Financial news: When inflation meets head-on with renters

I will just let the situation do the talking

I feel the pain as I read this
article in nst.com.my
   Argentina contends with inflation topping 100 percent year-on-year. A couple says in the article shared that they used to use half of their income on rent but totday, even with 70 percent of their income, they are unable to rent anything.

“This is the worst housing crisis in 30 years,” said Gabriel Mraida, president of the Buenos Aires municipality’s Institute of Housing.  According to income tax data “there are some 70,000 registered rental housing units in the city, but… about 500,000 households are tenants, just to give you an idea” of the scale of informal rental, he told AFP. Do read the full article with a lot more stories here:
article in nst.com.my

Homeowners usually have a better choice

Laws can be passed to limit the rental increase. I just have no idea if laws can be passed to force homeowners to rent out their units compulsorily. I think it will be tough. Homeowners cannot be forced to sell at a price determined by the government. (except for some countries where the flat you bought was from the government in the first place). Homeowners can keep their units empty and renters would have far fewer choices to rent.

Renters also have great powers too

If there’s an oversupply, renters could threaten to move and the homeowner would have to reduce the rental in order to keep the tenant. My friend’s unit nearby KLCC had to do that. Renters could also move here and there to enjoy different units, different locations, different vibes etc too. They do not need to be attached to one unit, one place, one location. Renters also save on all those headaches of maintaining the unit, of paying statutory bills etc etc.

Oversupply versus undersupply of properties

The market is not perfect. In other words, there’s no way that demand will be equal to supply. What usually happens is that demand moves up first, then prices start moving up. Supply will start to follow because developers could see many wanted to buy and they will do their best to quickly build more and more and more. One day, there will just be too many units and prices would have to drop, rentals would have to drop, correct?

Unfortunately, market is not perfect. Prices would drop for NOT LOVED areas, NOT LOVED units. In other words, the supply of these units are no longer considered at all in the market because technically very few renters wanted them in the first place. The ones which everyone wants to rent? Unfortunately, the supply is usually lower. Prices would then move up and people would pay higher rental for it. Please do not rely on the perfect demand and supply scenari yeah. It seldom happens.

Happy hunting for an amazing rental property.

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Financial news: Please note this is the currency which is appreciating. How ‘amazing’

My view remains the same. (Just need to look at historical articles yeah)

I guess I have written too many times about this topic. Perhaps today I just share what others are writing about this currency which people think highly. It’s sometimes amazing what the number says and how people perceive. I repeat. Currency value should just be mostly due to trade. People love to buy goods from you, they will demand your currency to pay for the goods. The value of the exporting country should increase. In other words, deficits should mean the currency should weaken and NOT strengthen. Well, the world is not so straightforward these days. Happy reading.

Massive Federal Debt?

Article in nst.com.my
  US Dollar is currently on a massive buildup of total federal debt and is now on pace to exceed US$50 trillion in a decade.

Social Security costs are projected to increase by 67 per cent by 2032, and the Medicare health program for seniors will nearly double in cost during that period, according to CBO, as Americans 65 or older top 46 per cent of the U.S. population, up from 34 per cent this year.

US tax revenues are among the lowest among wealthy OECD countries and should be increased, some budget experts say. Please do read on for more actual stats.
Article in nst.com.my

12th in the world for debts. Amazing.

Stats in
worldpopulationreview.com
  Another interesting entry on this list is the United States, whose debt-to-GDP ratio ranks 12th out of all the world’s countries. While the U.S. boasts the
highest GDP in the world,
, it
nonetheless spends more than it earns.

Major contributors to the national debt
 include the world’s
largest military budget
. Please do read more here:
worldpopulationreview.com

Rising debts a never-ending story

Article in bbc.com
 Just refer to images as below. No need for more words.

Higher debt than the combined debts of China, Japan, France and Italy

Article in www.aljazeera.com
   The United States has the world’s highest national debt with $30.1 trillion owed to creditors as of the first quarter of 2023. Washington’s debt now stands at $31.4 trillion, raising further concerns about US government spending and borrowing costs.

To put that in context, the US owes as much money as the next four countries with the highest debt including China ($14 trillion), Japan ($10.2 trillion), France ($3.1 trillion) and Italy ($2.9 trillion). Please do read the full article here:
Article in www.aljazeera.com

Do whatever you think is right yeah. I have no idea about how the whole world views this major currency. Cheers.

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Financial news: Younger population better or older is better? What about Malaysia?

Do you know what’s the median age of Malaysia’s population and what’s the median age of Indonesia, Thailand, the Philippines and Singapore’s median population age? Which country is considered the oldest among these few?

According to worldeconomics.com

Median age of Malaysia is 29.9 years old.  Indonesia’s at 29.4, Thailand’s at 39 and Singapore’s at 42 years. Singapore is considered a developed nation. Japan’s median population age is 48.4 years. If we have a population pyramid, Malaysia’s one is as below:

Info Source:
https://www.populationpyramid.net/malaysia/2021/

Any country with a median age of 40 or higher, their top portion of the pyramid would most probably be bigger. In other words, the older population.

Let’s look at Japan as an example:

https://www.populationpyramid.net/japan/2020/

 There are three types of population pyramids

Info Source: visualcapitalist.com

Expansive Pyramids
: Recognized by their traditional “pyramid-like” shape with a broad base and narrow top, expansive pyramids reflect a population with a high birth rate along with a high mortality rate which is most common in developing countries.

Constrictive Pyramids
: With a narrow base and thicker middle and top sections of the pyramid, constrictive pyramids often occur in developed economies whose populations have low birth rates and long life expectancies.

Stationary Pyramids
: These pyramids showcase an evenly distributed population across age groups, often found in newly-developed countries which have stable birth and mortality rates.

Investment potential?

Regardless of the median age, investment potential will be available. Just that the kind of investments we do would be different yeah. With an ageing population, who would buy your property in the future? Unless of course the country attracts a lot of new investors who buy and also stay. However, we could invest into companies which are catering to the older population. This will be a safe bet because the older population would continue to grow every year. After they sing the birthday song, they are one year older. 🙂

I am happy that Malaysia’s median age is at 30

It’s like a person who’s 30. Full of potential. Has gained sufficient experience for th enext growth phase. Unfortunately I am way past this age. However, if I add my age and my daughter’s age and divided by 2, I am not too far away from this number; 30. Haha.

If someone’s at close to 50, it also meant that this person has already achieved a lot. This person may now be slowing down a little so that he / she could enjoy what they have earned thus far. They are more likely to be less aggressive too. Can be bad too; there’s not going to be many new breakthroughs in the future. How many people at the age of 50 is still trying to invest furiously?

Some other population pyramids

Source: visualcapitalist.com

A younger population means there are more potential workforce to propel the economy further. However, it also meant that perhaps the infrstructure and everything necessary may not necessarily be ready. We could see this with Africa vs Europe below. Perhaps this is the best time for the European countries to be great trading partners to the African countries. Then, this would be the best of both worlds.

Happy understanding.

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Financial risks, household debts and lower income households

We should always be mindful that high household debts vs the GDP is dangerous to the economy. Everyone tells me this all the time. This is especially when the household debts are growing faster than the economy which meant that one day in the future, it may be higher than the GDP. So, the trick is to slow the household debts growth (focus on quality and not quantity) or to increase the GDP growth (easier said than done) Let’s look at two countries which are most often associated with Malaysia. One’s next to us and another’s on top of the migration thought. Singapore’s household debt as at Q3 2017 to the GDP is only 58 percent and I think everyone would agree that when people need a safe investment haven in South East Asia, the top choice may just be Singapore. Meanwhile, Australia’s household debt to GDP is 121 percent as at Q3 2017. It’s highest was 123 percent in Q4 2016. Malaysia’s household debt is somewhere in between these two.

Let’s look at Malaysia’s assessment as per the Bank Negara Malaysia (BNM) Financial Stability and Payment Systems Report 2017. If you like to refer to the full report which covers a whole lot more stuffs,
please click here for the PDF report.

The global economy and financial markets were influenced by major policy developments in several key economies, volatility in commodities markets and geopolitical risks.
(The major policy developments stated here has yet to include Trump’s comments about trade imbalance with China. Commodities market includes a major produce called oil. Yea, the prices fluctuate non-stop… The last would be the risks from all those potential confrontations between countries. Well, at least we learnt today that Kim Jung Un met Xi Jin Ping just days ago and there’s an upcoming summit between the North and the South Koreas. Positive developments I would say)

Despite all these happenings, BNM says that the
domestic financial stability continued to be firmly supported by sound financial institutions, and deep and liquid financial markets which facilitated the smooth functioning of financial intermediation activities.
Indicators of market, liquidity and funding risks were lower. Risks to financial stability from elevated household debt levels continued to recede.
(Positive comments. In brief, the banks still have money to lend, as long as one qualifies for one. Many analysts say that the rates would not be increased again this year but let’s just see how it goes yeah.)

The growth in household borrowings moderated for the seventh consecutive year and is now more in line with income growth. Against the stronger performance of the domestic economy, the ratio of household debtto-gross domestic product declined further to 84.3% (2016: 88.3%).
(Okay, it’s lower but as we can see this is still high when compared to Singapore for example)

Underlying trends in debt accumulation by households also continued to improve. First, the growth of unsecured borrowings in the form of personal loans has been sharply lower than that observed in earlier periods (2017: 2.5%; 2008: 25.2%).
(This is super important. when the borrowings are unsecured, any sudden changes meant even the financial institutions are rattled. When the borrowings are secured, then at least banks could still take steps to recover some portions of the debt)

Second, the debt servicing ratios of most households remained within prudent levels (median: 32.7%).
(Positive… definitely. Well, for people with this percentage, it meant also that most probably the bank would lend you more when needed)

Third, the growth in household financial assets (8.6%) outpaced that of debt for the first time since 2012.
(Positive)

Not all are positive yeah. The lower income households could continue to face challenges in meeting debt repayments amid higher costs of living. Given that debt levels are still elevated, the series of macro prudential measures implemented since 2010 remain relevant in their current form.
(I firmly believe assistance should be continuously given to the lower income households but more importantly would be steps to elevate their earnings too. Hopefully everyone is flexible to learn, apply and move up.)

In the financial markets, a number of factors are contributing to greater stability. A larger proportion of non-resident investors in the bond market are stable, long-term investors.
(This is positive yeah. We do not need speculators. We need long term investors…)

Strong domestic institutional investors continue to provide the necessary support to domestic financial markets during periods of heightened portfolio flows, thus preserving orderly market conditions.
(Yes, I still love shopping even if many people are saying that the
 retail sector’s numbers are not healthy)

Following three series of measures introduced by the Financial Markets Committee (FMC) since December 2016, onshore foreign exchange (FX) liquidity has also improved, driven by a more balanced foreign currency demand and supply.
(Remember this? When many were
against this move? My comments earlier here.)

Full report from Bank Negara Malaysia’s website here.

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Happy working harder and earning higher yeah. The next investment is waiting for our money. Cheers

written on 28 March 2018

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65% of Malaysian working adults said financial stress affecting their job performance.

Imagine not working and income stops.

When that happens, very soon, we will realise there are bills to be paid and the savings in the bank is being depleted very fast.  We try to look for a job and the only ones available may be in sectors not affected by lockdown. Whether we take it up or not, chances are we will be feeling stressful. It’s stress caused by financial issues.

This is why in a survey by Credit Counselling and Debt Management Agency (AKPK), 65% of Malaysian working adults reported that financial stress has affected their job performance. This is a super high number yeah. Let’s take a look at more details as to the reasons why they are financially stressed.

Articl
e in thestar.com.my

  AKPK chief executive officer Azaddin Ngah Tasir said this about the findings, “A domino effect occurs when a worker’s worried state of mind affects their job performance.”

Result from AKPK’s “Money and Mental Well-Being” study showed that financial stress spiked by 35% since the pandemic began in 2020. The high cost of living is the most common factor of financial stress, followed by low income and low savings.

Azaddin added, “Nearly half, or 41%, of respondents say that financial stress has affected their mental well-being. The most vulnerable group consists of those with the least amount of savings.”

Another interesting fact shared by Azaddin is about men and women’s financial stress. He said, “If men are more stressed by high debt burden, women are more worried about overspending.” He added, “Even more worrying, financial stress caused by the Covid-19 pandemic is closely related to mental health issues.” Please do read the full article here:
Articl
e in thestar.com.my

Financial management is for the long term and it must start today

Income is important. If we lost the current one, try to get a new one. Different industry is okay, learn and accept a lower pay first. Temporary work is okay. Delivering food is just another job to survive even if you do not wish to do it for the long term. If we have one, then start thinking of how to have a second income stream. We will never know when we will need it.

Savings is important. The major difference between two persons with the same salary is how much savings they have. If we have been overspending, this is really the time to understand that what we spend today is what we DO NOT have tomorrow. No one knows how long we would be looking for a job if we lost the current one.

Investing and protecting our wealth is important. If salary is continuous and savings are consistent, then we need to move up to the next one which is to invest and to protect our wealth.  Do we know how to invest? Do we know that insurance is an investment to protect any potential unforeseen circumstances?  Paying a few thousands per year to get a few hundred thousand protection is definitely a good financial sense. Do it yeah.

Hopefully, things will get better sooner than later.

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These are the 4 pillars to Financial Success. How many are you applying today.

What is Financial Success?

There are no universally agreed definition of financial success. Suffice to say, financial success for someone may be that his debts are under control and that his networth is positive (total assets minus total debts). It could also mean that every year, his wealth is growing faster than his debts. In other words, financial success can be achieved by anyone and it’s very different from becoming a billionaire for example.

Financial success to a working professional may just be getting a promotion every year where his salary is now a huge surplus versus his expenses which had stayed almost the same. As someone who has worked for 23 years, here are the 4 pillars to that potential financial success. Note though that this is more applicable to working professionals.

#1 Pillar is Earning.
The first pillar is NOT saving, okay? The first thing is earning. If we do not earn enough, there’s no need to talk about saving. As for earning enough, it’s really up to us. We could work hard and smart in the company and soon got good promotions and perhaps becoming a senior manager even before 30 years old. This was impossible then but it’s achievable today. With these higher position levels, the earnings increase too.

If there’s really no choice of higher income at the official work, then it could be after official hours. An office boy could still have his e-commerce business in the evening. A receptionist could become a GRAB driver for a couple of hours everyday after work. Even senior managers could choose to start a blog about an interest and turn it into generating extra second income! These are all examples of earnings and extra earnings.

Pillar of earning is learning. These days, we could learn many things for free. Question is, are we watching the TV or reading a book week after week and later year after year? When we improve ourselves, we improve our career outlook and when we improve our career outlook, we improve our earning.

#2 Pillar is Saving.
We can earn RM10,000 and we could still be in heavy debt. Or, we could earn RM3,500, rent a cheap place, give our parents RM700 per month, drive a reliable but old second-hand car and still have savings in the bank every month. Oh yeah, IF WE DID NOT  buy that iPhone latest edition for just 3 years, it would have saved us easily RM10,000 or more. Crazy but true.

Having nasi ekonomi versus sushi (or similar priced meals) will save us thousands every year too. Even changing the coffee we drink daily saves thousands every year! Do our math and we realise that it’s really possible to save enough down payment for an affordable home of RM250,000 after 5 years. Only 10% of this RM250,000 is needed. A good girl friend or a wife forcing us to save would help tremendously too with the savings. My close friend, Mr. C’s wife SAVED all his and her earnings every month. I think Mr. C has a very good wife. 🙂

#3 Pillar is Investing.
Note the word investing. It has nothing to do with speculating (super fast returns, super high risks for example). It has nothing to do with whatever get-rich-quick schemes in the market today. However, it can include buying a property and stretch ourselves to the limit BUT we rent out two of the bigger rooms and we stay in the smallest room.

It’s not even just property and first one may not
even be property. Earlier article here.
It can also include buying good stocks which we UNDERSTAND and keep them for dividends. Of course, before we start investing, always ensure we know what we are doing. That means studying, learning and implementing what we studied. If we earn good money every month and we ONLY saved it month after month, chances are we may still not be ahead of the inflation. Pillar #3 is super important yeah.

#4 Pillar is Preserving.
My dear friends, regardless of how much we have, an admission into the hospital for a appendicitis surgery with complications would easily cost RM15,000. (I know because I was hit with one before many years ago).

Do we have sufficient medical coverage even if we are currently covered by our company. No one would have any idea if the company shuts down suddenly yeah. What happens if we could no longer work, will our whole family suffer because of this or do they at least be compensated by the insurance company?

Remember, if we stop paying the mortgage, the whole family may lose a place to stay! This is why it is good to have a good insurance agent friend who’s able to provide sound advice on how to preserve whatever wealth we have as we continue to build it up.

My personal story towards financial success (obviously, in my own terms, not yet achieved)

My wife and I saved as much as we could for 5 years so that we could buy a 700 sq ft apartment at RM123,000 and spend RM35,000 on renovations and furnishings. Our savings was wiped out totally then. Well, I worked hard and we have more salary and thus more savings.

That apartment in terms of price did not increase by leaps and bounds but after ‘fully utilising’ it for 8 years, we sold it for RM215,000. In those 8 years, we stayed, my brother stayed, my wife’s brother stayed, my sister stayed and later it was rented out too. If we did not invest into this tiny apartment, imagine the $$ that all would have needed to spend on the rental alone.

As for how to spend wisely, well it’s always about choices, really.
Choices, Choices, Choices, really
  Comparisons are easy to do these days. Yes, you may also read
kopiandproperty.com
for free too. During my time, I did not have a blog I could read for free… Happy earning, saving, investing and preserving.

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Financial Tips 2016

This article was first published in NST dated 11th January 2016.

After a SLOW 2015, what would 2016 bring us? More negative news? Well, no matter how negative or how positive, we must stay focussed on our investment goals. If we do nothing, then when we need to retire, we really have nothing much. These would be some personal tips that I would be using in 2016, no matter how awesome the whole market is or how bad it may become.

Stay focussed on VALUE.

In the stock market, there are many companies which are doing well but the share prices are down and thus it’s undervalued. We can start our research with companies which has a high dividend yield which are 2 times the fixed deposit rates. Then, look at its Earning per Share (EPS). I would personally skip companies with EPS of less than 2x of FD. Preferably it should be 2.5x of FD’s return. Last, understand the business that the company is doing. Many times, our own judgement is good enough. Think long term. I quote Warren Buffet, “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price”

Think ‘View-and-Offer’ and not ‘wait-and-see’

If we need to buy a property, do not ‘wait-and-see.’ Please also do not follow ‘buy, buy, buy (BBB) as well. We need to stop focussing on hot areas. Understand why these areas are hot, for example maybe it’s because there are malls, international schools, near to expressways or even LRTs / future MRTs. Use the same criterias and look at areas which has ALL these attributes but is stil priced much lower, for example 30% lower or more. Then, ‘view-and-offer’ a price which gives the seller some profits and yet attractive enough for you versus the potential 3-5 years later. Remember to stretch the focus from just distance to duration.

Spend our time productively. Reading, learning and sharing with like-minded individuals. Honestly, watching more Korean dramas or even hours on Facebook with friends do not help much when it’s time to retire in the future.

Actions with property, unit trusts and fixed deposits

A good property is a great asset to hedge against inflation and provide potential capital appreciation. However, it takes months to buy or sell one. This is why majority are not looking at it and that’s why we should. Some even said they prefer to rent. It’s okay, we can buy to rent to them.

Unit Trust is for the long term. We need a very good agent for this, one who would be helping us to switch between funds to maximise returns. Just simply buying one and not doing anything meant normal returns which may only be slightly above official inflation numbers.

Fixed deposits (FD) are really just fixed deposits. If we have none, do not start any investment. At minimum, FD should cover 6 months of our current monthly pay. Once we have this minimum amount, start thinking about increasing our wealth through what we have currently.

Books to read for 2016?

I would personally be reading ‘Resources’ type of books. For properties related, Ho Chin Soon is a resource we must not miss. Through actual maps in all his books, it gives us an objective perspective about how the centres of growth are moving. We can then make a decision based on our own analysis.

I would personally stay away from books which tells me how to be rich in a very short period of time or how to buy properties even if we have no money etc. Frankly, greed was the main recipe for the 2008 mortgage crisis. When we look back, if we can do it, everyone else could and soon, the market would be full of speculative activities. As soon as we see everyone going ‘crazy’ with abnormal returns etc, take a step back and reassess. Perhaps that’s what Warren Buffet has advocated, “Be fearful when others are greedy and greedy only when others are fearful.”

U.M.N.O

Uncertainty Means New Opportunities. My good friend, Dr. Daniele Gambero commented recently that the worst times are also the best times for those who are focussed on grabbing the opportunities that come our way. Always remember what we always tell everyone else. We should buy when times are not good because this is when we can get bargains. One important piece of advice would be to buy within affordability. When times are uncertain, we may not know how long we would need to hold until the investment starts to appreciate or increase in value. Therefore, best to buy or invest with the view to potentially hold for at least a few years.

Happy New Year and happy investing for our future.

written on 25th Dec 2015

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Financial Tips from Financial Guru, KC Lau

1. What are the three ingredients for someone to succeed financially if he/she had just entered the working world and have very little savings to begin with?

I. Always live below your means: I see many youngsters straight away buy a new car after they got their first paycheck. This is so dangerous (no pun intended). New car have more safety features, but it is dangerous to your finance. Malaysians are paying too much for car and it shouldn’t even take up 10% of your income, just to get from point A to point B.

II. Acquire entrepreneur mindset: when you get your first job, think of how it is going to help you when you want to be on your own later. You want to learn as much as possible, and as fast as possible. If there is nothing to learn anymore, go somewhere else by changing job, changing department, changing boss, changing companies etc. Employment is a paid learning platform, not a place to trade your time.

III. Network aggressively: You want to mix around with people who are more successful than you, all the time. This includes the people you have meals with, the guys you cycle with during weekend, the people you talk to in the gym. Be a fool and offer your time, your help and your assistance to those people. They will turn to you with a lot of opportunity when you prove yourself worthy.

2. What would you recommend for people who realised only when they are close to 40 that financial investment is a must today.

We can’t undo the past. But we can still create the future. By the age of 40, you should have got credentials on your expertise. Use that to leverage for higher income making potential. If you didn’t do much investment at age 40, just start now. It is better to be late, than never.

3. If I have RM20,000 today which is extra savings, between unit trust (equity) versus blue chip stocks, which should I put my money in and why

When it comes to sports, it is always about the player, not the equipment. It is the same thing in investment. With RM20k in hand, my business partner Peter Lim will use it to borrow another RM20k, and invest all 40k in stocks. Probably for Charles Tan who is a property investor, the RM20k will be put down in a property. You are YOU. You know what you are good with. So do what you are good in!

If you ask me to choose just between unit trust and blue chip stocks, I will choose the latter. Reasons: low transaction cost.

4. The rich buys to rent, the poor pays to rent, do you agree? There are arguments that sometimes, renting is better than buying.

I definitely agree. It is also true that sometimes renting is better than buying.

Personally, if I am single now, I would rent because I won’t be staying at one place for long. Probably stay here a few months, move oversea a few months, come back and stay somewhere else for a few months, just like a nomad. But in reality, I am married with kid. My wife loves a big garden and likes to decorate her house. So we are always settled down in our own property.

But if you are just looking at numbers in financial sense alone, without considering other factors, I would say even the rich should rent their own place to stay. The logic is simple: you can easily find a property with very low rental yield, but can hardly spot one that provide magnificent yield.

About KCLau:

KCLau is a very “serious” online financial educator because he is doing it full time. He has published 6 books, created more than 9 online financial courses. He also conducts online financial training regularly. Visit his main site
http://www.KCLau.com
 and subscribe to his mailing list for lots of free training.

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Serious matter yeah. Be financially savvy and do something. Else…

Let’s understand these two facts. 90% of rural households do not have any savings at all. For urban households, 86% have zero savings! This meant that only 14 percent of households in cities have savings.
The full article in TheStar here: Sad Truth about Financial Standing.
 Within the article, it was pointed out that most Malaysians have low financial resilience and are vulnerable to financial shocks. It quoted a survey which found that more than 75% of Malaysians said it was a challenge to raise RM1,000 cash in the event of an emergency. When they need cash during emergencies, they will cut down on spending, borrowing from friends and family members, or depending on credit lines.  seem to be the solution when a large amount of cash is needed for emergencies. (NOTE: They can CUT down their spending… when funds are needed but somehow they could not save anything during non-emergency times)

Some other discoveries include these:

Malaysians like to “live for the moment” and focus on “instant gratification”. It says that these are usually millennials who wants to keep pace with the latest digital lifestyle, resulting in high borrowing, personal loans and credit card debts.

Most Malaysians have no long-term financial planning, with only 40% considering themselves as financially ready for retirement.

With the current life expectancy rising, savings would need to be stretched to last between 15 – 20 years after retirement. (Perhaps don’t retire so early? Here’s an article:
Tips for retirement? Don’t retire so early
)

EPF in one of its reports stated that 50% of retirees would exhaust their savings within the first five years of retirement!

Many Malaysians are prone to financial fraud and easily attracted to “get rich quick” schemes. (Speaking of this, just yesterday an old friend asked if she should invest in a scheme offering 5% returns per month. Total of 60% per year… I laughed and replied that I would not take that as an investment. Frankly, even 2% return per month for a 24 percent return per year already sounds too good to be true…)

When it comes to post-retirement, if we want to have RM3,000 per month, we should have a minimum of RM720,000 while for those who wants to have RM5,000, then a minimum retirement savings of RM1,200,000 would be required. The writer also said that Bank Negara, employers, community leaders and finance professionals could play their part in making us a financial-literate nation. Employers can invite financial or wealth professionals for town hall sessions to share knowledge on money management with their workers. (I still remember when I shared Property Investment 101 in my company’s usual monthly sharing sessions. The 50 seats were all taken up in 12 minutes! Haha. For some topics, it may take a long time. Anyway, 6 months after the sharing, a colleague told me that she bought her second property after my ‘motivation.’ Haha.)
Here’s that full article in TheStar.com.my

I still believe ‘forced savings’ is a good way to start for all Malaysians. For example, buying a property, investing into unit trusts, buying a savings plan etc. Yes, even buying 1,000 units of a good counter in Bursa Malaysia works well too. Aim at the dividend paying ones for example. Basically, make it ‘official’ so that we must keep putting aside some amounts every time we have our salary. In this way, even if we forget that we need to save, we will still have something to fall back on when needed. By the way a RM200,000 property with a 2 percent increase in price every year will become RM500,000 after 30 years. Here’s an earlier article:
Will affordable home prices go up?
  Savings will never happen easily or voluntarily. Force it into our lives and then it may happen. Happy savings my dear Malaysians.

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written on 14 Sept 2018

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Financing options for first-time home buyers?

Approval rates are easily above 70 percent thus far, for all states. Hard to believe?
Take a look for yourself
or read here. In fact, only for the first 9 months of 2017, a total of RM57 billion were approved by banking institutions to 142,558 first-time homebuyers. Here’s that
article in theedgemarkets.
  According to Deputy Finance Minister Datuk Lee Chee Leong said since 2010, the government and Bank Negara Malaysia (BNM) had introduced a number schemes and programmes to facilitate home ownership for eligible borrowers, especially for the purchase of first homes. “Among them are step-up financing schemes PR1MA, MyHome, Rumawip, Selangorku Homes, 1Malaysia Civil Servant Housing (PPA1M) and 1Malaysia People’s Friendly Homes and reducing the cost of buying houses through the MyDeposit Scheme by providing 100 per cent stamp duty exemption on the instrument of transfer letter and housing loan for purchase of houses worth RM300,000 and below.
Here’s the full article again.
As for all other available financial solutions which are government assisted? Do refer below. Information from

housingwatch.my

Financial solutions to facilitate homeownership

To facilitate homeownership in Malaysia, various Government-assisted schemes are introduced to enable first-time house buyers and youths to purchase a home. Financial institutions in Malaysia also offer competitive products to eligible borrowers to purchase or construct a home.

Government Assisted Financial Schemes

Skim Jaminan Kredit Perumahan

Guarantee scheme to enable applicants above 18 years old with good repayment capability but without fixed income, to purchase their first home priced up to RM300,000.

My First Home Scheme (Skim Rumah Pertamaku)

Guarantee scheme that enables applicants below the age of 40 with monthly income of up to RM5,000 (for single) and RM10,000 (married) to purchase homes of up to RM500,000.

BSN My Home (Skim Perumahan Belia)

Financing facility to assist single or married youths between 21 to 45 years old, with income of up to RM10,000 to own their very first home.

Special Financing Scheme

PR1MA Special End Financing Scheme

Financing facility to assist applicants above 21 years old to purchase PR1MA homes with flexible loan repayment.

Hope you have found at least one which meets your expectation. By the way, as long as you qualify, there is nothing wrong to apply for these. I would recommend

first-timers to also consider government housing

programmes too, regardless of whether they are under federal or state government. Once we have gotten a home, naturally we will be forced to be more prudent in our spendings. Remember, many people are without homes which meant that it’s even more important to be within the category of those with a home. Look at the more advanced countries to know that our home prices will become ‘severely unaffordable’ to many of their people, even if these are professionals such as managers. Well, unless Malaysian property market is something out of the ordinary, then perhaps our prices will remain stagnant until everyone could buy a unit. Then again, if prices stay stagnant, then it may be better not to buy and invest into something else instead. We need our
money to grow and assets to increase in value
.

Imagine buying a home for RM500,000 which stays RM500,000 until the day we retire, would you want to buy? Happy thinking and applying.

written on 8 Dec 2017

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FIRE Up our personal finance journey. Just do not forget property.

F.I.R.E is a very famous term for personal finance journey which I guess all personal finance writers would write about. It says Financial Independence and Retire Early. (FIRE) Personal finance journey is meanwhile an even larger topic and is usually very different for everyone.

By the way Financial Independence and Debt free are two different things. The former says we do not need to worry about money. It could also mean we can stop holding full time jobs for example. The latter says we have no debts. It does not say anything else about our financial status. Now, let’s talk about Financial Independence.

Photo by Pixabay on
Pexels.com

Lots of money.
Does Financial Independence means we have a lot of money? A lot more than what we could finish spending? Probably that may happen if we have super wealthy parents. Or our idea got billions of fundings and we earn millions in salaries. Then again, even that is not certain if we read about all the news about the lifetime savings of some older folks being squandered away within years by their kids. Or how some startups eventually fail.

Reduce expenses tremendously.
Or financial independence simply meant the ability to manage our expenses so that it is way below what we earn, no matter how much or how little we have. I think this is a more appropriate way of thinking about it. As this is a kopiandproperty.com newsletter, I need to remind all personal finance writers again that SAVING MONEY by renting versus buying does not cut it because when your income stops,your rental does not… So yes, reducing expenses also sometimes meant that we need to actually invest today.

In brief, Financial Independence means the amount of money we need is BELOW the amount of money we have. Let’s aim for this yeah. It usually does not happen unless we work on it actively to start making the money flow in passively…

Now, let’s talk about
Retire Early.
Do we need to retire early? Find something we like and keep doing it passionately. if we love what we do, why retire? Now, this has got nothing to do with senior citizens still having to clean tables or wash plates in some food courts just because they claim they are still healthy. Just be objective about it. No one loves cleaning tables after someone has eaten and dropped gravy on the table and washing dirty plates?

Stay REAL.
So, let’s aspire to build up enough wealth which could last us until they day we say bye bye to this wonderful world.  Oh yeah,
My wish?
One day when I am financially independent, I wish to lecture in a university in my hometown (Ipoh) and my salaries, I will donate 100% of it to a charity of my choice but it has to be based on my schedule availability and a subject I love. If I retire early, then that’s what I will do. What about you?

So, this is the reality everyone. It’s way beyond just managing expenses by not buying that expensive handphone and settling for a cheaper one instead… way beyond just savings extra RM58 from downgrading the broadband package and then telling the world I saved so much… way beyond just trying to have another income stream.  All these are great to do but one thing all F.I.R.E writers must put into their consideration is property.

Statistically?  If room rental remains the same, then it’s RM500 x 12 months x 25 years = RM150,000. This is just the rental of one room and not other expenses. If you really understand, then you will have to realise that property will always be that biggest expense. This is why it is COMPULSORY. Happy reading kopiandproperty.com and do share to more personal finance writers who may need to also have a property related strategy too. Cheers.

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Firms are positive? Good. Hire more and Higher Pay? :)

Original article in
TheSundaily here. Firms upbeat on outlook for next six months, RAM Rating index shows
 Briefly, RAM Business Confidence Index (RAM) showed some numbers which indicated that the corporates are confident; positive sentiment for the next 6 months. It shared that the corporate segments are showing a stronger sentiment comparedto the SMEs probably because of their economies of scale, operational flexibility, client bases and bargaining power to ride through short-term economic vagaries.
(Frankly, I do not think so. I think SMEs, especially the good ones are able to steer through this even better and this is also the time these SMEs become bigger. As for corporates, the below average ones may fare much worse because they are much bigger and will take more time to adjust when slow time suddenly descends)

Then again, perhaps the survey covers a huge number of SMEs.  RAM also shared that export-oriented firms are more bullish than their domestic-centric counterparts.
(This one I am quite sure because one listed technology company I know with a huge portion of their business for export has just brought all their staffs to Europe for their company trip, their best so far for the past few years amidst the slowdown? )
Anyway, while the study showed that the SMEs are not that positive but SMEs are still optimistic with business expansion as well as hiring for the Despite the poorer performance outlook, SME respondents still expressed optimism on business expansion (55.8) and hiring sentiment (56.3) in the next two quarters. RAM concluded the article saying, “This is perhaps a welcome indication that the momentum of economic recovery in Malaysia has an element of sustainability. This is especially so when firms have continued to express intentions to expand capacities and keep up hiring as well as capital investments.” (Let’s just say I am cautiously optimistic? Haha… Favourite term for analysts…)

I am currently managing a SME group of companies. We are ‘fighting’ everyday for that opportunity to join the corporates. To be bigger and thus having more resources. Yet, competition is really tough because other SMEs and even corporates with much more resources are also vying for business within the same space. What this tells me is that the pie (business opportunity) is still big enough. That is the reason why many SMEs still have bits, pieces and even slices of that pie. Perhaps this is why SMEs are still hiring and still looking to expand further. It means I have better be working even harder. Haha. Okay, any corporates reading this who wants to have a cup of coffee with me, do let me know yeah. In the meantime, gambate to all of us here in Malaysia. Cheers.

written on 3 Oct 2017

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Grow money with money. Boost your ego? Laterlah.

A good friend, much younger than me was in KL the other day and as usual we went for a cup of latte in the evening. She was driving just a Proton Saga and she told me that many of her friends were driving a Vios or a City. All of them told her to change car because her Saga is making her look bad. I asked if she felt the same. She laughed and said, “Of course not. I am too young and besides even if I drive a Vios or a City, would successful people like you think highly of me.” I laughed and said that fortunately you say this because I am driving just a Persona. How dare of me to look down on anyone driving a Vios or City?

Truth is, many are aiming for that short boost in ego among peers. No one wanted to be known as that ‘fella who has no cars, or that classmate is driving his father’s old Nissan Sunny (yes, that’s me too). I seriously think
MONEY is more important than ego
. With ego, others may think slightly highly of you. With money, you can make yourself wealthy and you soon realise that ego does not create more money. Money however would create MORE money. Haha.

A very easy example, when a young graduate buys a Vios or City, even if it saves petrol or whatever crap that the sales agent tells you, most of the time it will be on a 9 year loan or at least 7 year loan. The thinking is, within 3 or 4 years, my salary would have increased so much that paying for the car is as simple as ABC. I would not doubt that BUT by having this loan, it meant that you have chosen to
delay the opportunity to buy a property
 by at least 7-9 years. Seriously not a wise move at all. So, you rent and make someone rich. Staying with parents and giving them allowances is not so bad, at least when you need the money they would give you back, at least most of the time.

There are not too many 10 years before we realise that we needed more money to retire comfortably. Oh yeah, before we called it a night, I told my good friend that it’s not enough to drive a Saga. It’s more important to aim to earn more than enough to buy a Vios or City but use that money to create more money. If she did that, I would think highly of her. I would not mind having latte with her anytime at all. However, if the car she bought is to boost her ego but her wallet is empty most of the time, there’s really nothing to be happy about. No wonder the number of youths going bankrupt is getting higher year after year in Malaysia. Getting your ego boosted or bruised? Your decision.

written on 10 July 2015

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First day of school, it’s smooth… to the office.  Nice yeah

It was the 2nd of January 2018. This is the first day of work for many after some crazy weekends. On this morning, I expected the usual jam. I started my journey at 7:35am so that I will arrive in office before 9am. The jam did not happen. I arrived even before 820am and had time to slowly eat my breakfast too. Instead, my wife told me that it was extremely jammed at the road leading to the nursery for my two kids. I think there are just way too many anxious parents whose kids are going to the nursery for the first time ever. There were also many cars, all lined up along the road leading to a few schools within Sri Damansara. My staff in Penang also took leave to accompany her kid to school and so did my CEO and his wife. Okay, perhaps I am the lucky one since I have my wife to help plus I am very confident with my kids. Haha. Both did not cry today.  Daughter is in the 5 years old class and son is in the 3 year old class (pay school…..).  Many property thoughts went through my mind this morning.

Kids, lots of them would show to us that the
demographics of Malaysia,

at below 30 years old is very real and full of opportunities. The new parents may need a home instead of renting. These parents would want to upgrade to a bigger and better home. In fact, even more properties would have to be converted into nurseries and tuition centres. Parents would want a safe environment for their kids to run around, which meant that good developments would always be in demand. If the better ones are already very expensive, then these parents would move further away. Nope, those that do not meet their requirements would still not meet their requirements. It is thus not true that all newly built homes would be sold.
Size vs affordability matters, all the time.
 For many of these new parents, a home close to a LRT or MRT is useful only if they need it to get to their office. It is not useful to send their kids to the nursery or school, yet.

Today, it is also clear that areas / neighbourhoods with

access to schools, even the newer ones

would be in demand. I have no fewer than 3 friends who moved simply because they wanted to be closer to the schools that they wanted their kids to enrol in. Perhaps it is time that some of these property listings sites think about property listings based on how far these developments are from schools? It would help tremendously versus the current searches which would always have to start with any area and usually, everyone searches only for the typical areas everyone else searches for. Perhaps some of these searches can even start with the
MRT or the LRT stations instead?

Developments are then listed based on the duration of them from the stations? Frankly, it helps tremendously. Happy sending your kids to school yeah. Crying is just a phase most kids would have to face.

written on 2 Jan 2017

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First home? Buy Leasehold.

Why do I say so? I give you three reasons.  Affordability. Availability.  Actually.  Huh? Actually?? Haha….  Affordability is because when you compare around,  leasehold properties are almost always cheaper.  Sometimes up to 15% cheaper.  If you are buying your first property, buy something lower than what you can afford.  It helps in your mortgage payments so that you still have savings when you want to upgrade in the near future. Remember, just because you can afford a RM500,000 mortgage, why not get a RM350,000 one while the savings you save to get ready for another smaller property to rent out?

Availability.  In a lot of places, leasehold is the status. In fact one major reason why it is leasehold is because the state owns the land and does not want to sell it thus they lease it and you buy it. One example Kelana Jaya.  I love this area because it is between Damansara and Puchong and every amenity you can think of is nearby.  There are also a lot of Leasehold properties in Damansara. Think of it this way, there are reasons why the land is still leasehold. And for any state government to take back one whole block of 500 units of condo with potentially 2,000 votes in the election? Are you sure?

Lastly,  Actually. Actually this is your first home.  Long ago people stay in their homes forever.  Today nearly no one does that.  Changing jobs,  family upgrade,  getting married and many more reasons. Soon, in the future, if you have just one home until the day you die, something ay not be right with you. Perhaps you just did not know what’s happening to the world.  Thus buy and enjoy the stay.  Too much considerations will kill you.

written on 14th dec 2013.

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Do you believe the property bubble is bursting soon?

When sentiment is not that negative and people say something negative, it will usually affect the sentiment further. The herd mentality always apply regardless of whether it’s an investment or just buying the latest smartphone model. Remember that prediction about property bubble bursting? Here’s that prediction:
Property Bubble close to bursting

After that, in order to help people understand what would usually cause a property bubble to burst, I wrote this:
Understanding 3 property bubble bursting signs and more

I still did not know what people think actually. So, I ran a simple poll. Just two questions. Results as below: Actually, there’s a quarter of people who thinks that the property bubble may be bursting within 12 months. Frankly, this is a pretty high number. Another 77 percent says that they are not sure yet. This does not tell us that they are confident, ok? So, what could be done in the mean time? I will run the same poll next month. 🙂

As for what could be done, I would advise those who believe a property bubble bursting to start keeping and accumulating cash. Turn everything into cash because you may soon have a window of opportunity to buy properties at below-market-value. It’s a window because as long as the economy is still moving, the property prices would slowly recover. Then, the below-market-value properties would be back at market value again. If this does not happen within 12 months, well, you can then decide what to do next. Just a reminder yeah, when the property market do crashes, the stock market usually crashes earlier. This is based on historical happenings yeah and not a prediction of future. One more reminder, oversupply is not a clear predictor of property bubble crash. Here’s one earlier article:
Unsold units up by 40%. Should we be worried.

For those who are not sure yet, just like me, we should continue to follow the news, especially about the economy. Fundamentally, it all goes back to the state of the economy. By the way, based on international convention, Malaysia does NOT have RM1 trillion debts okay. If we have RM1 trillion debts, our rating would have dropped.
Here’s that latest news in asia.nikkei.com
  Continue to view and evaluate homes and if we found one that we really like and it happened to be at a good price (10 percent below the surrounding market-value), we could still buy it. Just do not buy because we want to buy, that’s not a cool reason. Historically, property prices would have ups and downs but it generally inches upwards. This is because everyone’s salary is also going up over the years. In terms of value, it may be ‘eaten up’ by inflation but that’s the main reason for property in the first place; hedging against inflation! Happy understanding.

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written on 3 Aug 2018

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First time buying high rise? Low floor is fine.

I must admit,  I am biased. I have enjoyed too many low floor units that I am biased against high floors. Okay, I have to admit this as well. The views from high floors are usually better than low floors. If the high floor and the low floor units have almost the same price, I would take the higher floor unit actually. For some condos, only the higher floors may have sea views or even sometimes unobstructed views. The low floors? Well, we get to see the car park building or perhaps obstructed by another development right in front of ours, somehow.My first time was 14 years ago. It was also a high-rise (apartment) on level 5. It’s one level above the swimming pool and I had pool view! In fact, if I really wanted, I could climb down my balcony to go to the swimming pool. Just kidding… it’s at least 10 feet.

Anyway, coming back to first-time home buyers who are looking at buying a high-rise unit. I bought my first high-rise unit because the other one which was on a higher floor came with a RM45,000 premium because it has a better view as well as being ‘more’ renovated. Well, mine came with minor renovation and I spent RM25,000 on renovating the whole apartment. Total gross savings? RM20,000 which I used to buy my electrical goods as well as furnishings. In the end, I had an extra RM5,000 which I kept for my next purchase
which was an upgrade 2 years later, a condo!
 So, the first reason is that low floors tend to save us money. Nothing about the view, nothing about the potential capital appreciation being higher or even that high floors tend to be windier and thus more comfortable. I am just talking about the savings from the price difference.

Let’s now talk about the view. Sorry yeah, no developer would guarantee us that the view we paid for will be the same view forever. Secondly, to most of us who are staying in high-rise currently, do we really go to the balcony and admire the view everyday? Holding a glass of champagne and thinking ‘wow this view is worth millions.’ Sorry yeah, there was a time when I stayed on the 10th floor of a condo in Tanjung Bungah for 2 years and during those 2 years, I was at the balcony only when I needed to hang my clothes out to dry plus when I needed to collect them. Assuming the premium was only RM2,000 per floor, that would have been RM20,000 extra compared to if I bought the ground floor. Note: If you really enjoy views from your balcony, please stop reading and start buying higher floors. Do not buy low floors and then regret when there’s not much views.

Hey, lower floors also meant ‘faster’ lifts. For those of us who have been staying in higher floors in hotels, we should have noticed that we needed to wait longer for lifts to come and for the lifts to go down. (Try the Genting’s One World to understand more…..)  So, with lower floors, we can save quite a lot of time every year. Plus, should emergency happens, the chances of us running down 5 floors would be far better than someone on the 40th.. Granted, most of the time, emergency does not happen often. Note: For those who love to walk the stairs to keep fit or to climb Mount Kinabalu like me (25th June 2017), higher floors allow you to walk to your floor and get the exercise you really need. For me, I use the gym to train instead.

Let’s come to a more serious matter since the above two are not about money. The third reason is
capital appreciation. Higher floors tend to be more valuable and I agree.

However, assuming we bought the lower floor unit at RM350,000 and the higher floor was RM400,000. When the price increased after 5 years and the high floor unit became RM700,000 do we really believe the low floor is still RM350,000? Or perhaps RM600,000? 🙂   Honestly, if we are buying a secondary unit today and the price difference is RM100,000 would we buy the higher floor or the lower floor. The answer is up to individual of course. If you ask me, of course I will save that RM100,000 for the next property!

view from balcony of my condo (Level 2)

If the price difference is not huge, by all means take the higher floor instead. The view is really better actually. Some say that mosquitoes could only fly up to Level 8. I have no idea but I do know that mosquitoes  do follow humans into lifts… However, for all the first-time home buyers who really want to save more money for a bigger fridge, a bigger LED TV or a bigger capacity washing machine, the savings of a few thousand ringgit can really help you get all those bigger items. Yes, I do own a condo unit on the 20th floor. However, the 40th floor is really more expensive! Happy getting your dream unit and enjoying the stay.

written on 23 June 2017

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Property Investment 101: I am a first-time home buyer, how?

I love this question but my answer is not a straightforward answer, sorry.

I spoke in the INVESTFair 2023 in MidValley Mega Mall just last weekend. I cannot say for sure for all speakers but my session was full house and many more were standing just outside the seminar area. I am grateful for everyone who dropped by and listened. I hope I have played my small part in helping more Malaysians own a home.

After the talk, a few people spoke to me and one of them was this young man from Ipoh. He mentioned that he stays near my Ipoh home and asked if I could give him some advise since he intends to buy his first property. Here’s my 3 or 4 simple tips just to get the thoughts on the right direction. If we are really buying, we need to ask more questions than these yeah.

Why are we buying?

It may be a unit nearby my parents house and my brother just have to get that unit no matter what. Thus, the offer has to be really genuine and attractive. It may be a unit which we intend for it to become a home sweet home. If this is the case, then do we like the unit? Are there enough great reasons that we could stay there for many happy years? The reasons could be anything, really. The kitchen is big enough, the living room is spacious, the porch could park 3 cars, anything. Just need all the right reasons for it to become a home sweet home.

If the reason is we want to rent it out for homestay, then it’s time to go online and search similar units nearby, look at the reviews and the prices they were being rented out. If the price is not good, if the reviews are saying things like ‘location’s not good’ etc, then better stay away. All these needs some time to do the research. If you do not and you just trust whatever the sales person says, that’s when it may just be a mistake.

How much could we commit?

Let’s face it. Most of us do not have unlimited funds. I know some friends who seem to have unlimited funds but most people would have funds limitation. Knowing how much we could afford is key. If we over-strectch ourselves financially, it will put us in a dangerous situation. What if we lose the income source for just a few months? What would happen to the repayment?  Use our full income, minus all the compulsory expenses and we would have a good number to work with. Please note compulsory expenses should not include fancy meals in a cafe or Americano from Coffee Bean everday yeah.

When should we go ahead?

Is this the best time to buy? Haha. Best time to buy means what? Means no matter what we buy it’s also okay? Worst time means what? Whatever we buy will surely fail? Frankly, it’s the right property which matters. A good property in a great location may only be available at a good price during bad times. A bad property during good times may even be sold at a price higher than what it should be. Stay very focused on WHY question above and the WHAT question below. Stop focusing on the time. If we did not find any property which meets our expectations, do we still buy? 🙂

WHAT should we buy?

This should meet your WHY above. If it’s for a home sweet home, how big should the size be? For a couple? For a family of three? For a family of three? A room for the parents? If it’s a double storey, a room for parents should be a room on the ground floor and it must not be the old design where the room is a small one for the maid. It has to be a current design where the ground floor room could be huge enough for a fully furnished room with a queen size bed.

If it’s for homestay, a high-rise unit with full facilities may appeal better to more people versus a landed property where it’s just too big for a single person, a couple or even a family with young kid(s) because they have no pool / playground to play with and they cannot just be running in the car porch the whole day… Unless of course your target is ONLY for big families and you like to occupy a niche, then go ahead and buy a typical landed home of 1,600 sq ft or more. Usually a double storey terrace may be 1,600 sq ft or higher.

Where should we buy?

This is not the last point. This is save the best for last point.  If we have reached some conclusions on all the above, we can now move to all hte potential locations. Sorry, we should never start from location in my own assessment because this will immediately narrow our search too much and we will miss the WHY, what HOW, the WHAT and even WHEN.

The reason to buy is the top, not the location. If we need to stay close to our parents but the location we love is 45 minutes away, then please be realistic yeah. If we like to rent out to working professionals but the location is far away from the central business district then it’s a challenge even before we start yeah. If the budget we have is just RM500,000 and the only thing we can buy in that location for this amount of money is a small sized high-rise unit, should we proceed? This is why we need to do sufficient homework first versus determining the location first.  The location will come when we think of why, how, what and when but it must not lead everything else and then we try to match the rest to where.

Listening attentively is good but just make sure we make our own decisions versus following blindly

Conclusion

There is no need to listen to just my perspective yeah. It is just how I buy. Do speak to more people and see what is their strategy. Adapt and adopt one which you find more suitable for you. Just need to remember that property is definitely compulsory one day. Else, it’s never ending rental until the day we bid goodbye to this world. Cheers.

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3 Must-Do Actions for future first-time home buyer. (Advice from the landlord)

One Fine Happy Day, my tenant called me

My tenant called me one day and said, “Charles, I intend to move out in 2 months time. I have bought a new place.” For 4 years, the tenant (a Malaysian Indian engineer) was diligently paying his rental for a 730 sq ft apartment. He was driving a Proton Iswara though he is a senior engineer in a multinational company. Now, he is buying a landed property from the secondary market. His new home is easily 2.5 times bigger than the apartment he is renting. Probably 2.5 times the price of the apartment he’s renting too.

I did share with him why property investment is compulsory
(read here if you like to know too)

I know, it’s like me telling the tenant that he should stop renting from me and getting a place of his own right? Haha. It’s okay, I prefer all my tenants to also benefit from conversations with me and if they accept my point of view, they can start making plans to get a place of their own. Nope, I did not ask him to drive an Iswara yeah. That was his choice. Haha. How much is an Iswara today?  Out of curiosity, I took a look too. Pretty affordable still.

Source: carlist.my

3 Must-Do Actions for future first-time home buyer

#1 Always have a PLAN even when we are renting.
I be honest even as a homeowner. By renting, you are only making the homeowner rich slowly, over the years. All the money you ‘lost’ since rental is a cost will add into the ‘win’ for the homeowner via the principal payments even if the home is still under mortgage.

Many years later, the wealth of the homeowner has increased by leaps and bounds and if we did not make plans to own a home, then a home will be out of bounds. Have a plan. Know where you intend to buy. Know how much you need to save. Always keep yourself updated on the listings of available homes. Who knows you may chance upon a good deal some day? STICK to the PLAN…

#2 After having a plan, then ACTION becomes key.
 Save money for downpayment for a home even as we pay rental. Save on rental by renting a place (or even a room) which is cheaper than what you could afford. Then, you can save money even as you rent. Drive a cheaper car (why not a second-hand car, no need to feel loss of image lah) than you can afford so that you also save money. Basic idea is simple, reduce expenses, increase savings and be ready!

We can spend RM500 for a room or we could spend RM1,500 for the whole unit. This is savings of RM1,000 per month or RM12,000 per year.

We can spend RM7 for a meal or we could spend RM20 for a meal set in a nice air-conditioned cafe. That’s RM13 savings per meal or RM39 per day or RM14,235 per year.

We can spend RM1,000 per month for a new Japanese branded Segment B car or we can get a new Proton Saga for RM600 per month. RM400 savings per month is RM4,800 per year!

Just doing these three things, we could have easily saved RM30,000 per year.  Now, do you wonder where your money went to?

#3 Remember, AGE is an advantage for first-time home buyer
  The earlier one buys a property, the longer the repayment period could be stretched to. It could be up to 35 years or up to 70 years old, whichever comes earlier. This is why as we got older, the monthly repayment may get higher. This is also why many people who’s over 40 tells us that it’s so hard to buy a decent property!

One more important thing. After we retire, there may NOT be a need to own a home. Just sell that home of RM1,000,000 and rent instead. The remaining amount, use it to travel. The world is such a huge place to visit. Lots to explore, lots to see, lots to try.

Before that day comes, just hedge against inflation by buying a RM500,000 property. 30 years later, this same RM500,000 property may be priced at RM1,000,000 but that’s just because value of money has gone down… due to inflation.

Conclusion

Still renting? Think about it after reading this article yeah. As a homeowner, I also hope for the best for you; first-time home buyer. If my tenant chose to continue renting, I will continue accepting the rental. However, I will always share with my tenants about the advantages of owning a place versus renting. Cheers.

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First time home buyers? Get your loan from a RM6 billion allocation

Working in KL, renting a place and wanting to buy your first property? Assuming you have just found a place to buy. What’s next? Let’s not debate on why first-time home buyers are not able to get loans. The applicants would blame the banks for not lending but the banks would say if the buyers qualify why would we not lend? Well, I am on the side of the bank, they MUST lend responsibly. Else, we may fall into a mortgage crisis like the one which happened in the largest economy in the world in 2008. Okay, now for the good news. Bank Simpanan Nasional (BSN) Deputy Chief Executive of Retail Banking Frederick Siew revealed that they have a RM6 billion allocation under the Youth Housing Scheme (YHS) which is STILL Available for applications. He shared that from its launch in July 2015 till currently, they have received 4,000 applications of which approval rate was around 50 percent. (NOT BAD!!)

What’s this scheme all about? Well, it is supposed to help up to 20,000 first-home buyers. Target wise, they are looking at couples from the ages 25 to 40 and the combined family income should be lower than RM10,000. Under the scheme, BSN may approve a full loan and all successful applicants would also get an additional funding of up to 5 percent for
MRTA
 or MRTT. The home loans are for properties ranging from RM100,000 to RM500,000.
(Yes, still under the affordable category)

Beyond just the loan, all buyers are eligible for an extra RM200 per month for the first 2 years. Frederick also shared that earlier, this scheme was not really known and it is now more visible because BSN has started trying up with developers of affordable homes.

It was not stated if the loan allocation was only for Greater KL, thus I assume this is open to applicants from all over Malaysia. I think it’s also important to note that some buyers would have their own favourite bank and I think this is also one reason why BSN may not be getting the traction they need thus far. Perhaps they should have engaged more blogs to share about their YHS. Haha. Anyway, jokes aside. Should you need a loan for your first affordable home, this is another choice for you. Personally, I have only been using the top 3 banks in Malaysia by size (Maybank, CIMB and Public Bank) for loans and that was because those were the banks which tied up with the projects that I was buying. My only preference would be a competitive rate and convenience of payment. Happy applying!

written on 16 Nov 2016

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Think. Why first-time home buyers need HELP

Everyone should own a home. However, everyone should also be responsible enough to own a home. Considering a couple, both engineers and with a monthly salary of RM5,000 each. If they did not SIMPLY spend, and their credit card has no outstanding, they should still be able to save RM1,000 each per month. This is RM24,000 per year per couple. In 5 years, they would have achieved RM120,000. Taking a 50 percent discount, this is still RM60,000. This couple can already afford a RM500,000 property with a 10 percent downpayment. The
mortgage per month
 is definitely well within the Debt Service Ratio assessment by most banks too.

Question. Why are so many Malaysians continue to ask for ever more help to own their own home? I remember I saved like crazy just to afford my first home, together with my wife. Sorry yeah, our salaries then were nowhere near the RM5,000 that I quoted as example above. In fact I think, both of our salaries added up should be around RM5,000. Yet, we could afford a new car each and a small 730 sq ft apartment in Penang island. There were definitely no Starbucks, no fancy handphones, no overseas vacations and no expensive
meals
 except for birthdays. Even Valentine’s dinner was celebrated in the usual cafe instead of Valentine’s set. Usual bill? RM60 per couple. Fortunately my wife is a very understanding soul-mate. Haha.

For couples who did not save as much as us, perhaps there are some good news in the upcoming Budget 2017. According to Kenanga Investment Bank Bhd, some goodies are coming. They include the reintroduction of the Developer Interest Bearing Scheme (DIBS), relaxed loan assessment methods, increased allocation of
Employees Provident Fund (EPF)
 Account 2 and more 1Malaysia People’s Housing schemes. DIBS especially would be a sentiment booster. It said, “The issue is many developers tend to price-in the DIBS cost into the property price, resulting in higher prices.” The top barrier? It’s usually financing. For this to be approved, Bank Negara Malaysia will have to study the long-term impact on banking risks.

Kenanga is also proposing the EPF Account 2 allocation be increased to 40 per cent from 30 per cent. It said with this adjustment, “We think this measure could be more meaningful compared to bringing back
DIBS for first-time house owners.

This will be quite helpful in servicing part or the full 10 per cent deposit, or if one is unable to secure the full 90 per cent margin financing.” Kenanga also said lowering or removing the real property gains tax or increasing the 70 per cent loan-to-value cap on third house purchases was unlikely as these addressed “non-house ownerships” markets. Such a move at this juncture would also be detrimental to the primary market. Full article from
NST here
.

Honestly, it’s best that we save enough for that first
10 percent downpayment
. This helps to put into perspective what we could really afford and some of the little sacrifices we need to make in order make it happen. Let’s really understand a landed terrace can still be less than half a million depending area or it could be many millions…. Buy what we could afford and work harder. Cheers.

written on 8 Sept 2016

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4 important things to understand for first time home buyers

Are you a first time home buyer? I was one as well, once upon a time ago. Are you worried because this is going to be a purchase of a few hundred thousand ringgit? I was as well, just that my first property was merely RM123,000 instead. Do you want to know some tips from a former first time home buyer who is NOT from any property developer, not from the bank, not part of any real estate agency and does not run any property course?

Yes, all that description describes me, a blogger in
kopiandproperty.com
 Happy reading and joining me in this property investment journey. Just 4 questions to start pondering. Note, nothing in this article tells you to buy tomorrow. That decision is up to you yeah.

#When to buy?
 – Honestly, for first-time home buyers, stop worrying about when is the market going to recover or when will the market reaches the bottom. Property buying is LONG-TERM. This is not buying this year and sell next year! These stories were very yesterday. Today, it’s more of finding undervalued properties instead.

Always understand that when we buy that first property and use it for own-stay, we save on rental which will likely be
HUGE if we are to calculate them for a few years. Earlier article here.

#When is the crisis coming?
 – Second thing everyone thinks they will gain a lot is when a crisis comes and the property prices crash. By the way, every time there’s a crisis, home prices will drop. This happens in ALL markets. The reason may not be due to property though. It may be due to loss of jobs, thus the seller selling the property and starts renting instead.

In fact, from the 1998 to the 2008 and even when we look at all advanced property markets, the same things happen! However, it will soon recover once the economy moves again and well,
prices are usually up because salaries tend to rise with time. Earlier article here.

#What’s the future like?
 – Frankly, no one knows for sure. If anyone were to tell you 30 years ago that China will be the 2nd largest economy today, you would have been rolling to the floor laughing. Well, it has happened.

If we look to Malaysia, then we should realise our median age is 29. In other words, our young population is still many times our older population. Note though that ageing nation will happen sooner than later but it’s a mere 7%. Demand for homes remain robust unless everyone prefers not to stay in a home instead…

However, it has got nothing to do with
buying property only in the youngest country yeah.

#Where to buy?
 – That mantra of location, location and location is a correct one. However, for first-time home buyers, if we buy based on the mantra of WHY, WHY and WHY, then our choices will suddenly expand and the price range will drop too.

Everyone must remember that once upon a time, there were only those few mature neighbourhoods. Today, there are so many new emerging neighbourhoods. Most of these are not within 10km away from the KL city centre. In fact it’s moving further away too. Open up your choices and stop looking at places where everyone is looking. Value is to be discovered and usually does not show up if everyone knows about it already.

Conclusion

Buy one which meets many of what we like, not when we find one that is PERFECT because it’s likely to be EXPENSIVE too. Buy one when we could afford, so that we do not spend that extra money on something else which we could afford but does not need.

Buy one so that if we do become those countries where properties got too expensive, at least we are benefiting from it and not suffering from it. If we think of Malaysia as a follower when it comes to real estate, then get ready for what has already happened in many of these advanced property markets.

Happy reading and please feel free to write in to share. Let’s help as many first-time home buyers as possible to understand that opportunities do not exist only for the super-wealthy or those buying to speculate. It exists for all Malaysians but some just do not have enough information to make their decision yet.

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First Property? Some considerations.

First property is always the hardest, especially for a white collar executive with less than 5 years of working experience. It’s the single largest item that one would be buying in their lives. Lots of doubts, questions and worry running in my head every time I think about my first property. What if, that first property turned out to be the wrong one?! I do have some savings. Yet not enough and simply not fast enough in terms of savings for the property that I feel comfortable with. With my ‘just enough’ salary, I still have to maintain my normal lifestyle, give some to my family and save a little for that elusive first property. I represent some of those who have graduated outside Penang and somehow have chosen Penang as their new home cum working destination.

I am a Johorean and I have worked in Penang for the past 2 years. So, what do ‘outsiders’ like me consider before buying their first property?

1) Try first, who knows if you are lucky?

In Singapore, it’s tough to apply for a HDB flat especially when there are so many applicants. Actually, it’s not that different in Penang. I applied for the medium cost apartment and got rejected. I had forgotten that with a total population of 1.7 million people within the state of Penang, I am still considered very slightly above average and thus should not have gotten a unit until those who are more qualified has one before me. It’s a bittersweet feeling, should I be happy or should I be sad? I did not want the low cost apartment but for the medium cost apartment, one’s salary must not exceed RM3,500. Somehow, I overqualified and yet when I look at the condo prices, I knew that I may join those who got rejected in their loan applications. I know the state government is pushing for more affordable homes costing less than RM500,000 in 2015. I hope I get one by then.

2) Acceptance of location

Where should we live? I want to live near to town. I want to live near my friends. I want to live near my workplace. I want a good location which is not far from everything that I want. Ok, perhaps that’s a bit too much. Yet, everyone would have an ideal location in their mind. Actually you can choose any location if you are rich enough. However, I think everyone should be willing to consider their second choice if they can still reach the places they want, just slightly further away.

3) Managing expectations

At our current age, there’s little reason to overburden ourselves. The reason is because the road to retirement is still many years away. If we simple can’t qualify, then don’t try. Just look at the high rejections for loan applications and you understand what I mean. Truth is, a 650sf apartment may be even more suitable for me than a 1,000sf one. Current low cost apartments include those of 650sf costing around RM100,000 and also those which are 850sf for RM250,000. If I can renovate it with some inspiration, I think it would be a home sweet home, for five years or until I can upgrade.

Last but not least, do not keep looking at just the new ones. Why not buy one which you can almost stay immediately? I have been to many secondary properties and the truth is, it’s not all bad. In fact, some can be considered very well maintained. Just do your research well, view a few more units. Use a little imagination and make that your home sweet home. I think I should be able to get one soon. Wish all of us luck in 2015.

written by Chloe Tyng on 2nd Jan 2015 and edited by charles.

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Property Investment 101: First Time Home Buyer and Stamp Duty Exemption

Good news for first-time home buyers

This was announced earlier but I think many may have missed the news because I do not read that many articles about firs time home buyers being super excited with it. Yes, this is definitely good news for many potential homebuyers. Not sure how many first time homebuyers were waiting for this extra savings when they buy their very first property. Please note that full exemption is only for properties priced RM500,000 and below only. This is valid until end of 2025.

For residential properties purchased worth between RM500,0001 to RM1 million, first time home buyers will get a 75% stamp duty exemption up until 31st December 2023.

Article in malaymail.com
  To help more Malaysians buy their first homes, the government will continue to give full stamp duty exemption for those who purchase property at RM500,000 and below. For homes valued between RM500,001 to RM1 million, first-time buyers are given a 75 per cent stamp duty exemption, an increase from the previous 50 per cent exemption.

Muhammad Ikram, a 30-year-old lawyer, said that he appreciated the stamp duty exemption as he was buying a home in Seremban worth some RM600,000, with his soon-to-be wife. “The stamp duty would have been more than RM12,000. So I think that’s quite good. It’s money that can go towards my wedding later,” he said. Do read the full article here:
Article in malaymail.com

No Stamp Duty does NOT mean I simply buy yeah

Buying the wrong property is far worse than not saving on stamp duty yeah. Do enough research, do enough comparisons and do enough objective evaluations before actually buying a property. Then again, not saving on stamp duty when there is such an exemption is also a big loss yeah. The money saved could be used for vacation or for some of the air-conditioner units for the new home etc.

How to save enough for that first property?

My advice is that if any first-time home buyer is thinking of buying, it’s important to see where most of your money is spent every month. If most of it went to unnecessary stuffs, then this is the best time to buy that first property and channelling all these unnecessary expenses into a necessary investment. It’s also called FORCED SAVINGS and you will be glad you did that versus changing a new smartphone every year for example. That was what happened to me for my first property. Suddenly I was extremely careful how much I spend on food, how much I spend for movies, how much I spend for anything everyday!

First property is just a start!

After my first property, it became clear to me that it’s possible to buy, work harder and be prepared for the second property. Second property was my second home, third property was in Kelana Jaya (which eventually became my home many years later when I moved to Kuala Lumpur) and 4th and so on. Remember, a journey of a thousand miles begins with the first step yeah. Starting is the hardest. I can safely tell you this was my feeling too.

Happy deciding and remember, do not buy if you could not afford. No point stressing yourself too.

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First to announce a revised GDP number downwards.

If you have been reading, you may have noticed that Singapore is usually faster than many countries in many things. Property prices for example will also rise faster too. Thus, it is definitely prudent to say that whatever they anticipated may also happen here in Malaysia too. Recently, we have the Covid-19 (coronavirus) which has wrecked havoc in China and many other countries. Out of China, the country with the most Covid-19 infected patients would be Singapore. As at
last count today, the number of infected has reached 77. (click to read)

Article in channelnewsasia.com
  Singapore’s Ministry of Trade and Industry (MTI) has forecasted the GDP growth for 2020 to be lower than last year’s 0.7% GDP growth. The major reason is because of the ongoing COVID-19 outbreak.  Economic growth for 2020 is expected to come in at around 0.5 per cent, the mid-point of a new estimated range of between -0.5 per cent and 1.5 per cent. Previous forecast was between 0.5% to 2.5%.

Last week, Prime Minister Lee Hsien Loong warned that the ongoing COVID-19 outbreak will have a significant impact on the local economy for the next couple of quarters. In an earlier forecast, MTI said that 2020’s growth would be based on a modest pick-up in global growth and a recovery in the global electronics cycle. The COVID-19 outbreak has changed the earlier forecast.  Please do read the very comprehensive
Article in channelnewsasia.com

There are already some anticipation that the GDP growth forecast for 2020 will be lowered by the government. Already we could read some analysts revising their own GDP growth forecast for Malaysia downwards already. OCBC
has now factored in COVID-19 and says that the GDP growth will be 4% for 2020. (click to read)
 Fitch Group is even more
conservative and has predicted that due to COVID-19, Malaysia’s GDP growth will be 3.7% for 2020 (click to read).

Anyway, before any GDP forecast changes, our Finance Minister has announced that Malaysia will announce an economic stimulus due to COVID-19 next week. Earlier article here:
Help is coming, industries and businesses please wait
  Perhaps this could be successful enough that the economy could maintain its course and
achieve the earlier forecasted GDP? That’s 4.8% yeah. (click to read)
 As a Malaysian, of course I would also hope that we hit 4.8% or higher for 2020. Awaiting the details for stimulus…

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Fitch: Malaysian banks are on negative outlook

Banks are an important barometer to a country’s economy. When banks are in trouble, they could not lend money and this causes businesses to face financial difficulties. Even today, banks are said to have tightened their lending standards and thus many were unable to get loans for their first home. Fitch Ratings in an
article in NST
 said that the banking sectors in Malaysia and Indonesia are the most exposed because of the negative effects from lower commodity prices. Before we start to break cold sweat, Fitch also gave the following remark. “Nevertheless, the major banks in all of these economies look resilient and remain on a stable rating outlook, owing to satisfactory profitability and strong loss-absorption capacity.”

Main reasons stated for the banks’ weakness was due to a few years of slowed
 GDP growth (Malaysia too)
, weak world trade
(read here)
,
currency depreciation
(
Yes, ringgit remain weak)
and drop in commodity prices. Demand is weak and supply remains almost the same or higher, of course the prices would have to drop. Just look at the high oil price then and the oil price of today. Due to all these, non-performing loans (NPL) are also expected to rise in 2016. Current numbers for NPL for Malaysia is definitely still low. As at end 2015, it is at 1.6 percent (World Bank). In comparison? NPL for U.S. is at 1.5 percent and Australia’s at 0.96 percent at the end of 2015.

In brief, the numbers do not reveal any big vulnerabilities for Malaysia even though a colleague of mine kept saying that Malaysia will soon face bankruptcy. At the same time however, she was still buying properties. I am not sure if she really wanted her prediction to come true. NPL numbers form one huge part of the potential for a potential property bubble forming. Of course, when NPLs start to rise, it would get even harder for banks to approve our loan applications. We should always watch this closely. NPL for Malaysia in 1998? It was 18.6 percent. Happy following.

written on 10 Oct 2016

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