[SPONSORED] What Rich Malaysians Do With Their Money (That You Don’t)

According to the Department of Statistics Malaysia, the T20 in this country received 46.2% of overall income share in 2016, while the M40 and B40 received 37.4% and 16.4% respectively.

Image credit to DOSM

Looking at the statistics, you can’t deny that rich Malaysians must know something that the rest of us don’t. I mean, the top 20% can’t have gotten almost half of all the income in Malaysia by accident.

I am greatly fascinated by the money mindset that the rich have. Not their lifestyle, mind you – looking rich is not the same as being rich – but their mindset: what they learned from their parents (if they were born rich) or from life experiences (if they worked hard to get there).

Here are some things that I’ve learned about rich Malaysians.

#1 – They buy time

Whoever said that money can’t buy time is wrong. You can.

Rich Malaysians know this. Instead of doing everything themselves to save money, they would instead pay for products and services that can save them time. Here are some examples:

• Housekeeping services – they employ staff who clean their houses, tend their lawns and send their clothes to the laundry.
• Childcare and ageing care facilities – they employ professionals who can look after their children and ageing parents.
• Quality products – they last longer and are more efficient compared to lower-quality products. Note that quality doesn’t necessarily mean luxury.

I started my personal finance journey with a frugal mindset – I’d spend hours looking for “free and cheap”. It served me well up until now (I’m financially stable), but it’s easy to forget that the cost of looking for free and cheap is time – time that I can use to earn more money.

At this point, I’m starting with slowly replacing all my low-quality items that wore out or broke down with higher-quality items. I’m still coming to terms with the upfront costs that I have to make – it’s mentally hard to accept higher prices when you’re so used to the cheap stuff!

#2 – They pay to mingle with the ‘right’ crowd

At a recent conference I attended, the speaker said something that made me think. He said, “You meet a different set of people at paid events as compared to free events.”

Obviously there are exceptions to the rule (e.g. receiving a free invitation to a paid event, fully-sponsored VIP events, etc.), but as someone who has always preferred going to free events over paid ones, this realisation came as a shock. I mean, I knew, but I didn’t digest the statement until now.

But it’s true. The people who shell out money to attend paid conferences and seminars tend to be people who invest in their professional development.

Reflecting back, I can personally attest to this. The buzz at paid events is different. The questions they ask moderators are different. The conversations during tea breaks are different.

This is not to say that free events aren’t good – no, not at all. But the chances of meeting people with a growth mindset are much higher at paid events.

Now I kind of know why some people pay to access premium places, like country clubs which impose ridiculously high annual fees. They get to network with people with similar economic backgrounds, and some of those networking can potentially turn into high-level business deals.  

If I’m honest, I’m a bit troubled by the elitism here. It’s a form of economic exclusion, isn’t it? Some of us – especially those who are just starting out – can’t afford to shell out the expense. But there’s a way around it – join online communities where the ‘right’ crowd hangs out. Be an active contributor and get yourself noticed there. Of course, this is no substitute for face-to-face meets but who knows what opportunities will be present themselves to you.

#3 – They protect their money obsessively

There’s no point in being rich if you can’t stay rich. When you’re rich (especially if others know it), your money protection game must be strong. Many parties – from scammers to long-lost relatives to opportunists – will want a slice of that money pie.

There are many money protection strategies. I’m compiling the ones I know of here:

• Place your money at bank or any authorised financial institutions and buying insurance policy/takaful certificate – for savings and for protection against unfortunate events.
• Ensuring high level of digital security – to protect online banking and investment accounts.
• Optimising bank deposit and insurance policy/takaful certificate protection – eligible bank deposits and takaful/insurance benefits are protected up to RM250,000 and RM500,000 respectively via PIDM (or Perbadanan Insurans Deposit Malaysia in full) in the event of a PIDM member fails. Rich folks who have more than the coverage amount may diversify their monies across different PIDM member banks or insurance companies to get the most out of PIDM’s protection.
• Set up wills and trusts – to make sure their monies (including proceeds from life insurance policies) goes to the beneficiaries they select themselves, and not to those opportunists. Eligible trust accounts held at PIDM members are also protected by PIDM!

A quick note about PIDM’s protection. It’s free and automatic (you have to know this – some people were duped into paying money for it!). You can read more about PIDM here.

You better click that link – rich Malaysians already know the information inside it, and if you want to be rich, you should, too.

#4 – They look for leveraging opportunities

Leveraging is the perfect example of working smart, not hard. It’s the art of allocating funds and resources creatively with the intention of creating future profits. Some examples:

• Leveraging on talent – rich Malaysians understands the importance of recruiting good talent, so they can leverage on their expertise. Here are 20 companies that have high profit:employee ratio. Fannie May earns USD1,759,000 in profit PER employee!
• Leveraging on zero/low-interest loans – One example is ASB loans, where you can earn 7-8%-ish returns with 4.x-5.x% loan. Another is using zero-interest or zero-fees credit card balance transfers to invest in fixed deposits, money markets, REITs, etc. (sounds easy, but timing is critical). There are other examples but they’re high risk and I don’t want you to take it as investment ‘advice’ and potentially lose money.
• Leveraging on properties – Buy properties and rent it out to tenants who pay higher than the mortgage amount.
• Leveraging on time – basically what we covered in #1. Paying for products and services that will free up time will allow for not just more working time, but also rest and relaxation time so we don’t burn out!

Conclusion

I used to view ‘rich’ negatively. But I’ve since realised that money merely amplifies a person’s personality. When good people become rich, they’ll use the money for good. If they’re bad, likewise. Money is just a tool, after all. You can use an axe to chop down a tree, or you can use it to remove a barrier.

It’s in our collective interest to help good people become rich. Support good people – people who run social enterprises, people who pay their employees fair wages and provide good working environments, people who work ethically in their companies and organisations. The richer they are, the better the position they’re in to make a positive difference to our world.

Leave in your comments people and businesses you think we should support. As a final note, do support the sponsor of this post, PIDM, too. By better understanding how PIDM’s protection works and benefits you, you are better equipped to make informed financial choices regarding deposit, takaful and insurance products for you and your loved ones.