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MoneyTipsEbookVol1V3 PDF
MoneyTipsEbookVol1V3 PDF
by KCLau
https://KCLau.com
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You might have come across some of the ideas in this book.
The purpose of making this book is to give you the convenience
to access my writing in a more organised format.
Also for your convenience, I’ve made the size of this book small
enough to fit on your mobile device screen, so that you don’t
have to do excessive horizontal scrolling to read the pages.
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The majority of wealthy people are the 2nd type. Saving and
investing is their priority!
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You should buy the house first, then serve the instalment for a
few years. After you build up more equity in the mortgage, you
can refinance the house to a higher loan amount. The extra
cash you get at that time can be used to buy your dream car.
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That way, you kill two birds with one stone. First, you save on
the interest because mortgage debt usually has the lowest
interest. Second, you delay the car purchase which will be a
long-term liability anyway. At a later time, you would most
probably get a better model with the same amount of money.
Just by doing this trick alone, you will be way ahead compared
to your peers who did the opposite - serving a car loan and
keep complaining about the high property price!
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Let’s say your fix expenses is RM5000 per month. You use your
credit card to pay for all those fixed expenses monthly. The due
date to pay back your credit charges is 20 days after the
statement date. Therefore, you can have the RM5000 put into
your own saving account to earn interest for 50 days.
Credit card really helps! (Only if you know how to use it).
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There are many types of life insurance plans. If we categorise
them based on the premium paid and the protection we are
getting. Basically, there are 3 types (refer chart):
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For Type B insurance, the total premium we paid will match the
total cash value of the policy at year 14th-18th. That means
after we had paid the insurance premium for 15 years, we can
still get back all the principal money if we surrender the policy.
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● Mudah.my
● www.Ebay.com.my
● www.Lelong.com.my
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But only with the proper use of leverage, a person can grow rich
even faster. You must have heard that most wealthy people had
gone through some difficult years before their success. Usually,
they can double their income every year after those initial
struggle. They certainly use some form of leverage. Example:
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the warrant will follow by ten sen as well. Those who bought
warrants know that warrant is a derivative security that gives the
holder the right to purchase securities (usually equity) from the
issuer at a specific price within a specified time frame.
But bear in mind that the key here is that you must know what
you are doing. Are you sure you can generate a better return
than the financing cost you pay? If yes, go ahead. If no, keep
learning until you do.
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4. If you are a slow reader and find that you can’t finish reading
the books you bought using RM1000 in a whole year, you can
consider buying books as gifts. There is always someone’s
birthday, anniversary, job promotion, X’mas celebration. Why
not giving them books as a gift?
To qualify for tax relief, you must keep the original receipts. Any
books and magazine are qualified for the claim, including e-
books. Go and buy some books!
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to yours?!
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Calculate your net worth every quarter, and you will find a
pattern. Make sure it only has one direction to go --- UP UP UP!
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Every sen kept and saved will still make you richer by one sen!
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Some people only have this type of policy. They never realise
that they go to war with underwear only, no armour, no helmet,
no nothing!
2. Hospitalisation and Surgical Benefit (known as medical
card or health card)
This benefits can cover most if not all of your medical expenses
at a hospital.
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Health card is not a credit card, and it does not have money in
it! If it is genuine cases, there will be not much trouble to get the
Letter of Guarantee from the insurer when you are hospitalised.
However, insurance company have the right to investigate
before they pay out the claim, especially when you make a
major claim within the first two years.
5. Natural Death
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No matter how you die, they will still pay your family this death
benefit, except committing suicide within the 1st year. Since the
life assured can’t enjoy this benefit, it is up to the individual
commitment to their dependents to calculate how much
coverage they should get.
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There are many ways to state our wealth. In fact, wealth is more
appropriate to be indicated by “time”, not the amount of “asset”
we have.
How long would it be for you? How wealthy are you? 3 months?
1 year?
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Simply, just divide your age by 10, and multiple it by your
current income. This should give a rough estimate of your
expected net worth should be.
Special thanks to Ami Sek who pointed out the confusion caused by inherited wealth.
I’ve updated this part after getting Ami’s input.
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Example:
CAR – If we buy a car for our personal use, it might be a liability
rather than an asset. Even though we purchased using cash
without any hire purchase loan, we still have to pay the
maintenance, road tax, car insurance and petrol. Even worse is
when we buy the car with a loan.
The car is an asset of the bank (I mean the money they lend to
you to acquire the car) but a liability of the car owner. In
contrast, if a taxi company buys a car and rent it to a cab driver,
and in returns, the taxi driver would have to pay leasing fees to
the enterprise. Thus, the car is an asset to the taxi company,
but a liability to the taxi driver.
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How about yours? I think most of us will most likely have the
same list or a variation of it.
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When Ken hit the lottery of RM1 million in the year 2005, he
bought a BMW 7-series car with 10% down payment. He also
purchased a house with a market value of RM1 million with 10%
down payment. He quit his day job and upgraded his lifestyle.
He dined at fancy restaurants. He changes his girlfriend every
two weeks. Forgetting that the million he got is just a plain of
luck, he finally went broke again three years later. He was
unable to pay the instalment for the bungalow mortgage and the
BMW car loan. You might have heard such story many times.
Giving you a lot of money will not make you rich. If Ken has the
proper money management skill, it will be a different story.
When you are financially illiterate, giving you more money is like
giving a gun to a child. You’ll harm not only yourself but the
people surrounding you too.
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2. Discipline
Imagine a bank account that does not give you any withdrawal
facility! Just like a piggy bank. You can only deposit money.
After opening such an account, you must deposit money into it
every single day. If you keep doing that for a very long time, one
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day you’ll receive a call from the bank officer. He’ll ask you to
clear the account because it is overloaded with cash!
This is the kind of discipline we are talking about. Spend less
and spend later. Save first and save more.
3. Time
When you lose any one of the three primary criteria, you won’t
be able to save more money. A severe disease will destroy your
earning ability. Premature death will take away your time to
save money. If you lack the discipline to save money, it is better
to engage some financial system to help you.
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Just by doing that, you immediately save the upfront fees when
investing in a unit trust, which big chunk of it goes to the
marketing cost of the funds.
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After paying the policy for 5 years, he heard from his friend that
he shouldn’t put money in an insurance policy. It is a waste of
money. So he surrendered the policy. The surrender value is
RM3900. Mark’s friend is right about “losing money” in
insurance. Mark had paid RM5297 and got back only RM3900
in return.
ROI = -26.37% in 5 years.
EAR = -10.04% per annum.
Conclusion: This policy is a bad investment according to
those who prefer to lapse policy.
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Anyway, don’t bother with those who didn’t write their will. Just
start to get yours written for these benefits:
Save money!
Without a will written, the person is called die intestate. His
heirs need to apply for the Letter of Administration (LA) instead
of Grant of Probate (GP). The legal fee is higher for LA
application because of the longer process and more documents
required. Don’t believe? Ask your lawyer.
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people eligible include your legal heirs, your creditors, your not-
trustworthy-relative.
Appoint Guardian
Yes! If you have minor children (age below 18), you ought to
write your will now! There is no other way to appoint a legal
guardian except by writing a Will.
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Saving
Saving is how much you can keep the hard earned money to
yourselves. Can you save RM300/month, or RM2/day, or
RM50,000/year? Pay yourself first!
Time
You must give enough time for your money to work for us. The
younger you are to start saving, the better it is.
Return
The rate of return is commonly associated with the amount of
risk we are willing to take. If you know an investment instrument
well, you will eventually bear lower risk as long as you know
what you are doing. Get higher return from your money! Put
your money into places where they can work hard! And make
sure you know how to take good care of them.
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His name is the government. The money you pay him is called
income tax.
So, if you already found a good business partner at this
moment, please appreciate his existence.
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It is fair to have a balanced portfolio –: 1/3 for each and you will
have a balance financial statement.
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Writing a simple will is certainly not the perfect solution for the
above situation. When we are taking care of our children, we
make sure to provide them with the best education. We also try
our best to make them study hard. We wish that someday they
will get a degree, master degree, etc., and earn a decent living.
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One weekend evening, Jim and Susan met with a terrible road
accident. Jim died on the spot and Susan also passed away
after two days in the hospital intensive care unit. This incident is
known as the double tragedy at the newspaper headline.
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Write a WILL
Tim and Susan shall have their separate WILL written. The
WILL is the only way to appoint a guardian for our children.
Before you appoint any person as a guardian, talk to them to
get their consent. It is even better to provide a certain level of
regular salary to the guardian as a compensation for their time
and effort.
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To put on a great child protection plan like this, you will have to
seek advice from a proper financial advisor. Make sure the
advisor has sufficient knowledge in living trust, life insurance
and also will writing. Email me if you need my assistance to
recommend a trusted associate to help you.
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2. Switching
Switching will lock in the gain you made on your unit trust
investment. Switching fees are low and lower than the upfront
service charge. When you are making a profit from an equity
fund, you can switch it to some lower risk fund to lock the gain
instead of selling it for cash. When the market turns weak, you
can switch it back to equity fund.
3. Portfolio Re-balancing
Portfolio re-balancing is the process of bringing the different
asset classes back into proper relationship following a
significant change in one or more. In simple words, it is
returning your portfolio to the appropriate mix of stocks, bonds,
cash and other asset classes when they no longer conform to
your plan.
Example:
You start investing 50% in equity and 50% in a fixed income
fund.
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One year later, the investment rises and now your portfolio
consist of 80% equity and 20% fixed income fund.
To re-balance your portfolio, you should sell 30% of your total
fund in equity and invest it in fixed income fund so that you
maintain your portfolio allocation.
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No money
● My income is not stable.
● I have to pay car instalment and house mortgage. Too
much commitment lar...
● There is no money left every month. I’ve got no saving
at all.
● RM150/month premium? I can’t afford that!
● I still have a few thousand credit card debt
No Need
● I am single. I don’t see any necessity to get insured
● Aiyahhh, just enjoy first. Don’t worry, be happy!
● My family can take care of me.
No Trust
● Insurance company always find loophole not to pay
claims
● My insurance agent ran away with my money last time
● I will lose money if I never make a claim
Despite all these reasons not to buy a life insurance plan, I was
shocked by a prospect’s decision quite a long time ago. I don’t
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There was one time that let me uncover this fact. A police officer
stopped me for an offence. Did I get a traffic summon? Yes and
No. YES because the police officer said the traffic ticket would
arrive in my mailbox in two months time. NO, because I still
have to wait two months to verify the YES. More about this story
later when I shared with you how I got away from traffic
offences. Before a police stop you for a traffic offence, here are
some tips on how to keep your cash safe in your pocket.
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Smile, silent, and don’t offer – fellow Malaysians know that
there are many sleepy traffic policemen. When they are sleepy,
they need coffee. Coffee is expensive. You can go to Starbuck
to verify the price. Being underpaid for a very long time, they will
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ask your help to donate some coffee money. If you think that
you can save summon ticket by offering coffee money, you are
wrong! That’s called bribery, not a wise money-saving move.
From my experience, I always use this strategy. Let me share
the stories with you.
1. Traffic offence No.1 – In the year 2005, I made a right
turn which is prohibited at a T-junction. A “sleepy” police
officer came out from nowhere and stopped my car. I
smiled, showed him my driving license and identity card.
Then silence. He asked,“Do you know what is your
offence?”. I answered yes and silent. He continued,“
This will cost you RM100 you know?”. I answered
“oh…”. Then quiet. He finally let me go by saying,"I see,
you are not a local folk. I’ll let you go. Drive safely next
time.” because the address in my identity card shows
Kedah, not Penang.
2. Traffic offence No.2 – In the year 2006, I made a U-turn
at a traffic light. A police officer stopped my car, and his
colleague came up to me. I was bringing some friends
from Johor to have lunch near Penang Mega Mall. I still
used the same technique: short answer, smile, silent
and the most important thing, don’t offer a bribe! He
hinted that they are doing Raya (festive) operation, the
fine is at the maximum rate. Anyway, they released me
again without ticket issued. Reason he gave: Don’t want
to spoil my visitors’ mood.
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If you are putting more money into low-risk and liquid account,
you are building an emergency fund out of that practice. In other
words, if you are investing most of your money, you probably
increase the risk to get a better return, hence reducing the liquid
part of your portfolio.
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days? Isn’t it too long? No, I don’t think that it is a long duration
because I have several credit cards with enough limit to be
used as a buffer. Nowadays, you can pay almost everything
with credit card except the debt itself. If you can liquidate the
account within 30-50 days, it is soon enough to pay the credit
card on the due date.
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If you can’t get the time to read it, make sure you asked the
following questions before you sign the documents. Get the
mortgage officer to show you these details in the offer letter.
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the full amount is released. You will end up with longer lock-in
period.
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13. Ask for the bank’s customer service call centre number.
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6. Pay all your insurance policy with credit card. When you
pay the premium-expenses, it becomes your saving. Especially
those policies which had reached the critical years. It is better to
keep paying those policies because 100% of your money is
credited to your insurance account.
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- get some money quote Tattoos on your body: I’ve seen people
tattooing their girlfriend’s name.
- sleep with your money: You should sleep with your lover every
night.
- give your partner more money: Since your lover is “money”,
give it more money certainly help to show your love.
- speak your love: Tell people how much you love money!
- show your love through your actions: hug it, kiss it and caress
it … don’t let it sit in the boring saving account.
- spend more time with your lover: You should seriously spend
some time regularly for budgeting, planning and reviewing your
financial goals.
- appreciate your lover: When your money leaves you one day,
you will feel sorry for not treasuring it before.
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Money or Beauty?
Many people associate a person’s wealth with his appearance.
It is like judging a book by its cover. I believe that it shows some
truth because people only realised that you actually “have” that
amount of money only after you spent it!
You renovate your house gate, only the gate! Your neighbour
saw it when they are passing by. They thought that you must
have been promoted or granted a big bonus. This makes you
appear richer.
I just hope that you realise that the money spent is no longer
yours. However, those actions do make you “look” more
prosperous. Money or beauty?
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When you are financially free, you can choose not to retire. It is
all up to you. Financial freedom just means that you don’t have
to “work for money” anymore. You can work for fun. You can
work for your passion. You can fulfil your dream without ever
worry about money. You don’t have to trade your time in
exchange for cash. You can go to live at the place you like. You
can even have your flat nose fixed with plastic surgery. You can
practically do what you dream to do provided that it is part of
your goal after you achieve financial freedom.
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1. Refinancing
Refinancing works like a charm when you have banks
competing to grab new customers. The trick is to make use of
the better rate offered by competing banks. With the lower
interest rate offered for a new client, it might be worth it still if
you refinance your existing home loan by paying the early
settlement penalty. But before you do so, please seek
professional advice to calculate how much you can save.
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3. Paying extra
Additional payment means you pay more than the required
instalment. There are two kinds of additional payment
acceptable if you are servicing a home loan. Please note that
the financial jargon used might be different among banks.
Let’s say you did this three times consecutively, so you made
an extra payment of RM1500 in total. On the next payment due
date, you suddenly run out of money because of some
emergency. Some banks will deduct RM1000 from your extra
payment and treat it as your regular instalment. So your record
is clean. Nothing is reported to CCRIS or CTOS. But if you need
to withdraw that RM1500 extra for emergency use, that is not
allowable.
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Bear in mind that you can opt for advance payment instead for
the extra RM2000.
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Notice that if I settle the loan within five years from the first
disbursement date, I will have to pay 3% from the original loan
amount or RM5000 whichever is higher.
For example, if my original loan amount is RM200,000, when I
choose to settle the loan or refinance it to other banking
institution, the amount I need to pay for the penalty is:
RM200,000 x 3% = RM6,000
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Before you sign the offer letter, there are two particular issues
that you need to understand:
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Example:
Original loan amount = RM200,000
Outstanding loan amount at the time of settlement =
RM180,000
You can always try to negotiate a better deal for your home
loan. No harm trying right?
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Before we get there, I would say that luxury is simply the life
experience that we cannot afford at this moment. When you
already achieve that, it is no longer a luxury, but simply
something that you can afford.
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You can have a head start when you have a good education
and a good degree. But that’s just a head start. Financial
success is a long-term endeavour.
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Financial situation:
●always spend less than they
earn
●save a portion from their
income every month
●conservative, passive
investors who mostly keep their
money in the bank
●buy a house, purchase a car,
go to work and wait for
retirement
●net worth grows slowly.
●they are frightened of debt and
try hard to pay it off as soon as
possible
Being mediocre is better than
being poor.
Financial Situation:
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Financial Situation:
●they are definitely the
Millionaire Next Door
●normally they work hard to
increase their income
●they earn better than the
mediocre but still spend like the
mediocre.
●they save a lot from every
paycheck which is normally
invested, in the area they are
familiar of, probably in their own
businesses.
●some ultra rich know how to
use the leverage of good debt.
They might get into deeper debt,
but at the same time the debt is
being used to acquire justifiably
greater assets. Assets
contributes more earning and
improve their cash flow chart.
●financially, they are
independent.
●They are the prodigious
Accumulator of Wealth
How do your cash flow and net
worth charts look like?
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Section A: Learning Phase
Learning phase started since the day you were born. In fact, it
never ends because learning is a lifelong journey. But in this
case, let’s say a person need 20-25 years of education to be
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Unemployment
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Illness or Disability
A major illness is something even worse than unemployment. A
person will lose his earning capability, at least temporarily if
lucky enough that it is not a permanent disease. A higher deficit
replaces saving. Having an adequate emergency fund might not
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2. Study and analyse the history of your cash flow chart. Create
a proper budget that you can follow. Find out the unforeseen
event that had impacted your financial situation before. Learn
from your experience.
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Do you want to get the next Volume of this ebook series? Visit
this page https://KCLau.com/lp/ebook to post a comment and
enter your emails to get on my e-mailing list.
regards,
KCLau
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