MYR 300 FREE money for self employed

Budget 2010 has been around for a while now, but I wonder why many have not made a big deal about this yet. If you are a Self Employed in Malaysia, you can open an EPF account yourself and save MYR 100 into it every month. In return, Government will add MYR 5 into your saving too. This is expected to start next year and 5% top up will continue for the next 5 years.

Although $60 a year is a small money but are you sure you want to pass on any FREE money ?


Assuming EPF declare a dividend of 4%, you will get more than MYR 10,670 5 years down the road out of the MYR 6,000 you have been saving. MYR 100 x 12 months x 5 years.

If you save the same MYR 100 monthly else where, it will need 22.01% interest rate to obtain the same return 5 years down the road.

22% passive return is not something available readily anywhere in the market. The only con side of this offer is its limit of MYR 300 contribution from the govertment in the next 5 years. Which is pathetically little. Then again, it also means it doesn't hurt at all to save the extra MYR 100.

Comes to think of it, is Someone intentionally trying NOT to pay out this FREE money by NOT promoting it as it deserves ? So they may declare a good policy change but keep things quiet and then at the end they can say, "it's you who didn't take our offer!"

Proceed with care and patient, EPF department does NOT know how to handle this yet ... their typical responses are, "Come back next year ..."

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Zero Sum = Nothing ?

Zero Sum theory says that if one earns an amount of money, there MUST BE another one lost exactly the same amount of money. Bundle with Buddhism (空, 无), one shall NOT care about money ... as all will go back to dust eventually, anyway.

Malpf would like to introduce this sign "=", an EQUAL sign.

Basically an equal sign separates out the left and right sides. The sum of left side IS EXACTLY the SAME as the sum of right side. For example,

0=0, A=A, $=$

So when you were born, you had nothing, its 0=0 .... when you die, you will have nothing left ... its again 0=0.

So you begin with Nothing and you end with Nothing. But does that necessary means you should have Nothing in between ?

One of the rules to keep this equal sign functional is that whenever you add or subtracts something from the left side, you HAVE TO do the same on the right side. For example;

(1) + 0 = 0 + (1)

so its

1 = 1

If you spend some effort (+1 left side) on something, you will always get something (+1 right side) back.

Some people's life can stay 0=0 their entire lives. Some goes up to 10=10 before getting back to 0=0. Some lazy bumps goes down to -10=-10. Some extraordinary folks reach their 100=100 targets.

When you dig deeper, there are always some stories. some are

1 + 2 + 7 = 5 + 5

while others are

2 + 5 + 3 = 1 + 9

different paths, different methods but either way, they are 10 = 10

The thing is ... it doesn't really matter or more correctly speaking, it doesn't really bother the Universe. As long as it is kept balance; the left side equals the right side, the Universe allows it to happen.

Guess what ? It is REALLY UP TO YOU what you want the equation to be. Just work on one side, the other side will automatically equal out.

So do you want to believe in Zero Sum, 空 and do nothing

or do you want to decide what to put on the left side of your equation ?

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MYR 50 credit card fee - Solve debt with more debt !?

Seeing that credit card debt has reached a serious and dangerous level, Malaysia government will start imposing MYR 50 fee on each credit card hoping people will reduce the use of credit cards and therefore reduce debt.

Although it may sound rational to some people, but its actually somehow a bit funny ...

For those who keep credit cards in closet, they actually use the cards as emergency loan facility. Admitting to hospital will go through smoother with a gold card etc. These people did not owe any credit card debt, they were NOT part of the problems to start with. But now they are affected and has to cut off some of these FREE loan facilities. Credit card debt NOT reduced, good people's personal finance affected.

Some pay off their credit cards in full every month. They use card so that they don't have to bring lumps of cash around. They were NOT part of the debt problem but now they need to take more risk bringing more cash with them. Credit card debt NOT reduced, good people's personal finance affected.

Then there are those who owe money - who have long winding credit card debt. They just can't pay off the debt. They are the target group to be help with this policy. How can adding MYR 50 on top of their debt help them ? They can't just simply stop the card, they will have to pay their debt. As long as they haven't finished paying their debt, the account is running and MYR 50 will be added every year ... as an encouragement fee to 'help' them reduce debt !? Credit card debt INCREASED, bad people's personal finance PENALIZED.

Lastly there are these group of people who haven't had credit cards yet. So when they apply for one, they will think twice. But these people are NOT part of the debt problem to be solved to start with ! Credit card debt NOT reduced, good people's personal finance instilled.

Call me dump and crazy, how can this MYR 50 fee help reduce credit card debt again !? There may be some good points identified but NONE will reduce Today's credit card debts !!

After all, do you think a credit card debt person wouldn't pay a small fee of MYR 50 to get a new card from this lady ? After all, he can pay off this MYR 50 in his next 30 years which is only less than $1 a month.

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Case Study : How to use Money ?

Starting at age 24, Daniel can save $1,000 a month. Plan to buy a $30,000 car at age 30, get married at 29 and buy a house at age 30.

He is also repaying $150 monthly to a $48,000 study loan. Only 10 more months left to pay for a $300 motorcycle loan. The $1,000 is net saving after deducting all these debt repayment.

"How to use money after I save them ?" Daniel asked.

Daniel has some goals to start with, so its best to draw a life line first.

Then Daniel should learn Future-Present Value finance formula. (He may also check out Rule of 72) With that he can come up with these figures. With $1,000 a month at age 24;

1. He can save in 2% fix deposit, he will have about $24,500 at age 26

2. In order to get $30,000 at age 26, his target investment return has to be 22%

3. If he didn't use the saving at age 26, it will accumulate to $76,400 at age 30 using 2% FD return

4. If he buy a car with $24,500, he will have $50,000 at age 30 using 2% FD return

So overall there is not much Daniel needs to worry about because

1. An used car of $25,000 or $30,000 are within similar range

2. Marriage may cost a few thousands typically

3. $30 to $50 thousand is enough for down payment for a typical home

Within the next 2 years, Daniel should mainly focus on cash flow control,

1. $300 motorcycle loan will end in 10 months time, by then he "should" save more every month i.e $1,300

2. He may spent only $350 for food as a student, but a working employee generally may spend more. He needs to watch that in order to achieve the $1,000 saving a month as the target he sets for himself.

3. Phone bill may increase too.

4. New spending category may also be added like entertainment, broadband, bad habits like smoking and drinking etc. Watch the friends you make, the girls you like, the bosses you kiss ass to ... make a good judgement if it is worth doing so.

After that if Daniel really buy a car, that will significantly change his personal finance;

1. Road Tax

2. Car Insurance

3. Petrol increase, usually by 4x from his previous motorcycle usage

4. Maintenance fee - a bad purchased used car may need frequent foreman visit

With only a target salary of $3,000 to $5,000 .... the car he will own may be his First biggest challenge.

Overall, this is the recommendation for Daniel,

1. Understand the TRUE concept of Personal Finance

2. He has 2 years before buying the used car, learn more about car mechanic, how to buy an used car, make more friends in car businesses etc. so that he can target buying an used car worth $X but he only pays $X - $Y for it. High Value for Money. Also read about other ways to get cars.

3. Learn Wealth Pyramid as tools to achieve MeM (Money earns Money) concepts. Goes up level by level from FD to Bond Fund to Mutual Funds to direct stock market investment.

4. While increasing investment return, understand that risk is something you don't know or you thought you know but didn't. So ability to learn, learn accurate and learn fast is your biggest asset now.

5. Marriage is not necessary a liability, it can be a happy event that earns positive cash flow sometimes. Daniel has 5 years from now to start explore what marriage ideas that can achieve such goals.

6. Daniel has 6 years to learn about property investment before buying his first home.

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