MPU2222

ENTREPRENEURSHIP 1

TOPIC 10: ACHIEVING ENTREPRENEUR’S

PERSONAL FINANCIAL DREAMS

Prepared by: NOR LINDA BINTI MOKHTAR

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 Chapter Outline

 Entrepreneur Wealth Building

 Planning for Uncertainties
 Managing Debt Borrowing Basics

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 Entrepreneur Wealth Building

 The Saving Habit - hard to do and challenging.

 Saving is the portion of disposable income not spent on consumption of
consumer goods but accumulated or invested directly in capital equipment
or in paying home mortgage or directly through purchase of securities.
 Should make savings automatic.
 A savings plan is an essential part of financial plan (to achieve financial
goals).
 Suggest to save at least 10% of salary every month (more saving now more
money for future).
 There are several ways percentage of monthly salary can be put into saving
account in the bank: - write out a cheque and deposit
- transfer on the ATM
- transfer from current account via internet
banking

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  Increasing Net Worth via Saving and Investments – building wealth is about increasing
net worth. Assets – Liabilities = Net Worth (assets>liabilities=positive, or
liabilities>assets=negative).
 Must look at:
a) Investment goals – must fit with needs (why, how much money, how long, how much risk,
how much return and what sort of sacrifices are you prepared to make to achieve these goal
exp changing lifestyle) *** the answers to the above questions must be realistic with sources of
income and consistently save and invest (should be reasonable and achievable).
b) Investment risk and return – keeping money in a saving or fixed deposit account with a bank
is safest from of investment. The return (the interest rate) is lower compared to other forms of
investment, but it is not risky. Keeping money only in savings or fixed deposits would not be
able to build your wealth as fast as you would like to. Keep in mind that investment can give
better returns but sometimes carry greater risk which is greater chance losing their value. A
return on an investment is usually stated as an annual percentage. The actual return on an
investment would be after have deducted related expenses. (exp: stock market, bought RM5
per shares but price can go up to RM7 or can go down to RM2) or (buy a house and then sell it,
will only know return after have deducted items such as legal fees, agent’s commission, stamp
duty and bank loan interests). ***investment if higher the return, greater the risk.
c) Diversify investment – when invest money, do not put it all into one type of investment. If
something happens to that investment, would lose all the money. It is important to diversify.
Put money in different types of investment (plan) and spreading money in a variety of
investments to spreading the risk.(eliminating chances of financial losses). How invest is
determined by investor profile whether as an aggressive, moderate or conservative).
Aggressive investor – might invest in volatile investment such as shares, Moderate investor –
might invest in different asset class such as unit trust funds and fixed deposits, Conservative
investor – might invest such as bonds and fixed deposits. ***your own decide which options to
choose and how much to spread savings amongst the types of investment products available.
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 Types of Investment

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 • Most common form of investment, such as bank saving accounts and fixed deposit.
• Provide easy access to money when needed and no chance lose any capital (very secure).
• Provide very little income, no capital grow, quite risky in the long run.
Cash and
Fixed Interest • Suitable for use as a transaction account, keeping cash on hand for short term expenses and
Investment emergencies and short term saving without any risk to their capital.

• Also known as equities or stocks represent ownership in a company.

• Become a part owner of the company, become entitled to share in its future value and profits.
• As the overall value of the company increases, the value of the share s also increases
Shares • Earn dividends when company pay part of its profits to shareholders as income payment.

• Money from hundreds of individual investors are pooled together to buy a large number of
different assets. Professional fund managers decide what percentage of the fund should be
invested in each assets, countries, industries and companies for good returns.
Unit Trust • Each investor then receives units in the fund which each unit represent a mix of all the
Funds underlying assets such as shares, bonds and fixed deposits.

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 • Properties increase in capital value over time as house and land prices
rise.
Property • Investors can earn rental income from tenants.

• Either government or corporate bond (lending money for a certain

period of time at predetermined interest rate).
• Investor receive a steady income stream through regular interest
Bonds
payments.

• Investment in property and real estate.

Real Estate • Investors get dividends.
Investment
Trust (REIT)

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 Planning For Uncertainties
 Life has many ups and downs can and do happen unexpectedly such as
accidents and disasters.
 If we are not adequately prepared for uncertainties, it usually brings about
feeling of fear, depression and worry.
 The Need to Get Insured:
a) What is insurance? – is a financial instruments that you can purchase to
protect from such an eventuality (death or disability). Protection in case
something happens to you, your family or your belongings. Example: Purchasing a
house by borrowing money from the bank.
b) Purpose of insurance – is providing you with peace of mind to pay for
damage/to replace items that had been stolen, pay for medical bills, take care of
your monthly living expenses/debts, provided some financial support to your
family.
c) How does insurance work? – upon payment of a relatively small fee (known
as a premium). A licensed insurance company will replace items lost or damage
due to an insured peril such as fire, accidents and this must occur during the
insurance period up to the limit of the sum insured. The common fund helps all
those who contribute to share the risk (not all affected at the same time).
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 Types of Insurance

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 Managing Debt: Borrowing Basics

 Before borrowing money, make sure can manage debts.

 If borrow money, should use it to make more money.
 Do not pay for things that will not create value for you.
 Never use short-term loans such as credit cards or overdrafts to fund long-term
assets for example house or building.

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 Types of Loan

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Types of Cards, Credit Trap and Tips on
Using Credit Card

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 Repayment and Default

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