, make sure R-squared should be at least 0.85. Otherwise, beta doesn't reflect the fund's sensitivity to the benchmark index.
a fund with a beta of 1.5 tend to gain 1.5% for every 1% rise the market and lose 1.5% for every 1% decline in the market.
Thus, if beta is 1, then it imitates the benchmark index completely.
R Squared
R-squared is a historical measure which indicates how closely a fund's past fluctuations have correlated with the fluctuations of its benchmark index. R-squared vales range from 0 to 1.0, or 0% to 100%. In Public Mutual, we are using 0 to 1.0.
0 means that a fund's returns have noc correlation with a benchmark's fluctuations while 1 indicates that a fund's return s are completely correlated with the benchmark's return.
Thus, if R-squared is less than 0.7 (my opinion), there is no point to look at Beta, as beta measure a fund's sensitivity to movements in the benchmark index.
More useful R-squared is more than 0.85. It indicates the fund's performance patterns have been in line with the benchmark.
0 means that a fund's returns have noc correlation with a benchmark's fluctuations while 1 indicates that a fund's return s are completely correlated with the benchmark's return.
Thus, if R-squared is less than 0.7 (my opinion), there is no point to look at Beta, as beta measure a fund's sensitivity to movements in the benchmark index.
More useful R-squared is more than 0.85. It indicates the fund's performance patterns have been in line with the benchmark.
Sharpe Ratio
I am learning the ratios to better myself in unit trust investment.
The Sharpe ratio is a risk-adjusted measure of return that is often used to evaluate the performance of a portfolio. The ratio helps to make the performance of one portfolio comparable to that of another portfolio by making an adjustment for risk.
E.g. Fund A 15% return
Fund B 12% return
Is Fund A better? Fund A is better if it doesn't take higher risk than fund B. Risk adjusted return will tell you which one is better.
Fund A standard deviation 8%
Fund B standard deviation 5%
risk free rate is 5%
Sharpe ratio for Fund A is (15%-5%)/8% = 1.4
Sharpe ratio for Fund B is (12%-5%)/5% = 1.25
This means to say Fund B is able to generate a higher return on a risk-adjusted basis.
Public Mutual does compute sharpe ratio in the consultant's software. I don't know where to look for this reading in any public domain.
The Sharpe ratio is a risk-adjusted measure of return that is often used to evaluate the performance of a portfolio. The ratio helps to make the performance of one portfolio comparable to that of another portfolio by making an adjustment for risk.
E.g. Fund A 15% return
Fund B 12% return
Is Fund A better? Fund A is better if it doesn't take higher risk than fund B. Risk adjusted return will tell you which one is better.
Fund A standard deviation 8%
Fund B standard deviation 5%
risk free rate is 5%
Sharpe ratio for Fund A is (15%-5%)/8% = 1.4
Sharpe ratio for Fund B is (12%-5%)/5% = 1.25
This means to say Fund B is able to generate a higher return on a risk-adjusted basis.
A ratio of 1 and more is good,
2 and more is very good, and 3 and more is considered excellent.
Public Mutual does compute sharpe ratio in the consultant's software. I don't know where to look for this reading in any public domain.
Unit Trust Consultants
I passed my unit trust exam with FIMM many years ago. I have attended many unit trust training sessions at Prudential Unit Trust (now call Eastspring), Public Mutual, AmInvestment, RHB etc. Of all the training sessions, the trainer and managers will ask you to sell, sell, sell. They will teach you how to answer objections. Tell you what are the common objections and how you should prepare yourself for such kind of objections. They will show you how good the performance of their investments are. When new funds are launched, they will tell you blah blah blah, so that you feel that the investments are good for your friends and customers, and they you go, following what they have psycho you.
My sales volume has never hit the targets for oversea trips. I feel that when I sell unit trust, I am asking my clients to trust me for the return of their investments. I don't feel comfortable because after attending so many trainings and listening to so many sharing from 'successful consultant', I haven't seen the trainers have emphasized on making good returns for our clients. 'Consultants' will extract good performance of the past years' record, or pick on successful investment of their clients to persuade their clients. Even the managers are selling this way. I feel that most of the unit trust and insurance agents in Malaysia are not up to the level of being responsible 'advisers'. I would say many are merely good 'sales person'.
My sales volume has never hit the targets for oversea trips. I feel that when I sell unit trust, I am asking my clients to trust me for the return of their investments. I don't feel comfortable because after attending so many trainings and listening to so many sharing from 'successful consultant', I haven't seen the trainers have emphasized on making good returns for our clients. 'Consultants' will extract good performance of the past years' record, or pick on successful investment of their clients to persuade their clients. Even the managers are selling this way. I feel that most of the unit trust and insurance agents in Malaysia are not up to the level of being responsible 'advisers'. I would say many are merely good 'sales person'.
Tuesday, 9 October 2012
Extraction Of Virgin Coconut Oil
I live in a land that coconuts are grown along the seaside. Drinking fresh coconut water is really a blessing in Kota Kinabalu. Cheap and easily available.
My husband mentioned to me the benefits of virgin coconut oil (VCO) a few months ago. I didn't pay a lot of attention as I was taught that coconut oil has bad cholesterol. VCO came to my attention when I was trying to find out why sometimes my wok smokes a lot. Finally I found out that the type of oil used was the culprit. I read about smoke point of different oil, and how heat can damage the oil. Now I know that different type of oil has different smoke point. Once the oil passed its smoke point, the oil becomes damage and harmful to our body. For example, olive oil is meant to be good for our body. However, if we heat olive oil in high temperature, the good oil becomes bad oil.
Back to VCO. At the tip of Borneo in Kudat and Kota Marudu, the locals plant a lot of coconut trees. They are hard-core poor farmers. A few NGO helped to set up a VCO processing centre for the locals to extract VCO. I remember when I was young, I went to Keningau as my aunties and uncle were living there. They kept coconut oil in the house as disinfectant like iodine. The locals always apply coconut oil on their hair. The coconut oil smelt very bad. Because of that, I have never like coconut oil. However, VCO changes my perception. My brother in law brought along some boiled vegetables sprinkled with VCO on Saturday night. The VCO smelt 清香fragrant。I love it.
Again, back to VCO. Now I understand the coconut oil extraction method can affect the type of coconut oil quality. Apparently, VCO doesn't go through high temperature heating. It involves a simple process.
First, 10-15 matured coconuts are grated using the grater machine. The grated coconut is then sun-dried for three hours, after which it is ready for oil extraction. The dried coconut is fed into the oil expeller machine, and then cold-pressed to extract oil that flows down into a container. It is then filtered to obtain clean oil. And the end result is virgin coconut oil—pure, raw and crystal clear, without any chemicals added, and with a sweet aroma.
There is no heat treatment—the grated coconut is dried naturally in sunlight. This differs from refined coconut oil (hydrogenated coconut oil), obtained by boiling the copra of which the oil is yellow in colour with a thick odour.
VCO can be obtained through traditional fermentation method, involving the natural separation of the coconut oil from water using gravity. This can be done at home. First, coconut milk is expressed from freshly harvested coconuts. The coconut milk is then allowed to sit for approximately half a day. The water separates from the oil and sinks to the bottom, while the lighter coconut solids float to the top. In between the coconut solids and the water is a crystal clear layer of completely unrefined coconut oil. The oil is warmed for a short time to remove any remaining moisture, and then filtered. The result is a clear coconut oil that retains the distinct scent and taste of coconuts.
There are many claims that VCO provide many benefits. I am yet to try it out, for my aging skin, my gum and the old age spot. Since it is easily available, I should give it a try.
My husband mentioned to me the benefits of virgin coconut oil (VCO) a few months ago. I didn't pay a lot of attention as I was taught that coconut oil has bad cholesterol. VCO came to my attention when I was trying to find out why sometimes my wok smokes a lot. Finally I found out that the type of oil used was the culprit. I read about smoke point of different oil, and how heat can damage the oil. Now I know that different type of oil has different smoke point. Once the oil passed its smoke point, the oil becomes damage and harmful to our body. For example, olive oil is meant to be good for our body. However, if we heat olive oil in high temperature, the good oil becomes bad oil.
Back to VCO. At the tip of Borneo in Kudat and Kota Marudu, the locals plant a lot of coconut trees. They are hard-core poor farmers. A few NGO helped to set up a VCO processing centre for the locals to extract VCO. I remember when I was young, I went to Keningau as my aunties and uncle were living there. They kept coconut oil in the house as disinfectant like iodine. The locals always apply coconut oil on their hair. The coconut oil smelt very bad. Because of that, I have never like coconut oil. However, VCO changes my perception. My brother in law brought along some boiled vegetables sprinkled with VCO on Saturday night. The VCO smelt 清香fragrant。I love it.
Again, back to VCO. Now I understand the coconut oil extraction method can affect the type of coconut oil quality. Apparently, VCO doesn't go through high temperature heating. It involves a simple process.
First, 10-15 matured coconuts are grated using the grater machine. The grated coconut is then sun-dried for three hours, after which it is ready for oil extraction. The dried coconut is fed into the oil expeller machine, and then cold-pressed to extract oil that flows down into a container. It is then filtered to obtain clean oil. And the end result is virgin coconut oil—pure, raw and crystal clear, without any chemicals added, and with a sweet aroma.
There is no heat treatment—the grated coconut is dried naturally in sunlight. This differs from refined coconut oil (hydrogenated coconut oil), obtained by boiling the copra of which the oil is yellow in colour with a thick odour.
VCO can be obtained through traditional fermentation method, involving the natural separation of the coconut oil from water using gravity. This can be done at home. First, coconut milk is expressed from freshly harvested coconuts. The coconut milk is then allowed to sit for approximately half a day. The water separates from the oil and sinks to the bottom, while the lighter coconut solids float to the top. In between the coconut solids and the water is a crystal clear layer of completely unrefined coconut oil. The oil is warmed for a short time to remove any remaining moisture, and then filtered. The result is a clear coconut oil that retains the distinct scent and taste of coconuts.
There are many claims that VCO provide many benefits. I am yet to try it out, for my aging skin, my gum and the old age spot. Since it is easily available, I should give it a try.
Endowment Plan
Endowment Plan is sold by many insurance agents as a saving products. Customers are easily to be persuaded. I believe most people want to save money and get good returns from their savings and they are willingly persuaded by insurance agents and bank staff to commit in endowment plan.
Our trainers in insurance companies will teach us not to mention 'insurance products' when we sell endowment plan. It should be addressed as 'saving plan'. I try but I give up cheating myself because insurance is always insurance. If the primary element of an insurance product is not insurance, then something is wrong.
Anyway, the reasons that I don't encourage endowment plan as a financial planner due to the following:
1. Once you have committed, you must faithfully pay for the duration of the payment term. As like other insurance products, the distribution cost for the first few years are expensive. Once you stop, you lose what you have paid before.
2. It is unlike saving in the bank if the sales person try to compare with the bank deposit returns. You can't withdraw your money for the 'money saved' (premium) in your endowment plan, while you won't lose your capital in the bank saving account.
3. The sum assured is very low
4. An endowment plan projects high returns. If you only take the guarantee maturity value into consideration, it is quite similar to putting money in FD.
Worst still, many of the 'cash return' insurance products are package whole life. What is the point of locking your money with insurance company and getting the annual 'cash return'? The 'cash return' shrinks every year because the value of the same amount money depreciates over time.
Our trainers in insurance companies will teach us not to mention 'insurance products' when we sell endowment plan. It should be addressed as 'saving plan'. I try but I give up cheating myself because insurance is always insurance. If the primary element of an insurance product is not insurance, then something is wrong.
Anyway, the reasons that I don't encourage endowment plan as a financial planner due to the following:
1. Once you have committed, you must faithfully pay for the duration of the payment term. As like other insurance products, the distribution cost for the first few years are expensive. Once you stop, you lose what you have paid before.
2. It is unlike saving in the bank if the sales person try to compare with the bank deposit returns. You can't withdraw your money for the 'money saved' (premium) in your endowment plan, while you won't lose your capital in the bank saving account.
3. The sum assured is very low
4. An endowment plan projects high returns. If you only take the guarantee maturity value into consideration, it is quite similar to putting money in FD.
Worst still, many of the 'cash return' insurance products are package whole life. What is the point of locking your money with insurance company and getting the annual 'cash return'? The 'cash return' shrinks every year because the value of the same amount money depreciates over time.
Monday, 8 October 2012
What is Ponzi Scheme 庞氏骗局
What is a Ponzi Scheme? It is a scheme that looks good at the surface with irresponsible motive behind. It is sweet in the beginning but end up bitter at the end.
Ponzi Scheme promises an above normal rate of return, but not so high as to be unbelievable. The setup is not transparent as to how the return is to be generated. The scheme will convince some investors first and the promised return will be given for a few or many periods. These investors will invest more, and bring along their friends and relatives. Typically, those earlier investors will earn. The later investors' investment will be used to give to the earlier investors. Until such time that the holes are too big to cover, or the ponzi scheme master is happy with the amount of money he is holding, he will just disappear, or change the scheme, or change the man behind the scheme.
Doesn't it sound familiar? Even direct selling is patterned this way. Maddoff is a famous example in 2008 in US.
Even though we perceive the US people more knowledgeable than us in Malaysia, they still fell prey to this kind of scheme. Be practical, the hard earn money when invested, must exercise due diligent. Otherwise, just leave it in Fixed Deposit. Though sound unintelligent, but better than falling prey to ponzi scheme.
Ponzi Scheme promises an above normal rate of return, but not so high as to be unbelievable. The setup is not transparent as to how the return is to be generated. The scheme will convince some investors first and the promised return will be given for a few or many periods. These investors will invest more, and bring along their friends and relatives. Typically, those earlier investors will earn. The later investors' investment will be used to give to the earlier investors. Until such time that the holes are too big to cover, or the ponzi scheme master is happy with the amount of money he is holding, he will just disappear, or change the scheme, or change the man behind the scheme.
Doesn't it sound familiar? Even direct selling is patterned this way. Maddoff is a famous example in 2008 in US.
Even though we perceive the US people more knowledgeable than us in Malaysia, they still fell prey to this kind of scheme. Be practical, the hard earn money when invested, must exercise due diligent. Otherwise, just leave it in Fixed Deposit. Though sound unintelligent, but better than falling prey to ponzi scheme.
Is Genneva Gold a Ponzi Scheme?
I have heard about Genneva Gold from my clients. They asked me whether I have any investment in gold in Genneva. I came to know gold investment a few years ago reading the monthly magazine called "Money". From there I only knew that I can invest in gold via Public Bank Berhad and Maybank Berhad.
Prior to that, I thought to invest in gold, you need to buy in the form of gold jewelry.
I called up these two banks to find out how to invest gold in their banks. In general, it is very much like unit trust. There is a difference between buying and selling price. To open a gold investment account, your initial investment would be to purchase 10 gms of gold (about RM1790 now). Subsequent investment is 2 gm (about RM358). This is affordable. The banks will give you a gold saving account book for records. You do not have to keep the physical gold yourself. Since these banks have licenses from Bank Negara Malaysia to trade gold, you are rest assured. If you want to withdraw, you can sell the gold back to the bank, or withdraw in the form of physical gold.
Similar to unit trust, you wish for a return by hoping the gold price will rise eventually in the long run. You can check the gold price in the internet. They are the same globally.
Unlike Genneva gold, the company promises you very good return. I was told 2% monthly. In a year, you get a return of 24%! The agent told me that they get 1.5% of the customers' investment! If the customers do not sell back their gold, and renew their license, they continue to get 1.5%!
This scheme has attracted a lot of investors. Quite a number of investors invested their life saving because the monthly dividend is really attractive. If you are retired and withdraw your EPF of RM200K to buy Genneva Gold, you get RM4K monthly for your living expenses. Your agent will get RM3K from your investment. Doesn't that sound good? Better than rental income if you wish to purchase a house for rental. Where can you find a house that cost you RM200K and give you a monthly rental income of RM4K?
However, when investments are too good to believe, hold back and ask yourself this question. How do they make money from my investments to pay me dividend and the agent commission? Does gold price really rise so fast? Look up information in the internet. Plenty of discussions going on in the internet.
Prior to that, I thought to invest in gold, you need to buy in the form of gold jewelry.
I called up these two banks to find out how to invest gold in their banks. In general, it is very much like unit trust. There is a difference between buying and selling price. To open a gold investment account, your initial investment would be to purchase 10 gms of gold (about RM1790 now). Subsequent investment is 2 gm (about RM358). This is affordable. The banks will give you a gold saving account book for records. You do not have to keep the physical gold yourself. Since these banks have licenses from Bank Negara Malaysia to trade gold, you are rest assured. If you want to withdraw, you can sell the gold back to the bank, or withdraw in the form of physical gold.
Similar to unit trust, you wish for a return by hoping the gold price will rise eventually in the long run. You can check the gold price in the internet. They are the same globally.
Unlike Genneva gold, the company promises you very good return. I was told 2% monthly. In a year, you get a return of 24%! The agent told me that they get 1.5% of the customers' investment! If the customers do not sell back their gold, and renew their license, they continue to get 1.5%!
This scheme has attracted a lot of investors. Quite a number of investors invested their life saving because the monthly dividend is really attractive. If you are retired and withdraw your EPF of RM200K to buy Genneva Gold, you get RM4K monthly for your living expenses. Your agent will get RM3K from your investment. Doesn't that sound good? Better than rental income if you wish to purchase a house for rental. Where can you find a house that cost you RM200K and give you a monthly rental income of RM4K?
However, when investments are too good to believe, hold back and ask yourself this question. How do they make money from my investments to pay me dividend and the agent commission? Does gold price really rise so fast? Look up information in the internet. Plenty of discussions going on in the internet.
Thursday, 4 October 2012
Emergency Cash Fund
Who are among those who lapse their life insurance policies easily?
From my experience, most of the lapsed policies are owned by young adults. My young adults customers are mostly at least having tertiary degree at local universities. I noticed that once they lost their jobs, they stopped their premiums immediately. However when I meet them for appointments, they are normally quite well-dressed and equipped with the latest phone.
My advise to these young adults would be to keep 6 months of emergency cash fund. This means to say that if you are out of job for 6 months, you still have this saving of emergency cash reserve to keep you through. This assumes when you lose your job, you will be able to get another one within 6 months time. You estimate how much you need to spend every month. Do not underestimate. Multiply this estimation with the number of months you think will get you back to a job.
As you get older and more fuzzy about jobs, you must keep more emergency cash fund.
Draw up a worksheet to record your daily expenses. At month end, you will know how much you require in a month. Remember to consider some expenses that recur once a year like your motor insurance, road tax renewal, land assessment, PA insurance and fire insurance.
From my experience, most of the lapsed policies are owned by young adults. My young adults customers are mostly at least having tertiary degree at local universities. I noticed that once they lost their jobs, they stopped their premiums immediately. However when I meet them for appointments, they are normally quite well-dressed and equipped with the latest phone.
My advise to these young adults would be to keep 6 months of emergency cash fund. This means to say that if you are out of job for 6 months, you still have this saving of emergency cash reserve to keep you through. This assumes when you lose your job, you will be able to get another one within 6 months time. You estimate how much you need to spend every month. Do not underestimate. Multiply this estimation with the number of months you think will get you back to a job.
As you get older and more fuzzy about jobs, you must keep more emergency cash fund.
Draw up a worksheet to record your daily expenses. At month end, you will know how much you require in a month. Remember to consider some expenses that recur once a year like your motor insurance, road tax renewal, land assessment, PA insurance and fire insurance.
职场增值 Increasing your value at work
A Singaporean motivational speaker was invited by a KK church to conduct workshop on increasing your value at work. Every attendant has to pay more than one thousand to attend the 2 days workshop. I heard that the respond was very good. The church said that this speaker charged more than RM5000 for similar workshop outside the church, and this was a very special "discount" for church members. After the workshop, the pastor asked the participants to share. The participants were excited and motivated, and many said value for money.
However, one church member who has been life insurance for at least 30 years, was fury after the workshop. He said he has attended so many similar motivation talks in life insurance industry. And why should the church members including the elders stood up clapping their hands welcoming the entry of the speaker. The speaker is neither God or Jesus!
After a few months, the same workshop was brought to the seminary. Charges remained above RM1000. I signed. Many Christians in KK are innocent. I should not question them but I think some people became regular church goer or cell group members because they just want to belong to somewhere. Perhaps church is perceived as a safe place to belong to. Do churches more like clubs to non-christians?
However, one church member who has been life insurance for at least 30 years, was fury after the workshop. He said he has attended so many similar motivation talks in life insurance industry. And why should the church members including the elders stood up clapping their hands welcoming the entry of the speaker. The speaker is neither God or Jesus!
After a few months, the same workshop was brought to the seminary. Charges remained above RM1000. I signed. Many Christians in KK are innocent. I should not question them but I think some people became regular church goer or cell group members because they just want to belong to somewhere. Perhaps church is perceived as a safe place to belong to. Do churches more like clubs to non-christians?
Mr.Wong's Personal Financial Planning's Workshop
Mr. Wong KS is a well known Financial Planning speaker in Chinese speaking community. He was a regular financial planning speaker at Ai-FM. He was also invited to give talk and to conduct workshop in Kota Kinabalu and Tawau.
I had listened to his talk several times over the radio. I like his sharing. Because of his popularity, he was invited to conduct workshops at one of the church several times in Kota Kinabalu. Mr. Wong KS charged RM3300 for the workshop. If you want to attend the same workshop again, you pay 1/3 of the original price. I personally find this very, very expensive. Surprisingly, many people are willing to pay for that amount of money in order to know how to manage their money. One of my customer attended his workshop, and called me to tell me now she knows what she wants for her life insurance. When I met her up to review her policy, she told me that she wants to increase her critical illness cover to RM100K. Naturally, I asked her why RM100K? She said Mr.Wong said so. In Kota Kinabalu, most people are very innocent. They come to adore a person easily. And whatever the person said, they just follow faithfully without asking why.
My customer continued to tell me that her income will be allocated according to 2116 formula. 20% saving for financial independence, 10% for protection, 10% for children's education and 60% for living expenses. This is a good guideline, but keep in mind that this is a general guideline. If I have big income, there is no need for me to spend 60%. I can save more. If I am a single person, I don't need so much protection.
Nevertheless, at least, by attending the workshop, these attendants are more aware of their spending and their investment, hopefully.
I had listened to his talk several times over the radio. I like his sharing. Because of his popularity, he was invited to conduct workshops at one of the church several times in Kota Kinabalu. Mr. Wong KS charged RM3300 for the workshop. If you want to attend the same workshop again, you pay 1/3 of the original price. I personally find this very, very expensive. Surprisingly, many people are willing to pay for that amount of money in order to know how to manage their money. One of my customer attended his workshop, and called me to tell me now she knows what she wants for her life insurance. When I met her up to review her policy, she told me that she wants to increase her critical illness cover to RM100K. Naturally, I asked her why RM100K? She said Mr.Wong said so. In Kota Kinabalu, most people are very innocent. They come to adore a person easily. And whatever the person said, they just follow faithfully without asking why.
My customer continued to tell me that her income will be allocated according to 2116 formula. 20% saving for financial independence, 10% for protection, 10% for children's education and 60% for living expenses. This is a good guideline, but keep in mind that this is a general guideline. If I have big income, there is no need for me to spend 60%. I can save more. If I am a single person, I don't need so much protection.
Nevertheless, at least, by attending the workshop, these attendants are more aware of their spending and their investment, hopefully.
Hong Leong Income Builder Plan
Sharon is 22 years old. She does not have a steady job. She is still depending on her parents when her odd jobs income do not meet her expenses. In fact, Sharon is spendthrift. She likes to buy branded clothes, go clubbing and drink at starbucks.
Her friend, Magdalene is also 22 years old. Through Sharon's social friend, she came to know Magdalene, who has just started to earn extra income by joining Hong Leong Assurance as life insurance agent.
One day, Magdalene called up Sharon to have lunch with her. Magdalene showed her concern for Sharon's way of spending, and encourage her to take up Hong Leong Income Builder Plan. This plan is popularly promoted by HLA agents as well as HLB's sales officers. Magdalene proposed to Sharon that she should save RM200 every month with her for 12 years. On the first anniversary, Sharon will start getting dividend from HLA.
Sharon went home to ask permission from her mother to take up the plan, and her mother agreed. After paying for 2 months, Sharon was not in good term with her mother. Her parental assistance of pocket money halts.
When Sharon talked about this with me, I pointed out to her that this saving plan is a wrong choice for her. She should keep her money in the bank as she doesn't have steady income. Furthermore, an insurance saving plan is not a good idea for saving at all. When she needs money, she will not be able to withdraw the premiums that she has paid. She should have deposited her money in the bank. It is also ridiculous to ask premium from mother to 'save' in the saving plan.
I notice that many consumers when heard of the product name "saving", they will assume that it is similar to saving account in the bank. Agents or bank officers will seldom point out to them that they are at a loss should the policy be discontinued.
On my advise, Sharon stops the plan losing a few hundreds. When I called up the young agent, she even told me that Sharon can get back 70% of her premiums paid. From here, I concluded that this young agent doesn't even know her products well, how can she give correct recommendation to her customers?
I wish Bank Negara has better control of the insurance agents and bank officers selling insurance plan. Should there be any complaint or mis-selling, the premiums should be refunded to the customers.
Her friend, Magdalene is also 22 years old. Through Sharon's social friend, she came to know Magdalene, who has just started to earn extra income by joining Hong Leong Assurance as life insurance agent.
One day, Magdalene called up Sharon to have lunch with her. Magdalene showed her concern for Sharon's way of spending, and encourage her to take up Hong Leong Income Builder Plan. This plan is popularly promoted by HLA agents as well as HLB's sales officers. Magdalene proposed to Sharon that she should save RM200 every month with her for 12 years. On the first anniversary, Sharon will start getting dividend from HLA.
Sharon went home to ask permission from her mother to take up the plan, and her mother agreed. After paying for 2 months, Sharon was not in good term with her mother. Her parental assistance of pocket money halts.
When Sharon talked about this with me, I pointed out to her that this saving plan is a wrong choice for her. She should keep her money in the bank as she doesn't have steady income. Furthermore, an insurance saving plan is not a good idea for saving at all. When she needs money, she will not be able to withdraw the premiums that she has paid. She should have deposited her money in the bank. It is also ridiculous to ask premium from mother to 'save' in the saving plan.
I notice that many consumers when heard of the product name "saving", they will assume that it is similar to saving account in the bank. Agents or bank officers will seldom point out to them that they are at a loss should the policy be discontinued.
On my advise, Sharon stops the plan losing a few hundreds. When I called up the young agent, she even told me that Sharon can get back 70% of her premiums paid. From here, I concluded that this young agent doesn't even know her products well, how can she give correct recommendation to her customers?
I wish Bank Negara has better control of the insurance agents and bank officers selling insurance plan. Should there be any complaint or mis-selling, the premiums should be refunded to the customers.
Children's Money Sense
From my observation, how children handle money matters are learned from parents. Most family in Malaysia have 2 children. Sometimes you see 3 or 4. We live in a small family unlike our generation. We affect each other everyday.
Many young generations do not seem to value money as much as we do. If they don't have enough, they will go home to ask from their parents. Our society is sick.
My friend bought 3 cars for her 3 children aged 19 to 22 so that they don't fight to use the car. She is now paying 3 hire purchase, plus maintenance, petrol, motor insurance and road tax renewal. Her son likes to speeding while driving. Once she saw her son on the road, she was mad. Her son denied. Thanks to the CCTV at the highway that sent him 2 summons for speeding. Brave enough, he asked her mum to pay for the summon, though he has started working.
Why is our young generation getting irresponsible? Are parents to blame? Have we sent them to the wrong education that they didn't learn Chinese proverbs to grow up respecting the elders?
Many young generations do not seem to value money as much as we do. If they don't have enough, they will go home to ask from their parents. Our society is sick.
My friend bought 3 cars for her 3 children aged 19 to 22 so that they don't fight to use the car. She is now paying 3 hire purchase, plus maintenance, petrol, motor insurance and road tax renewal. Her son likes to speeding while driving. Once she saw her son on the road, she was mad. Her son denied. Thanks to the CCTV at the highway that sent him 2 summons for speeding. Brave enough, he asked her mum to pay for the summon, though he has started working.
Why is our young generation getting irresponsible? Are parents to blame? Have we sent them to the wrong education that they didn't learn Chinese proverbs to grow up respecting the elders?
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