Taking Charge of Financial Planning Process

Finding good investments, minimizing taxes, beating inflation, and managing money are at the top of many people’s lists. Still, even if you recognize how important financial planning is, you may be waylaid by financial paralysis, unsure of where to begin, or even fearful of making mistakes. Pulling together an entire financial plan can be daunting. Maybe you’ve created a plan that you’re having difficulty following or fear isn’t comprehensive enough. Or you may be confused about what steps to take first.

Here are sequence of steps for taking charge of the financial planning process.
These are the steps:

• Step 1: Determine where you are financially.
• Step 2: Set goals.
• Step 3: Develop a plan.
• Step 4: Keep simple records.
• Step 5: Make an informal budget.
• Step 6: Deal with shortfalls, credit, and debt.
• Step 7: Review your progress.

I will try to elaborate in details in every steps. Hopefully this can give u some ideas about financial planning works. :)

What is will

A Will is a declaration by a testator (the person who make the Will), in prescribed form of the intention of the person making it of the matters which he or she wishes to take effect upon his or her death, until which time it is revocable. In short, it is a person’s last instructions.

Why need to draw up a will

1. Completing your Financial Planning Picture
By writing your Will, you would have completed your financial planning picture because you have covered yourself with insurance and created wealth (business) and accumulated wealth (investment/unit trust). It is a final step how you distribute your estate.

2. Unlock Frozen Assets in a Shorter Period
Most people will have dependants (parents, spouse, children and so on) who may be dependent on money that they provide. It may cause great difficulties for them if the flows of money stop suddenly. It is important, therefore, that instructions are left in the Will so that the money is made accessible to the right people in the quickest period possible.

3. No Limitations
A well-worded comprehensive Will written today will not become invalid should your assets and estate grow in the future. So, your future assets can be protected by your Will.

4. Peace of Mind
If you write your Will, you can enjoy peace of mind in thought because you have made proper arrangements for the distribution of your assets to your beneficiaries, most important, you are still in control of your assets.

5. Cheaper to Write a Will
Will-writing is considered the cheapest among all the financial services. For the one-time fee that is paid, it will last as long as you do not revoke or rewrite it. Even if you decide to rewrite a Will later, the cost is minimal compare with benefits and protection you enjoy.

A person dies WITH a Will	A person dies WITHOUT a Will
You provide for your beneficiaries in the Will you choose rather that letting the law decides.	Your estates will be distributed to the lawful beneficiaries according to the Distribution Act 1958 (as amended in 1997).
Partner, step children, illegitimate children, aged relative or others who depend upon you can be provided for in a Will.	Under the law, there is no provision for these groups of people. They might fall into financial difficulties without your support.
You exercise the right to appoint people of your choice to administer your estates and to carry out your wishes, safeguarding the interest of those you love and care.	The High Court decides for you. It might not be your choice.
No family contention could arise over the choice of administrator.	A family conflict arises on the choice of administrator.
You may appoint guardian of your choice for your infant children. So that their support, health and education will be taken care of.	The High Court decides for you. It might not be your choice.
No sureties are required for Grant of Probate.	Two sureties are required to provide security for the due administration of the estate. The security shall be equivalent to the gross estate. There will be delay in administration.
It costs less in term of legal fees to apply for Grant of Probate than Letter of Administration.	Legal fees could be costly.
With a Will, the whole legal process could be just a couple of months.	The legal process could take years. Assets could have shrunk in value when Letter of Administration is obtained.
Your loved ones are financially protected.	Your family could be facing serious financial difficulties.

Reference: Rockwills Corporation Sdn Bhd

Return and Risk

Knowing Return and Risk
Return and Risk are Primary consideration in Investing. They should likely form the basic for all your investment decision. Thus it is a MUST that you understand what return and risk are and how they are originate and they are related.

Return
You invest to get return. It simply get Gain (positive return) or lost (negative return) on your investment after you have sold it. When you invest, you expect a particular return level . However, the actual return may differ from your expected return. Investing is based on expected return. It is therefore that you do not have unrealistic expectations

Risk
Many think of investment risk as the possibility of losing money. This is a valid concern. Other define risk as the uncertainty of receiving the expected returns. All can these can be measured and quantified by a statistic. Different investment products have different degrees of risk or volatility. Look at the various product like shares, bonds and cash deposit on their annualised return and Risk.They can be classified into two categories:-

(1) Systematic Risk -factors that effect the market in general and it include things like general economic conditions, changes in interest rate or a sudden adverse change in market conditions. And as investor, you cannot avoid these risk

(2) Non-Systematic Risk-factors that are applicable only to the investment itself like quality of a company's management and the sustainability of its product development strategy.You can reduce this risk by spreading your investments over a number of holdings.

Thus, the risk-return trade-off is an important consideration in investment - Higher expected returns have higher risks. Investors not able to take risk have to contend with lower returns. You need to apply the Risk-Return trade off when purchasing the product.
When deciding on the appropriate level of risk, you need to consider two issues. Firstly, what is your tolerance level of risk and secondly, is the length of time you are investing for.

"Don't put all your eggs in one basket", is the basic idea behind Diversification and it is a powerful tool in managing risk. Diversification involves spreading your investments over a variety of assets and securities to avoid excessive exposure to any single source of risk. If you put all your money in a single security, what happen if the insurer goes bankrupt?

To diversify effectively, you must apply the ideas of Correlation, which is a measure of the tendency of a security or investment class to follow that of another. Assets with returns that move in the same direction are positively correlated; if their returns move in opposite directions, they are negatively correlated. Investing in different securities in different asset classes like cash, bonds and shares is a way to go.

When you invest, you operate with a Time horizon in mind. It is the time available to invest to achieve your financial goals. Example, if you are 40 years old and investing for retirement at age 60, then your time horizon is 20 years. Therefore, you can use Time and Return to grow your money or Time and Risk to stomach more risk with time to invest in Riskier assets.

Dollar cost averaging can reduce risk in a long Investment horizon. The idea is to invest a fixed sum of money at a regular interval, regardless of whether the market is rising or falling. If you invest in only a certain time, you may buy when prices are at or near the peak.

Reference: MAA financial Planners SG

What is Investing

Investing is how you make your money grow, or appreciate for long term financial goals. It is a way of saving your money for something further ahead in the future.

Saving is a plan to set aside a certain amount of your earned income over a short period of time in order to be able to accomplish a short term goal. It is a plan of action where you plan on acquiring a certain amount of money by redirecting some of the money you have received from your various sources of income.

Investing, on the other hand, is a much longer term activity. We consider investing as an action that is based on long term goals and is primarily accomplished by having your money make more money for you.

Many people realise the importance of saving but have reservations about investing. Investing is often regarded as "gambling"; "too risky"; "only for the rich";"only for those about to retire"; too complicated"; "not necessary". While misleading, such reservation also deter us from investing. We then forgot the opportunity of growing our savings. If you are in this situation, we will address some of your concerns and questions you may have about investing.

Reference: MAA Financial Planners SG, DFI Kidspace

Top mistakes investors make

One way to have more money is not to lose what you already own, through bad investments. According to CFA institute, here are the fastest ways to lose money through investment: -

1. Buying investments without first establishing an investment strategy.

2. Investing in individual stocks instead of creating a diversified portfolio of securities.

3. Investing in stocks instead of in companies.

4. Buying high – performance chasing.

5. People sell low.

6. Unrealistic expectations.

7. Churning their investments.

8. Acting on tips and sound bites.

9. Pay too much in fees and commissions.

10. Engage in decision-making by tax avoidance.

11. Neglectful of their investment

12. Don’t know their real tolerance for risk.

If you are investing, make sure you do not make this common mistakes.

Source: Personal Money Tips

If time is Money...

If time is money....

think....

You ought to spend or invest it carefully. Most people spend too much time wasted doing not really important stuff. When you track your time, you will be surprised where it goes.

Try to manage your time by using some simple tools such as

1. Sort your task by using ehhhh.... "Importance and Urgent task-er" LOL

2. Weekly Timetable Track Record

after you clearly know which task is more important and urgent to you, then try to spend more time for them...

Hopefully this little tips can help you ;)

理財的“五個一”工程

1、一生恪守量入為出

拳王泰森從20歲開始打拳，到40歲時掙了將近4億美元，但他花錢無度，別墅有100多個房間，幾十輛跑車，養老虎當寵物，結果到2004年底，他破產的時候還欠了國家稅務局1000萬美元。如果你不是含著金鑰匙出生，享受應該是40歲以後的事，年輕時必須付出、拚搏，老來窮才是最苦的事情。

2、不要夢想一夜暴富

天上沒有餡餅，天上有甚麼？雨、雪、沙塵暴，偶爾會掉下一個花盆甚麼的，一定不會有餡餅掉下，中國有句俗話“財不進急門”。

一年40至50%賺利機會不可信，要想想別人的動機，聽起來過於完美的東西往往不是真的。很多中了彩票頭獎的人10年後還是貧困，因為買大房子、買車，鑽出幾十個窮親戚。

當別人給你貌似很好的投資機會時，問自己六個問題：
1、誰在賣我東西，對方的信譽如何？
2、我的錢用甚麼去了？
3、我賺的是甚麼錢，盈利模式。
4、收益率合理嗎？年收益1至5%低，5至8%中等，8%以上高。
5、如果我不投資了，賣得出去嗎？
6、如果賣不出去，可以自用嗎？

六個問題如果有兩個以上有疑問，就不大可信。

3、不要讓債務纏住一生

房奴、車奴、卡奴。月還款應該在收入的30%以下，50%會非常難受。想好你是否具備財務能力再買房，沒能力買房就是房奴。

車奴更甚，車子是持續消費。日本富翁每天拎著飯盒坐公共交通。信用卡是財務鴉片。

改變生活要從小錢開始還，還卡－－還車－－還房－－存錢－－投資。

你永遠算不過銀行，擺脫財務要還本而不是還息。

4、一夫一妻一個孩

結婚不是最大的財就是最大的債。所以不要輕易結婚與輕易離婚。

5、專心一項投資

中國有一句老話叫一招鮮，吃遍天，一生做好一件投資你就會過上美滿和幸福的生活，不是去賭。不熟不做，不懂不投，不要從眾。有些錢不是你的。

Reference:
星洲日報／投資致富‧財富教室‧2010.08.08

6步驟防信用卡盜用

信用卡遭盜用將讓你遭到巨大損失。信用卡發行機構對此事件非常警惕，並採取安全措施保護消費者買免受詐騙。

不過，你也需採取必要步驟以將遭盜用風險減至最低。

保障你的信用卡

1. 一旦收到信用卡立即簽名

2. 將信用卡放置在錢包的固定位置，一旦遺失或被偷，你即可馬上發現。

3. 不將信用卡借給他人

4. 不随便向他人提供你的信用卡資料（信用卡號碼及截止日期），他們可能透過電話、郵件及網絡購物

5. 記住密碼且不寫在信用卡上或向任何人紕漏

6. 記下信用卡發行機構的電話號碼，一旦信用卡遺失、遭偷竊或未經授權交易，你可立即向此機構呈報。

確保你收到新信用卡後，將舊信用卡剪斷

◆簽名或確認交易前，請詳察付費授權單細節。

◆妥當收藏付費授權單，並在收到每月賬單時立即檢查。

◆一旦發現可能出現未經授權交易，馬上通知信用卡發行機構並儘快以書面通知。

◆在丟掉付費授權單前銷毀它。

Reference:
星洲日報／投資致富‧銀行知多少‧2010.08.08

5 Reasons Why You Feel You Don’t Need A Will

Reason 1: IGNORANCE
Many people are unsure of the function of a Will and importance of having one to protect the future of their loved ones.

Reason 2: SUPERSTITION
Throughout history, people have felt that if they write a document pertaining to death, it is a sure-fire way to hasten their demise. Death is obviously a subject we do not want to think or talk about and we generally associate death with older generations.

Reason 3: AGE
So many young people do not have a Will simply because they feel too young ~ nobody is too young to make a Will. In fact, a Will has nothing to do with age or death, but to protect your loved one when you are no longer around. One is never too young, It can only be too late.

Reason 4: MISCONCEPTION
It is believed that only the wealthy need to write a Will, for they have many possessions. The truth is, writing a Will has little to do with your net worth and everything to do with leaving a legacy of love and care. We all have something to leave - maybe EPF, a low cost flats, a small car, insurance given by credit cards company, banks, handphone service providers or other even those long forgotten Savings Accounts you've had for years.

Reason 5: PROCRASTINATION
People think a Will is a complicated and time consuming document and best left to write when older, instead of wasting time in the prime of life. According to statistics, today only Seven out of ten people who need to make a will die without having done so. This often creates serious problems for their families and others whom they would wish to benefit. Many people make the mistake of thinking that their possessions will automatically go to their spouses, children, or relatives but this is not necessarily so. If you do not make a Will your property and possessions will be disposed of according to Government rules (Distribution Act 1958), which may not be as you would wish!


Every individual over the age of 18 should have a will, whether they are rich or poor, male or female, single or married. Without a Will, the law will decide and certain people who are dependent on you or your loved ones may not received anything.


"If You Do Nothing,

The Law Will Do It For You!"

Source:
Malaysian Will

Distribution Act 1958

DISTUTION ACT 1958 (as amended by the Distribution (Amendment) Act 1997

INTESTATE LEAVING SURVIVING ENTITLEMENT Spouse only ( no parent(s)/issue ) - Spouse - whole estate Spouse and Parent(s) only (no issue) - Spouse - 1/2 - Parent(s) - 1/2 Issue only ( no Spouse/Parent(s) ) - Issue - whole estate Parent(s) only ( no Spouse/issue ) - Parent(s) - whole estate Spouse and issue ( no Parent(s)) - Spouse - 1/3 - Issue - 2/3 Issue and Parent(s) ( no Spouse ) - Issue - 2/3 - Parent(s) - 1/3 Spouse and Issue and Parent(s) - Spouse - 1/4 - Issue - 1/2 - Parent(s) - 1/4

Note : This Act only applies to West Malaysia and Sarawak. It does not apply to Muslims.

In the case when and intestate dies without leaving a surviving spouse, child or parent, the following person(s) are entitled to the estate in accordance to priority :-
1. brothers and sisters
2. grandparents
3. uncles and aunts
4. great grandparents
5. great uncles and aunts
6. Government

Source:
AmanahRaya

How and Why to Start an Emergency Fund

Most personal finance books agree: the first thing you should do — after meeting basic needs, and while reducing spending — is to start an emergency fund.

What is an emergency fund?
An emergency fund is an easily accessible stash of money for use only in case of emergency. It is not to be used to buy a new car. It is not to be used to buy a new Playstation. It is not to be used to remodel your bathroom. It is for use only in case of emergency.

Why do you need an emergency fund?
Do you really need to ask? Here are some simple real-life emergencies:

* I have lost my job. (need time to find job)
* I was just being robbed .
* My uncle had died last week, i need to donate money.
* My handphone just spoilt, need to buy a new handphone.
* Share Market drops dramatically, i have to hold it.

In each case, those people with an emergency fund are going to be in better shape than those without one. Studies show that those without emergency savings are more likely to accumulate debt. It may feel like you can’t afford to have one, but the truth is you can’t afford not to have one. Emergency funds are essential, even for college students.

How much is enough?
How much do you really need? As usual, I recommend that you do what works for you. There is no one right answer. For me, my advice is around 6 months of your expenses.

How do you get started?
Before you begin, be sure that you’re meeting your basic living expenses. And as you build your emergency fund, be sure you’re also reducing your spending and avoiding debt.

I think it’s wise to keep your emergency money someplace that’s not too easy to access. (Ignore this piece of advice if you know you’re disciplined enough not to use the money for other purposes.) You might, for example, open an account at a bank across town. Or deposit the money with an internet bank. Don’t carry a card tied to the account. You’ll still have access to the cash when you need it, but you will be forced to consider your actions before making a withdrawal.

Where to save?
Most probably low risk saving tools.
1. Bank Account
2. Fix Deposit
3. Bond Fund

Starting an emergency fund can be as simple as depositing RM200 per month into your savings account. (At least got a kick start for you)

What do the experts say?
I checked the personal finance books on my shelves to find out what the experts had to say.

Robert Pagliarini, in his forthcoming The Six-Day Financial Makeover, declares that an emergency fund is the most important financial step after taking care of basic living expenses. “Your emergency reserve is your financial cushion in case something goes wrong and you lose your job or you need access to money quickly. Your emergency reserve should consist of at least three months’ worth of cash. Once you’ve saved enough for the cushion, you can [move on] to other goals.”

The Wall Street Journal’s Complete Personal Finance Guidebook says: “How much is enough? The answer is different for different people in different situations. For those in careers with a large, ongoing demand or who have relatively strong job security, three months’ worth of expenses is probably enough of a cushion. Those with bigger career demands, such as higher-paid managers and executives or couples who work in the same industry or at the same company, might want nine months to a year’s worth of expenses in the bank. Yes, that’s a lot of money to save, but financial security is a game won by the most prepared to outlast the tough times.” Use a money market account for your emergency fund, the book recommends, but keep several hundred dollars in cash someplace safe in your home.

In You Don’t Have to Be Rich, Jean Chatzky recommends three to six months of living expenses. Your Money or Your Life recommends six months of living expenses, but only once you’ve achieved financial independence.

In The Automatic Millionaire, David Bach recommends the following three steps:

1. Decide how big a cushion you need. Bach recommends three months of living expenses, though he believes more is better.
2. Don’t touch it. “The reason most people don’t have any emergency money in the bank is that they have what they think is an emergency every month…A real emergency is something that threatens your survival, not just your desire to be comfortable.”
3. Put it in the right place. “Not earning interest on your emergency money is almost as bad as burying it in your backyard.”

I like the approach espoused in Dave Ramsey’s The Total Money Makeover. Ramsey’s very first step is to save $1000 in an emergency fund. Then he advocates eliminating debt via the snowball method. Only once your debt has been eliminated does he recommend building a three- to six-month cushion. This is excellent advice.

Source:
Get Rich Slowly

What is the 'Rule of 72'?

The 'Rule of 72' is a simplified way to determine how long an investment will take to double, given a fixed annual rate of interest. By dividing 72 by the annual rate of return, investors can get a rough estimate of how many years it will take for the initial investment to duplicate itself.

Step 1: How long does it take my money to double?

Divide the number 72 by the percentage rate you are paying on your debt, or earning on your investment. Here are two examples...

You borrowed $1,000 from your friend, who is charging you 6% interest. 72 divided by 6 is 12. That makes 12 the number of years it would take for your debt to your friend to double to $2,000 if you did not make any payments.

You have a savings account with $500 deposited in it. It earns 4% interest from the bank. 72 divided by 4 is 18. It will take 18 years for your $500 to double to $1,000 if you don't make any deposits.

Remember: 72 divided by the Interest Percentage is the number of years it takes to double.

Step 2: How many times will my money double?

This step teaches you how important it is for your money to double as many times as possible, and for your debts to double as few times as possible.

Determine how many years you will keep your investment before cashing it in. Divide that by the number of years it will take to double each time, the number you figured out in step one.

Now look at what happens to your money each time it doubles...

$1 ... $2 ... $4 ... $8 ... $16 ... $32 ... $64 ... $128 ...

You can see that it makes a big difference how many times your money doubles. If you can make it double only a few more times by making just slightly better investments, you can end up with many times more money at retirement, or whenever you cash in your investment.

Think about how fast your debts can double with high interest rates, such as those charged on most credit card accounts.

When dealing with low rates of return, the Rule of 72 is fairly accurate. This chart compares the numbers given by the rule of 72 and the actual number of years it takes an investment to double.

For example, the rule of 72 states that $1 invested at 10% would take 7.2 years ((72/10) = 7.2) to turn into $2. In reality, a 10% investment will take 7.3 years to double ((1.10^7.3 = 2).

Notice that, although it gives a quick rough estimate, the rule of 72 gets less precise as rates of return become higher. Therefore, when dealing with higher rates, it's best to calculate the precise number of years algebraically by means of the future value formula.

Source:
Investopedia, ruleof72.net

Time Value of Money (TVM)

What Does Time Value of Money (TVM) Mean?

The idea that money available at the present time is worth more than the same amount in the future due to its potential earning capacity. This core principle of finance holds that, provided money can earn interest, any amount of money is worth more the sooner it is received.

Also referred to as "present discounted value".

Understanding The Time Value Of Money - Investopedia Videos
click the link above to understand more in video

Investopedia Says:
Everyone knows that money deposited in a savings account will earn interest. Because of this universal fact, we would prefer to receive money today rather than the same amount in the future.

For example, assuming a 5% interest rate, RM100 invested today will be worth RM105 in one year (RM100 multiplied by 1.05). Conversely, RM100 received one year from now is only worth RM95.24 today (RM100 divided by 1.05), assuming a 5% interest rate.

Source:
Investopedia

What Is Risk Management?

Risk management requires the management of uncertainty.

RISK represents UNCERTAINTY.

The more uncertainty there is in an activity the greater the difficult in managing towards a successful completion.

It is fair to say that anything that can AFFECT the PERFORMANCE of the product would constitute a RISK.

However, this event would need to be UNCERTAIN and have a SIGNIFICANT impact.

Naturally, if the affect was insignificant the risk could be largely ignored and if certain the event would constitute part of the main plan and not a contingency.

When something goes wrong and there is no 'plan' in place to tackle it you are into CRISIS management. It's possible that you may get away with this on occasion but regular crisis management will cause a lot of problems, as well as draining morale. If effective risk management fails it is likely that crisis management will come to the fore.

Potential risk treatments

Once risks have been identified and assessed, all techniques to manage the risk fall into one or more of these four major categories:

* Avoidance (eliminate, withdraw from or not become involved)
* Reduction (optimise - mitigate)
* Sharing (transfer - outsource or insure)
* Retention (accept and budget)

Source: Risk Management-Basic, wikipedia

Using a credit card good or bad?

Credit cards can be a wonderful way to shop and make payments to merchants or take cash advances, but wait, if you go overboard it can easily become a nightmare. There are some good reasons to use credit cards as well as some bad that are worth noting.

A credit card is not for everyone, there are some people who should just never have one. For example, those who have trouble keeping themselves on a budget should probably avoid getting any kind of credit cards. These cards can only lead to trouble in the wrong hands!

If on the other hand you are capable of managing debt and your finances then a credit card might be the best thing that has ever happened to you. With one of these credit cards you will be able to buy food when you are in a pinch or pay to get your car repaired if something goes wrong with it. When you have a credit card you would not have to worry about carrying too much cash in your wallet.

Credit Cards can make or break your credit history

One of the best aspects of credit cards is the fact that they are very easy to get. All though in some cases this could be seen as a drawback. Many persons are getting approved for these credit cards who have no credit history or who have bad credit history.

Using your card wisely is important to survive in the world of credit. Did you know that you have to have a good credit history to buy a car or a home? If you have no history or poor history you could find yourself getting turned down for just about nay kind of loan in future Responsible use of credit cards can be a powerful tool for you to build a credit history that you can be proud of.
If you get your credit card and you then make all of your monthly payments on time every month then you will be in the perfect position to get approved for any other kind of important loan that you need in the future. Moreover, the credit card issuer will typically not levy any fee or interest if you make your card payments in full by due date.

Understanding Credit Card fees and charges

You can revolve credit using credit cards. In such scenarios you will be liable to pay certain charges and interest which may differ from bank to bank. If you do not pay your credit card dues by the due date, interest charges and other fees like Late Payment fees are charged when you make part payment or your payments are late. To better understand what charges and fees is typically levied let us look at four probable scenarios in the table below.


These scenarios are not exhaustive but are only indicative of the kind of charges/fees that you as a credit card customer might incur in various scenarios.

Conclusion

It is how you use your credit cards can make it good or bad for you. When used wisely, credit cards can help you make the most of your financial resources. You can use cards to make some purchases more easily and securely — like travel reservations and they can even help you budget and save. But to enjoy these benefits, you need to choose a card that’s right for you, and use it carefully.

Source:
Personal Money

Financial Goal Setting

The personal financial goal setting is learning to control your day-to-day financial affairs to enable you to do the things that bring you satisfaction and enjoyment. This is achieved by financial planning and following a budget.

Without smart financial goals and specific plans for meeting them, you will just be drifting along and leaving your future to chance. You've probably heard the quote: "Most people don't plan to fail; they just fail to plan."

The end result is the same and it is a failure to reach financial independence.

FIVE SIMPLE STEPS FOR SETTING FINANCIAL GOALS

Step 1: Identify and write down your financial goals, whether they are saving to send your kids to college or university, buying a new car, paying off credit card debt, saving for a down payment on a house, taking a vacation or planning for retirement.

Sometimes when people write down their goals, they discover that some of the goals are too broad in concept and nearly impossible to reach, while others may seem smaller in scope and easier to achieve.

Step 2: Break each financial goal down into several short-term (less than 1 year), medium-term (1 to 3 years) and long-term (5 years or more) goals. This will make the process easier.

It is okay to dream about riches, but be realistic about what you can actually do. Try breaking down your goals into three separate time frames.

By placing a time frame on your goals you are motivating yourself to get started and allowing yourself the chance to succeed. Remember that you can adjust the time frame whenever you need to.

Step 3: If you have a lot of goals, focus on priority goals which are within your budget. Keep other goals in the list, move to the next goal only when the higher priority goal is achieved.

Step 4: Educate yourself and do your research. Read Money magazine and books about investing and wealth creation. Learn about the different types of investment options that suit your goal period. Yes, there is the potential for loss, but if you do your research and do a proper investment, you can ensure your financial future. Remember not to put all your eggs in one basket.

Diversify your investment portfolio. With a little effort you can learn enough to make educated decisions that will increase your net worth many times over. Then identify small, measurable steps that you can take to achieve these goals, and put this action plan to work.

Step 5: Evaluate your progress regularly. Review your progress monthly, quarterly, or at another interval you are comfortable with, but at least semi-annually, to determine if your program is working.

If you're not making a satisfactory amount of progress on a particular goal, re-evaluate your approach and make the necessary changes.

There are no hard and fast rules for implementing a financial plan. The important thing is to do something as opposed to doing nothing, and to start NOW!

Reference:
Setting goals 101

Medical Card

Medical cards and medical insurances are necessary because all services cannot be offered by a government hospital. Government hospitals can offer emergency and essential medical care but usually there is a long waiting list. Possession of a medical card will be able to give you more choices.

A medical card can help you prepare for these costly expenses and ensures comprehensive coverage in medical, surgical and hospital costs, ambulance fees and other related medical charges.

Things to Look Out For When Buying Medical Cards

Exclusions
Many medical cards do not pay for many chronic diseases in the first year and many cards do not pay for pre-existing medical conditions. Most cards only provide in-patient services and exclude outpatient services.

Guaranteed Renewal
Some medical cards are yearly renewable, while others normally offer guaranteed renewal up to a lifetime limit.

Co-Insurance
Some medical cards also practise co-insurance, meaning that you'll have to pay a certain amount of the medical fees, normally at 10% - 20% of the total medical fees incurred, while the balance will be paid by the insurance company.

Cashless
There are also some medical cards which are cashless medical cards. As a policyholder of this kind of cashless medical cards, just present the card at any participating hospital to facilitate your hospital admission. You do not need to worry about preparing and submitting claims as all expenses under the medical card will be paid directly to the hospitals. However, this kind of medical cards are becoming less available due to misuse and very high claim rate.

Participating Hospitals
Depending on the insurance companies, the number of participating hospitals varies. Choosing a medical card with more participating hospitals benefits you better, as you will have more choices in time of emergency.

Ch3: Have a medical insurance to ensure your money won't outflow to medical bill. Remember, your money invested is for other purposes.

Statistic in Medical Insurance shows that none of the Insurance Companies gain much money by selling Medical Insurance. There are a lot of claims and the inflation of medical treatments are pretty high.

Source:
YKconsultancy

均衡發展5財富價值

每個人都希望擁有各種財富，亦對生命有很多假設，這些假設合起來就成為一般人所指的“價值體系”。筆者將人生財富的價值體系組合了5個價值戶頭，分別是知識、物質（包括金錢）、健康、人際關係及心靈，真正擁有財富的人應該擁有這5個滿滿的價值戶頭。

人出生時這5個戶頭原是空的，隨著生命不斷成長，便按不同的速度增加價值。有些孩子在物質，甚至知識、健康等戶頭裡載得較滿；有些孩子則在人際關係或心靈戶頭上相對較滿。

當我們長大後，我們或會過份追求物質或知識，當這兩個戶頭有所進賬，相對就忽略了健康、人際關係或心靈戶頭的增值，甚至會出現“價值轉移”的情況，漸漸減低其餘戶頭內裡的價值，那時候，我們便容易病倒，與人不和，甚至心靈上出現空虛的感覺，這是人生常見的現象。

所以在我們的生命中，時刻提醒自己努力尋找及發掘人生財富的寶藏在哪裡，儘量保持5個價值戶頭平均，當價值轉移的傾向不會呈現一面倒，我們才能擁有真正快樂。

明白以上概念後，我們大體明白擁有金錢（物質）並非代表擁有真正財富。在生命中，仍有知識、健康、人際關係及心靈以外有價值的元素，同樣需要我們好好地珍惜及增值。

理財教育只是生命中多種價值教育的一部份，而非價值全部，若要生命中擁有真正的財富，我們就要好好持平看待這5個價值戶頭，令它們經常處於“常滿”的境界呢！

source:
星洲日報／投資致富 15/05/2010

Financial Idiot

Example:

Eddy is a fresh graduate who earns RM1800 per month. Right before graduation, he
bought a new Toyota Vios with minimum down payment. After paying the hire purchase
installment, he is left with RM1000 for all other expenses. He rented a room in Kuala
Lumpur that costs RM300 per month. Without proper budgeting, he pays for all other
expenses with his credit card whenever possible, such as petrol, fine dining, and some
other consumer spending.

Just within a few months, he had reached the maximum credit limit of his first credit card.
Not enough still, he applied more credit cards from other financial institutions. Another
six months down the road, he can no longer afford to pay the credit card minimum
payment. Finally, he lost everything. This is a typical story of a financial idiot.

Let’s look at the net worth chart of a financial idiot.
Net worth chart of a financial idiot

This chart shows an idiot digging a never ending debt hole. Until the day he is too broke
to even declare bankruptcy, he will be buried in the deep pile of debt shit. There is no
other way to help this guy unless he is willing to delay gratification, cut a lot of expenses,
and work hard to save!

Are you one of them????
This is how he Idiot's cash flow looks like. Don't be one of them... ok? :P

Source:
Top Money Tips for Malaysian by KC Lau

What is Financial Planning Part 2

Again, i would like to emphasize this - Personal financial planning is a process of managing money to achieve personal economic satisfaction. It is often confused with Investment planning, however financial planning is not just about investment but covers much larger gamut of managing your money.

The most important tool of personal financial planning is the financial plan. In general usage, a personal financial plan can be a budget, a plan for spending and saving future income. This plan allocates future income to various types of expenses, such as rent or utilities, and also reserves some income for short-term and long-term savings. A financial plan can also be an investment plan, which allocates savings to various assets or projects expected to produce future income, such as a new source of income, business or product line, shares in an existing business, or real estate.

Personal financial planning process involves following steps :



Step 1: Determine your current financial situation.
your personal financial situation can be assessed by compiling simplified versions of financial balance sheets and income statements. A personal balance sheet lists the values of personal assets (e.g., car, house, clothes, stocks, bank account), along with personal liabilities (e.g., credit card debt, bank loan, mortgage). A personal income statement lists personal income and expenses.

Step 2: Develop your financial goals.
Two examples are “retire at age 55 with a personal net worth of Rm 1,000,000″ and “buy a house in 3 years paying a monthly housing loan installment (mortgage servicing cost) that is no more than 35% of my gross income”. It is not uncommon to have several goals, some short term and some long term. Setting financial goals helps direct financial planning.

Step 3: Identify alternative courses of action.
Once your short term and long term goals are set, evaluate the gap between your current as well as desired situations. The financial plan details how to accomplish your goals.

Step 4: Evaluate your alternatives.
It could include, for example, reducing unnecessary expenses, increasing one’s employment income, or investing in the stock market, mutual funds or regular savings plans.

Step 5: Create and implement your financial action plan.
Execution of your personal financial plan often requires discipline and perseverance. Many people obtain assistance from professionals such as accountants, financial planners, investment advisers, and lawyers.

Step 6: Review and revise your plan.
As time passes, your personal financial plan must be monitored for possible adjustments or reassessments. This is a cyclical processes.

Advantages of personal financial planning:
1) Increased effectiveness in obtaining, using, and protecting your financial resources.
2) Increased control of your financial affairs.
3) Improved personal relationships.
4) A sense of freedom from financial worries obtained by looking to the future.

Source:
Personal Money

What is Financial Planning part 1

Financial planning is the long-term process of wisely managing your finances so you can achieve your goals and dreams, while at the same time negotiating the financial barriers that inevitably arise in every stage of life. Remember, financial planning is a process, not a product.

Why a CFP® Professional?

CFP® professionals are dedicated to using the financial planning process to serve the financial needs of individuals, families and businesses. Most CFP professionals have completed a course of study in financial planning approved by CFP Board.

To earn the prestigious CFP® certification and remain certified as a CFP professional, individuals must meet four main requirements.

Certification Requirements

Examination

CERTIFIED FINANCIAL PLANNER® Professionals must successfully complete CFP Board's comprehensive certification examination, which tests an individual's knowledge on various key aspects of financial planning.

Experience

CERTIFIED FINANCIAL PLANNER Professionals must acquire three years of financial planning-related experience before receiving the right to use the CFP certification marks.

Ethics

CERTIFIED FINANCIAL PLANNER Professionals must voluntarily ascribe to CFP Board's Code of Ethics and additional requirements as mandated. CFP practitioners who violate the code can be disciplined, including permanent loss of the right to use the CFP certification marks

有錢不等於富足

一般來說，孩子對事物的理解都較單純。如果金錢能換來他們想要的一切食物和玩具，金錢在他們心目中就奠定了重要的地位，以為有錢便擁有一切。

身為父母，如果不及時加以教導，孩子就會漸漸形成拜金主義的傾向，以為擁有了錢，就等於擁有整個世界。事實上，金錢遠遠不能賦予人擁有想要的一切，有錢並不等於富足！

那麼，甚麼才是真正的富足呢？答案很簡單，內心的富足才是真正的富足。

若果一個人擁有金錢，不一定擁有幸福、健康和快樂。相反地，有些人雖然金錢不多，但一生卻感到富足。在日常生活中，我們可以通過一些簡單的方式，讓孩子認識甚麼才是真正的富足。

心靈富足才是真正富足

名牌與父母，你選哪一個？當孩子對別人的名牌衣物心生羨慕時，我們可以這樣說：“他的衣服確是很漂亮，但是如果要你在有漂亮衣服穿和有爸媽終日相伴之間作選擇，你會選擇哪一個？”相信很多孩子很自然會選擇後者。

以生活例證說明心靈的富足，才是真正的富足。當發生災難事件，在有人需要幫助的時候，可鼓勵孩子伸出雙手，獻出一分力量。1元不算少，100萬元也不算多，只要是發自內心的捐助，就是一份無人能及的力量。

透過參與捐助，孩子獲得內心的快慰，往往比物質給予的更強烈及持久。因為這種快樂已提昇到心靈滿足的境界，這是人類生命中奇妙獨特之處。

金錢的價值只是一種觀念，當觀念轉變，我們才會明白“有錢不等於富足”的道理。可是在這個追求物質的年代，人們事事向錢看，又何來空間去反思真正價值，是否真要等到山窮水盡時，才體會到這個大道理，那時候可能已太遲了！

source:
星洲日報／投資致富 19/07/2010