Definition of balance transfer
A bank agent called me few days ago to introduce the bank’s new balance transfer program. I do have a rough understanding of what balance transfer means, but figure that I might as well do a bit of research and post it here.
Definition of balance transfer (source: CreditWeb):
A balance transfer is an option offered by many credit card issuers which enables the card holder to use their available credit from one card to pay off the balances due on one or more other cards. Usually the interest rate on the amount borrowed is lower than the rate of the cards that are being paid off by the balance transfer.
I actually rejected the offer since I don’t have any balance left in my credit card statement and I only have 1 credit card with that bank. So it kinda defeat the purpose of using a balance transfer. Also, it does not make much sense to use it if you know how to control your spending and spend within your limit. No late payment, no interest charges. You can choose to consider balance transfer if the other credit card offers zero annual fee… but in times like this, that’s pretty unlikely since you will most probably cancel off your unused credit cards…. and forced to pay the annual fees for the remaining 1 or 2. I’m sure in 2010, the banks will do their best to attract more credit card applicants and waiving the annual fees can be one of the best attractions 
Anyway, I must be honest with you all that when it comes to balance transfer, I’m pretty bad with it since I’ve never used it. So far, I’ve been quite disciplined and managed to pay off my balance every month (not much anyway) so I rarely get hit by the interest rate… thus no point for balance transfer.
Yes, balance transfer has its advantages and disadvantages. But if you know how to control your spending and how to pay off the balance on time EVERY MONTH, then I really don’t see a need to use it. So in the end, it drills down to one thing – controlling your spending.
The state of our local property market
The average price of a property in our country has risen dramatically over the past few years, including during recession period. This is even more obvious in prime locations such as Kuala Lumpur, Selangor and Penang. A property bought 2 years ago in an OK location can easily worth 20-30% more now. And I won’t be surprised if the price of properties continue to rise from here onwards.
The funny thing is, no matter how ridiculously priced these properties are, they still get sold. A semi-d house with an awkward design (toilet next to the car porch), located in Shah Alam and priced at 800-900k….sold out. This shows how desperate the home buyers are…. or rather, how aggressive the property investors are.
I think it’s pretty obvious that our property market is seeing a stiff competition between the desperate local home buyers and the cash-rich property investors (especially foreign investors). The situation is fast becoming a “get a house while you still can afford” thing as local home buyers (or first time home owners) rush to get their hands on ANY affordable properties.
As a result of this, the price shoots up even more, to a state where other local home buyers can no longer afford to get their own houses and yeah….people have to rent a place or risk getting a big big debt on their shoulders.
But seriously, will this situation continue? I’m afraid so. What bout the price of the properties? If the properties are overpriced as they are now…will there ever be a bubble burst for our local property market? I’m afraid not due to the large number of rich foreign property investors coming in, and also due to the smart marketing move by the local property developers.
And on the question of whether the government’s decision to lure foreign property investors is a positive/negative move…. i will leave that to you.
p/s…. property consultant Chris Boyd recently said that now is a good time to buy property due to the affordable interest rate and that the property price has not peaked *shudders*. Check out his article in The Star here – A good time to buy.
How much is “enough”?
“How much money do you actually want to earn?” is a very common question. And the typical response is “Until I’ve earned enough”.
But how much is “enough”? 50k? 200k? 1 million? or just $1 more than the amount you need? Without defining what does “enough” mean to you, it’s very difficult for you to set your financial goals. So the first thing that you need to know before doing any financial planning is your definition of “enough”.
I’m not going to guess what is your answer. So I’ll just assume you are like most people I know, and your definition of “enough” is to be able to retire comfortably, without having to worry too much about money when you’re no longer working.
If that’s your definition of “enough”, then I have a few tips which might be able to help you achieve your goal.
- Go for conservative investing. When choosing a type of investment to put your money into, always go for conservative type of investing. Say NO to short-selling or active trading (be it stocks or funds). Go for those which are safer, but have lower returns. Index fund is a good option while FD (interest rate is too low at the moment), and stocks (too risky) are not.
- Pay attention to the cost of investment. Most investment types need you to pay a certain amount of money for their services – especially stocks and mutual funds. Pay close attention to the amount of money you need to pay for such things. Because most often than not, these fees will greatly reduce the amount of earnings you get from your investments.
- Minimize spending. It’s okay to get your WANTs every now and then but always take into consideration your financial goals. Will buying item A has any negative impact on your financial goals? Will it slow down your overall progress?
I think these 3 simple rules will be able to help you in achieving your “enough” and enable you to live comfortable upon reaching your retirement age. I can’t say that it’s going to work 100%, but I really believe it WILL help you to move closer towards that direction. But bear in mind that, these 3 simple rules are not going to make you rich…. they will only be able to make you achieve “enough”…. just enough for you to live comfortably.
p/s….. conclusion, if you are looking to achieve “enough” (as in enough to live comfortably upon retirement), you should avoid going to risky investment types such as property and stocks, and also avoid spending too much on services such as those incurred by mutual funds.
Property investment: business vs residential units
For those who are new in property investing, this is perhaps one of the dilemmas that they always face – whether to invest in business premises or to invest in residential units.
Normally people would invest in residential units because they tend to be cheaper (generally speaking) and there are also more options for them to choose if compared with business premises (shop lots, office units, etc). However, they may change their mind once they realized that the profit margin tends to be higher for business premises.
Yes, you CAN earn more by investing in business premises, sometimes significantly more than investing in residential units. But, as with everything in this world, there are pros and cons to each of them.
Business premises
+ A good tenant can easily helps you to pay off your loan and at the same time, helps look after your unit for a long period of time. For example, banks, and franchised outlets.
+ If you happen to buy the unit in a very good location, you can expect to earn more than 40%. For example, those who bought a shop lot in Kota Damansara when it was first launched could easily earn a 200-300% profit now.
- Most anchor tenants like banks are pretty hard to get. Most of the time, it is the property developers themselves who are able to engage them as tenants.
- Business premises tend to be priced higher than residential units.
- Maintenance fees and the utility charges are also priced higher for business premises.
- A lot of speculations are involved when investing in business premises. You invest in one place at a cheap price, and hoping that the location will become popular in the near future.
Residential units
+ Priced lower than business premises.
+ Maintenance fees and utility charges are sometimes lower (certain properties fall under the commercial rates though).
+ Easier to find tenants as the demands are higher for residential units, as long as you don’t ask for ridiculous rental price.
- Your tenants are easier to run away especially for those renting out their apartment or condominium units. I’ve seen tenants moving out in the middle of the night (just spent 2 or 3 hours) without their landlords knowing it.
- Although demand is high, the supply for residential units is also very high especially when most of the units are controlled by property investors.
I’m not sure if this gives you a clearer picture of which type of property investment you should go into. I sure hope it does. Anyway, there could be more pros and cons to each of them. But in general, all I can say is that investing in residential units is for the beginners and perhaps those more reserved type of investors. If you have the financial backing and are okay with high risk, then go for business premises. High risk, high yield. Just be aware that if the location you’re investing in failed up pick up momentum, then your investment is as good as gone.
As for me, I’m not that big a risk taker. I prefer to have a slow and steady growth, with minimum speculation. That’s why I personally feel that investing in residential units is more suitable for me.
Hope it helps.
Fixed Deposit (FD) rates of banks in Malaysia (November 09)
In August, I compiled a list of Fixed Deposit rates in Malaysia HERE. Here’s the update for the month of November 2009.
|
Bank |
1 month |
3 months |
6 months |
9 months |
12 months |
| 2.00 | 2.10 | 2.20 | 2.30 | 2.50 | |
|
2.00 |
2.00 |
2.00 |
2.00 |
2.50 |
|
| 2.00 | 2.10 | 2.20 | 2.20 | 2.50 | |
|
2.00 |
2.05 |
2.10 |
2.20 |
2.50 |
|
| 2.00 | 2.10 | 2.10 | 2.10 | 2.50 | |
| 2.00 | 2.00 | 2.00 | 2.00 | 2.50 | |
| 2.00 | 2.00 | 2.00 | 2.00 | 2.50 | |
| 2.00 | 2.00 | 2.00 | 2.00 | 2.50 | |
| 2.00 | 2.00 | 2.00 | 2.00 | 2.50 | |
| 2.00 | 2.10 | 2.10 | 2.10 | 2.50 | |
| 2.00 | 2.00 | 2.00 | 2.00 | 2.50 | |
| 2.00 | 2.10 | 2.10 | 2.10 | 2.50 | |
| 2.00 | 2.00 | 2.00 | 2.00 | 2.50 | |
| 2.00 | 2.00 | 2.00 | 2.00 | 2.50 | |
| 2.00 | 2.00 | 2.00 | 2.00 | 2.50 | |
| 2.00 | 2.00 | 2.00 | 2.00 | 2.50 | |
| 2.00 | 2.00 | 2.00 | 2.00 | 2.50 |
If you refer to the previous rates in August 2009, you will notice that there’s no change to the rates at all. But many people are saying that our Bank Negara will increase the interest rate soon, considering the fact that our economy is slowly recovering. I’ll post up an update to this list of FD rates once there’s any changes to the interest rate.
Hope it helps.