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.

Well, to be honest with you, saving is not really that difficult. Even if you can only save 5% of your monthly salary, it is still good enough. The ideal case is of course to have 10% or more, but any saving is better than no saving.

So to get you started, here are some simple ways you can do to come out with that 10%.

• Cut down on your WANTs. This is important. The things that you want can be very expensive – fashion goods, gadgets, cars, etc. These things can take away a large sum of your money. Try to cut them down as much as possible. It’s okay to have 1 or 2 WANTs…. but a warning to you, don’t ever fall into the trap of having too many WANTs.
• If you always have no money left due to debts, then clear or reduce them as much as possible. Credit card debts should be the first to clear. Also, try to refinance your loans and see if you can get a better deal. Once your debts are cleared, you should have sufficient amount of money to save up – provided you don’t go get another debt!
• Start to cook at home. Eating out is expensive – the food, the parking and the fuel. Furthermore, it’s healthier too.
• Minimize expensive activities such as movies, clubbing, meals in posh restaurants, etc. For example, if you are a regular Starbucks customer, cutting down 1 cup of coffee per week can save you around RM 50 per month. That is already 1% of RM 5000 (average salary for Malaysians).
• Get some side income such as earning money online, get some part time jobs, freelance, etc. You need to sacrifice some time to earn, but I feel it’s worth it in the long run. But only do this if you are sure you won’t neglect your day job.
• Remove your credit cards. They can be helpful if you know how to use them but if you are the type of people who can get tempted easily, then stop bringing them out. Credit card debts are the type of debts which bring a lot of people down.
• Travel by public transport or car pool. You can really save a lot there, even though you need more time to commute.

Some may argue that the amount of money saved using the above methods will not be much….well, I think it really depends on your lifestyle. Also, I can’t stress enough that any saving, even 1% of your monthly salary, is better than no saving.

Just always remember to control your own WANTs. Know your limits, and your financial condition. Don’t wear a hat that is bigger than your head.

There’s not much change to the interest rates of most banks. Most of them have the standard 2.0% for 1-11 months, and 2.50% for 12 months FD. The good thing is major banks like CIMB, Maybank, Public Bank and Ambank are giving pretty good FD rates as compared to the international banks. Most of our accounts are in there anyway. And if you are looking to invest for anything less than a year, I guess the best is Affin even though it is not as accessible as other local banks (not as many branches around).

Hope it helps.

My question to them – after becoming debt free, what’s next?

And I believe that is a very important question one should ask oneself. Why are you working so hard to be debt free? What are you going to do once you have the extra cash after finish paying the housing loan or car loan?

You know what? Some of the people I’ve asked, they told me that the reason they are working so hard to finish their current loan, is so that they can take up another loan for a bigger car or a nicer house.

Hmm…so they want to end the current loan…so that they can re-enter the very same vicious cycle they are trying to get out from? What’s the difference then? The cycle will never end if you plan to do it that way.

That’s why in my humble opinion, being in debt is OK and it’s not that bad provided you can still live comfortably in this world. Why? Because living in this world, it is very hard for someone to be completely 100% debt free. Therefore, depending on what is your end goal, debt free can be good or it can mean nothing at all.

Last but not least, stop cursing your loans and banks and keep praying that you can be debt free….if all you want after that is to get on another debt.

p/s…. i also notice that the older you are, the bigger your debt will be. So the debt you have while you are in your 20s could be significantly lower than the debt you acquire in your 40s (inflation, more commitments, etc). So, getting rid of your lower debt (the one from the 20s) and getting on a larger debt (the one in the 40s) is not an entirely smart move.

But is this even achievable in this 21st century?

For me, I do believe financial freedom is achievable but financial security is not. Why do I said so?

Financial freedom, to me, is when you can still pay off your commitments and live comfortably without working. You can live by just using your retirement fund, your dividends, FD interest rates, etc. You no longer need a steady income from the daily 9-5 job anymore. You can just do whatever you want but this depends on how much you spend on your NEEDs and WANTs. If you lead a simple life without all those luxury stuff, I am sure financial freedom can be achieved easily. On the other hand, if you only want to drive imported cars and only want to stay in multi-million condominium, then financial freedom might not be that simple.

What about financial security?

To be honest, I don’t believe in such a thing. No matter how safe you think your finance is, it is not 100% protected. If you put it in fixed deposit, the bank might collapse (our government does give protection on this but how fast you get the money back is another issue). If you are a millionaire, a terminal illness might rob you off your fortune due to the cost of the medical treatments. If you own a multi-million business, a wrong decision might cause you to lose your business altogether.

Let’s just face it. In this age of uncertainties, there is just no such thing as financial security anymore. Whether you like it or not, there will surely be some risks that your money will be gone. The only thing we can do is to minimize that risk…. maybe by buying insurance… but well, AIG nearly died. No?

So if you’re thinking that financial security is something achievable, I can tell you it’s something very subjective and something quite impossible to achieve. Minimize the risk = yes.

If I were you, I would rather concentrate my attention on achieving my own version of financial freedom. But bear in mind that even if I do achieve financial freedom, it might not be 100% secure.

I know this might not sound appealing to some people who have worked very hard to achieve whatever they have today, but I guess it’s time to face the reality and I believe the recent economy crisis has really shown us that financial security is not really applicable nowadays.

The Secrets of Financial Freedom: An Interview with the Millionaire Next Door

Once you’ve finished the article, you’ll notice that there’s no magic formula when it comes to becoming rich. The 2 points that I can get from this article are:

• Spend less than you earn
• Invest your money

For the first point, it’s quite straightforward. You don’t buy things which you cannot afford. Spotted that nice and cool car? Can you afford it? Or that nice condo in Mont Kiara? Can you afford it? When I said “afford”, it doesn’t mean taking up a loan which will tie you down for another 40 or even 50 years. It means you have the means to own that something without committing too much. If you can be 100% sure you will live comfortably with the new 30 years long housing loan, then by all means, go ahead. The thing I notice in most people is that, they want all the nice and trendy stuff in the world but they cannot really afford these things. So they take up loans after loans…and delaying all the credit card payments (transferring the outstanding balance here and there just to minimize the interest charges). If only people can start thinking properly and ask themselves this simple question – can I really afford it?

Also, stop going for things like Starbucks and those expensive dining places. I work in KLCC, and I only went to Starbucks for farewell (or free treats). Mmm…I think I only went there not more than 5 times during the 3 years working in KLCC area.

Anyway, for the second point, it’s again a no-brainer. Invest your money. If you don’t invest, it’s likely you are going to spend it away or you will put it in a place where…the value will just depreciate with time. Take note of the inflation rate in your country and try to find an investment type which can give you return HIGHER than the inflation rate. Surely, you don’t want your hard-earned money to become worthless after 10 years or so.

So, there you are, 2 very simple points to remember for anyone who wants to live a comfortable life or to become rich. As you can see, you can still buy your NEEDs and WANTs as long as you don’t spend more than you earn. That’s all. You don’t really need to lock yourselves up in a room so that you can cut away the spending and become rich. Just control your spending and only get things you can really afford.

Hope it helps.

Therefore, I personally feel that everyone of us should start saving money as much as possible. Here are some simple ways that I can think of.

• Car pool - fuel price is not high now, but the toll rate is. It does save up a lot of traveling cost if you car pool with other people in your area (home/office).
• Eat at home – eating outside is way more expensive than eating at home. It’s less healthier too.
• Spend on needs, not wants – there’s no way you can avoid buying stuff like food and necessities. But for those WANTs, you can always avoid them. Furthermore, most of these WANTs are not cheap.
• Find reasons NOT to buy things – if you want to buy something, try to find few reasons why you shouldn’t buy it. Is it too expensive now? Maybe you can’t afford it? Maybe you can just borrow from one of your friends who has it?
• Find free alternatives - there are a lot of free alternatives around. For example, one can easily use the internet to browse for any news, rather than spending RM 1.20 a day on newspapers.
• Look for sales/promotions – there will be a lot this year, and most of them will be very crowded. It’s okay if you have the time and it’s even better if you can find few people to car pool with you to go there. I’m pretty sure you can get some items for a very cheap price.
• Sell your old stuff – you can do it in lelong.com, ebay.com, or those second hand shop. Things like old computer, old books, used newspapers, etc might not fetch you a lot of money, but it’s better than pilling them up in your home.
• Do part-time or side business – you can opt for freelance, doing part-time, or start your own side business. Online business is pretty popular these days and not much cost to set up.
• Find extra income – introduce your friends into your company and earn the bounty fees, or helps your company to sell a product and earn the commission. These things are always right in front of you. Maybe it’s time for you to fully utilize these opportunities?

Those are some of the things that I can think of. What about you? Are you doing your part to save as much money as possible? What are the things that you are doing to achieve that?

Each of the 10 millionaires are unknown or normal people. It’s just like you and me…normal people spending time doing things for their normal life, and staying in normal house, working in a normal job. There is no big deal about who they are or what they are doing. But they’re rich……far richer than the normal folks….and far richer than most people thought they are.

The reason behind this is their lifestyle. All of them practice frugal living and only buy things which they really really need. They seldom (some of them never) buy anything which they want but don’t need. And even if they need something, they will make sure they don’t have anything which can be reused (or modified). If they do have such things, they will just modify and reuse.

I know to some of you, this kind of lifestyle is pathetic and sad. But this is the path they’ve chosen. They never aimed to be millionaire though….they just love to live a simple life and only use things they need to use.

So now, think about it. Do you still want to be a millionaire? Do you think you can do it? If yes, how will you do it and what will you do in order to be a millionaire? Live frugally or be the next Bill Gates? Well, to be honest, it’s easier to do the former than the latter.

Last but not least……let me throw you a question. Take a wild guess, what are their occupations?

From what I can remember, there’s a school teacher (a normal one, not those who teaches in tuition centers), a bank officer (not the type who cons the bank’s money), an insurance agent, etc. As you see, these are really normal folks.

So if they can do it, why not you?

A lot of the investors including some of the major shareholders were not happy that the big boss (the largest shareholder) was not present. The guy is actually the founder of the company. One investor even said that he (the investor) has been investing in the company for more than 10 years now and the so-called ‘boss’ has not attended the annual general meeting before….not even once. Any questions thrown to the company will be filtered by his subordinates and one of his sons during the meeting. The investor then threw a question which is quite ruthless and yet important.

“If he is not willing to spend few hours in this meeting with his fellow investors, what makes him think that we’ll trust him with our money and that he will do things which only benefit the shareholders?”

Since then, the company’s stock price has fallen drastically (partly because of the recession).

Actually, when I pick stocks, it is quite important to know how the companies handle their activities. A company which does thing that only benefit the big bosses and not the shareholders should never be bought. These companies should be left to rot unless……they really have very very good prospect that you simply don’t care what they do with the money.

Otherwise, you should just ignore them. One of Warren Buffett’s lessons is to run the company for the sake of the shareholders. If a deal is not going to benefit the shareholders, don’t go for it. Because at the end of the day, the listed companies are actually using the shareholders’ money to run their business and if you don’t do things which benefit the shareholders, investors will just run away…..and thus pulling down the overall ‘value’ of your company.

p/s……… by the way, did anyone buy KPJ? I told some people to buy but I didn’t go for it due to lack of fund. Hopefully some of you have actually bought it. If not, never mind. Opportunities will come again in the future

NOTE: Those highlighted in BLUE might not be the latest rates since there’s no update since the last BLR cut. As for those in RED, I couldn’t find out about the rates at all from the Internet. If you’re interested in those banks, it’s better for you to call them up and ask.

As you can see here, the interest rates are really really really low. It’s no longer worth it to keep our money in FD and I think that is exactly what are government is trying to do – to prevent us from saving up, and encourage us to spend. This is quite a risky move and it might backfire.

For me, I will only keep my emergency fund in FD while majority of my investments will be in unit trust and stock market. The % is just too low to be kept in FD. Our inflation rate is actually higher than that.