financial literacy month 2021
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[TRANSCRIPT] Personal Finance Chit Chat with Hann and Suraya | Financial Literacy Month 2021

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This is a transcript of the Personal Finance Chit Chat show, which aired live on 30 October 2021 during the Financial Education Network-organised Financial Literacy Month 2021 Finale. Hann of RinggitPlus and myself answered audience-submitted questions, taken both prior to the event and during the show.

The questions we answered were:

  1. I am currently unemployed. I cannot search for a job due to my mental health. Is there any way to earn income from home as I want to pay for therapy? Thanks.
  2. Could you talk about the process of getting financial advisory services, especially for middle class. If it’s necessary, as well as the rates in Malaysia?
  3. Let’s say I’m an LGBT person, what is the best way to make sure my partner gets the wealth they deserve? Wasiat can’t get past Faraid? Is Hibah Takaful good?
  4. Where do you keep your emergency and sinking funds? And would you consider them part of your net worth?
  5. Suraya, I love your content. What do you think about BNPL? Thanks.
  6. I only have personal loan and home loan, how can I finish this loan super fast? Can you give me good tips?
  7. How to use credit card to pay another credit card? How to get a 1% interest credit card.
  8. Crypto, stocks or property, what is best to invest?
  9. [On BNPL] So businesses are crazy for it because of the great potential profit, but who’s going to protect consumers from these dangers? It seems like credit card 2.0, what can we do?
  10. How do I know if I have enough money to buy a property? Any advice for fresh grads on how and when to buy property? The thought of being in debt scares me.
  11. Adakah patut Personal Loan dipanjangkan kepada 20 tahun kembali seperti dahulu, komitmen rendah, maka kuasa beli meningkat dan ekonomi grow?
  12. Macam mana nak mencari sumber dana dengan mudah yang kurang syarat dari institusi kewangan yang syarat ketat tanpa duit dan tak mampu bergerak untuk niaga?
  13. Macam mana nak uruskan kewangan dengan gaji bawah RM1300?

You can go directly to the section you want below. Otherwise, you can also listen to the show – the video is embedded at the end of this article.

This transcript has been edited for clarity.

INTRODUCTION

Hann Liew: 

Hi, good afternoon and welcome to today’s session, “Personal Finance Chit Chat” with Hann and Suraya, in conjunction with Financial Literacy Month 2021, organised by the Financial Education Network, a network that aims to provide financial education and support during this challenging time. 

Hope everyone’s doing well this afternoon and staying safe. I’m Hann, co-founder and director of RinggitPlus, Malaysia’s number one financial marketplace. We’ve been operating since 2012 and served over a million customers for various financial products, including credit cards, loans, insurance, and wealth services. I’m also a licensed financial planner and over the past year RinggitPlus, my financial planning team and I have helped thousands of Malaysians with Personal Financing/ Financial Planning support.

Let’s first set the scene for this afternoon. Over the past 18 months, the COVID 19 pandemic has been quite damaging not just to our health and economy, but also to our personal money. In the most recent survey that we did at RinggitPlus the “RinggitPlus Malaysia Financial Literacy Survey 2021”, we discovered a few scary statistics that you Malaysians told us.

Over half or 56% of Malaysians told us that they can’t save at all or save less than RM500 a month. Almost half of Malaysians spend the same, or more than what they earn each month. And the scariest of all, which is, only 15% of Malaysians told us that they believe that their EPF balance will be enough for them to retire on. This is down from 30% last year. All this means we’re all hurting financially a little. We hope today, we can help a little by sharing some thoughts on various questions that you might have. 

With me, I have a highly acclaimed personal finance writer, speaker and activist Suraya Zainudin. Suraya, why don’t you introduce yourself a little bit, and then what we’re going to be doing this afternoon.

Suraya Zainudin:

Thank you for the introduction. Hann. It’s really nice to be doing this second year in a row. I am a writer, speaker and founder of a personal finance website, RinggitOhRinggit.com. And I’m happy also to share that I’m as of now an associate financial planner, on my way to get my CFP certification.

Today, as Hann said, we are going to answer some questions that you, the audience, have submitted earlier this week. We asked you to submit on Slido and have received, as of this morning, about 34 questions. We’re going to go through them as much as possible.

For those of you tuning in from the platform, you will also see a Slido down below where you can also ask your questions, so upvote the ones that you want answered. Without further ado, we’ll just jump right into the questions. What do you think Hann, shall we go ahead? 

Hann Liew: 

Let’s do that. You ready, Suraya? Ladies first, you go ahead.

Q1 – I am currently unemployed. I cannot search for a job due to my mental health. Is there any way to earn income from home as I want to pay for therapy? Thanks.

Suraya Zainudin: 

Alright. So the first question is by Tamara. Tamara says, “Hi, I am currently unemployed. I cannot search for a job due to my mental health. Is there any way to earn income from home as I want to pay for therapy? Thanks.”

What do you think, Hann?

Hann Liew: 

Oh, really tricky question. For me, it really depends on your capacity to work. Mental health is a big topic these days. But I think the first thing you got to look for is do you have capacity to work. Whether it’s at the workplace, or at home, work tends to work. You have to do things and then get (the) compensation.

But if you know you’re feeling up for working, the first point of call is to find a job. But make sure that you can find one which gives you flexible hours. (Do) things like full remote work, (and work at) places where you feel comfortable to do work. So once you’ve determined, “Hey, I want to work from home. I’m comfortable doing that. Does a job allow me to do so?” 

More and more employers these days are offering flexible working hours, full remote work, so be on the lookout for those. And obviously there are many other ways to make money which I will let Suraya answer a bit more. I’m sure you have to add something to that.

Suraya Zainudin: 

Yes, Tamara, when I got your question, I spent the longest time doing research because I want to do you justice. Okay, so the way that I see it, mental health and financial health are super interrelated, and it’s a chicken and egg situation: Financial health will affect your mental health and your mental health will also be affected by your financial health. 

First and foremost, I think your question is about, are there ways to earn income from home because you want to pay for therapy? And the answer is yes, definitely. A lot of people are making money from home from online work. I personally am doing that. However beyond that, I’m assuming that you have financial difficulties, so I want to point out a few resources that maybe you can use first. 

The first one is called Better Help app. It’s a therapy app and a paid app, however, they are offering one month of free therapy for people. So you can claim one month, at least that’s something (EDIT: This promo expired unfortunately).

Number two is that there’s an organisation in Malaysia called MIASA. Malaysia – that stands for Mental Illness Awareness and Support Association. The website is MIASA.org.my. You can look through what are the activities and resources that are available. There’s also an initiative called MindaKami, which is also great at providing help for people who need mental health support. 

Just remember that mental health is something that is ongoing and something that you will have to work on. It is a good idea for you and everyone else who is listening in to look for free ways to deal with your mental health issues. Look for free ways to cope: find support groups, exercise, do gratitude journaling, all of those.

No matter what, try not to go into unhealthy ways of coping with your mental health, for example, shopping. It will give you those dopamine, which you are really craving, but those may perhaps quickly spiral you into a worse financial situation.

So that’s what I have to say on the matter. Hann, and shall we move on to the next question?

Q2 – Could you talk about the process of getting financial advisory services, especially for middle class. If it’s necessary, as well as the rates in Malaysia?

Hann Liew: 

Let’s do that. Thanks for the question, Tamara. Next question is from Izwan, quite highly voted also. And the question goes, “Hi, could you talk about the process of getting financial advisory services, especially for middle class. If it’s necessary, as well as the rates in Malaysia?” So he’s asking, How do I do it? Do I need it? How much it is? 

I guess I should clarify first, before I pass to Suraya, we first have to differentiate between financial advisory and financial planning. It can get a bit confusing, but please follow me if you can. In Malaysia, Financial Advisory is a specific regulated profession and licensed by Bank Negara. And it’s largely, in fact it’s solely focused on insurance coverage, and the fact that it’s called Financial Advisor, because they can offer you insurance from many providers. So that’s quite handy. 

That’s slightly different from Financial Planning, which is a little broader. It’s a profession that’s regulated by Securities Commission, rather than Bank Negara, because it also covers not just insurance, but investment, cash flow management, tax etc. So I’m guessing what you mean is Financial Planning, rather than Financial Advisory as it exists here in Malaysia. So that’s kind of the first thing I wanted to say to that. 

In terms of whether it’s necessary or not, I think the most classic answer is it depends. But don’t think of it as, “Hey, I only need it when I’m rich”. Because even if you’re a middle-class person, you’re an M40, having a financial planner guide you through your journey might help you avoid making kind of very costly mistakes, which, in fact, pays for itself. And, you know, it’s actually a myth that financial planning is only for rich people or T20 people. 

For example, and I’m a bit biased because we offer financial planning services ourselves. For a few hundred ringgit, you can get a very comprehensive financial plan, covering all kinds of areas of your life, Debt, Savings Investments, Retirement, Tax and Estate Planning, and you can do it entirely online.

That’s kind of long-winded, but hopefully, that helps. Suraya, what do you reckon?

Suraya Zainudin: 

Sure, yes. So I would like to say that RinggitPlus’ Financial Planning Services go for a few hundred ringgit. Usually Financial Planning Services can go up to thousands. So RinggitPlus’ Financial Planning Services is one of the most affordable ones in the market, if not the most affordable. 

But in addition to that, you can get Financial Planning Services for free one time a year, which is right now, during the Financial Education Month. If you notice in your virtual convention, there’s a section called Financial Planning and you can book a free session with licensed Financial Planners. So make sure to take advantage of that.

Like Hann said, you don’t have to be a T20 in order to start. You can even ask them specific questions, for example, “Can you review my insurance?” or, “What do you think of my investment portfolio right now?”, “What is your recommendation?” You can ask them specific questions like that. 

Q3 – Let’s say I’m an LGBT person, what is the best way to make sure my partner gets the wealth they deserve? Wasiat can’t get past Faraid? Is Hibah Takaful good?

Suraya Zainudin: 

So I’m gonna move on to the next question, which is sent by Anonymous. Anonymous asked, “Let’s say I’m an LGBT person, what is the best way to make sure my partner gets the wealth they deserve? Wasiat can’t get past Faraid? Is Hibah Takaful good?” So Anonymous, there are a few components to your question, I’m going to try and break them down.

If you are Muslim, there is a tool called Wasiat and it is not true that Wasiat cannot get past Faraid because, in the documentation, you can allocate a third to whomever you want. However, the big caveat is that the rest of the heirs must be agreeable to the “pecahan”, to the allocation. 

So I’ve actually researched this topic quite a lot and I have an article on it on Ringgit Oh Ringgit. Your question about hibah takaful and whether it is good – it is something that I would highly recommend to all Muslims, and not just for LGBT persons.

If you are a Muslim, if you have irresponsible family members, if you have loved ones who cannot get inheritance from your money, if you are a convert, and you have your non-convert parents or siblings that you want to leave money to, or if you have adopted children – they do not have any allocation under Faraid system, so definitely get Hibah Takaful because with Hibah Takaful you can allocate the beneficiary to whoever you want. You can even name them as the sole receiver of the money.

One nice thing about Hibah Takaful is that it is one of the most affordable tools for inheritance especially for Muslim people in this country. As a benchmark, about RM100 to 200 range, depending on your age and your gender and things like that, you can leave behind a cool let’s say RM500,000 to a million.

So I want to expand this question beyond LGBT person, to just whoever was listening in, who are worried that your loved ones may not get inheritance when you pass on.

Hann, do you have anything to add?

Hann Liew: 

That was very, very, comprehensive, Suraya. I probably only have one last thing to add for Mr. or Ms. Anonymous. I think what you said is right, it’s not just for LGBT people. Iit’s for anyone who wants to give outside of the Faraid structure. It can be a friend, it can be a loved one of any kind.

Wanting to add I guess to what Suraya said about Hibah Takaful, also you might want to consider Hibah Amanah as well. If you have existing wealth elsewhere in cases like ASB or Tabung Haji, and you go, “Hey, look, can I give it to somebody who’s not within that Faraid kind of structure?” – consider Hibah Amanah, that pretty much means you nominate somebody under that scheme, your ASB or your Tabung Haji funds to whomever you’d like to be.

So Hibah Amanah is something to consider as well for people who have the wealth sitting there and they hope to give it to their loved ones.

Q4 – Where do you keep your emergency and sinking funds? And would you consider them part of your net worth?

Hann Liew:

Cool, let’s keep going. Next one is a classic one, which I think everyone should know. Also from Anonymous. So the next question is, “Where do you keep your emergency and sinking funds? And would you consider them part of your net worth?” I think this is a great question. And Suraya, why don’t you have a go?

Suraya Zainudin: 

Oh, you taichi to me? Alright. 

Hann Liew:

As in, I want to hear what you think, cause this is a very specific question, and where do you keep yours? So I’m curious to hear where you keep yours too. 

Suraya Zainudin: 

All right. Three months’ worth of expenses, I keep in my bank account, that’s for my day-to-day (expenses). The rest, I put them in my various liquid investments. Only a minority, I keep in illiquid investments.

The one inside the bank account is there because it’s for daily life. That’s my emergency fund. The rest I just put in ASB (and other liquid investments), because it’s just far enough for me to not use but easy enough for me to take just in case I need it. And yes, I do consider them as part of my net worth. How about you, Hann?

Hann Liew:

No same, yeah, same. Love that answer. It’s very obvious that you know exactly what to do with that. And I think for me, I would encourage you to do the same. So I keep mine in a slightly different place. And I’ll explain why in a second. There’s kind of two questions there, which is, “Where do you keep your stuff?” and “Would you consider it part of your net worth?” 

“Where do you keep your emergency fund?” – I think is a good question. You mentioned three months, as a licensed Financial Planner, we certainly say three to six months is where you should be looking at for your expenses, so that if anything happens, you’re not worried for a large amount.

The next question people gonna ask usually, when they say once I say three to six months of your expenses is okay, where do I put this? And for me, I like to go principles-based. Principles-based meaning, I keep my emergency funds in three places. The three principles are: one, it has been liquid. Like you said, I need the money within a day or less.

Number two, it needs to be fairly low risk, which means I can’t take too much risk, I can’t be investing in kind of the stock market or cryptocurrencies or things like that. Means if I put the money in today, it’s got to be a similar amount, tomorrow, next month, next year.

And third, and most important that most people forget about is that you should try and beat inflation even with your emergency funds. Because emergency funds just sitting there will be eroded by inflation, if you keep it under your pillow or something. So those three principles, liquid, low risk, beat inflation. 

And there are many options. You mentioned a great one, which is ASB, especially the fixed price funds, perfect place to put (your emergency savings). Why? It’s low risk. It’s a bit lower recently, but you still beat inflation above 4%. And lastly, it’s fairly liquid, you can walk through a branch get your money. It’s a bit of a hassle, but you can still do it. 

Another option, which I personally do is, I have a home loan with a flexi account feature. So I live in a home, I have a home loan on it, and a flexi account feature. It’s a bit complicated, but basically what it means is if let’s say my home loan is RM400,000 ringgit, and I have say RM50,000 of emergency money, which I put in the current account, linked to the home loan, then my interest will only be charged on 350,000.

So that’s what that offset means. And that effectively means my emergency funds are earning the home loan interest rate, which is about 3.3%, which is lower than ASB but still pretty decent, still pretty liquid, I can take the money out any time.

So that’s where I keep my personal emergency funds. And I certainly consider them part of my net worth because it is money that we own.

Q5 – Suraya, I love your content. What do you think about BNPL? Thanks.”

Hann Liew:

Cool, good stuff. Let’s move on. The next question is going to be a firecracker one. You’ve got an Anonymous, “Suraya, I love your content. What do you think about BNPL? Thanks.” Yeah. So Suraya, what do you think about BNPL?

Suraya Zainudin: 

Let me go on a rampage right now. Thank you Anonymous for asking this question. It is my belief that BNPL or Buy Now Pay Later for people who are not familiar with it, there’s more bad than good.

For people who are hearing this term for the first time, BNPL or Buy Now Pay Later is basically a system where they allow people who don’t have credit card to pay for any item or services that they want using an installment system, usually between three and six months and you don’t need a credit card for it. So nice, right. 

However, I believe that BNPL does more harm than good and the reason is that most items and services sold under BNPL are items that are considered wants and not needs. There’s barely anything on or related to health and safety services. It is mostly luxury items. It’s excessive consumption, things that are aspirational that are promoted. 

And the second reason why I don’t really promote them or like them is because it is this trend that encourages people to borrow against their future. And borrowing against the future, those kind of tools already exist right now. You’re borrowing money to buy a house – that’s borrowing against the future; your future self’s ability to be able to pay off the loan. Or a car, you borrow now so that your future self will pay off the car. But you can sort of somewhat justify these things. Car, house, education, because those are things that can help you earn more money and to make a living. 

How about with BNPL? Let’s see, if you buy a luxury item, how can you ever justify that? And when you allow this culture of borrowing against the future, what then is the incentive for employers to raise salary? Right?

So we have been talking about how in Malaysia, the cost of living is high, and salary is low. And when tools like this exist, that say, “Oh, you want what you want. So come let’s borrow money, and let’s help you to afford this so you can live the life that you want,” instead of actually prioritising, “Hey, if you want something, save up for it first before you get it”.

So that’s my two cents about it. And maybe something else, Hann, before I pass it over to you. BNPL is not unique to Malaysia. It’s been existing in other countries. I’m just gonna touch on some statistics. BNPL is already very, very popular in Singapore. In a 2020 study, 27% of people who use BNPL are worse off because of a BNPL purchase. 9% have paid a penalty for missing payments.

You don’t want to be like one of those who are not able to pay for it. Because I have now seen people who have taken excessive installments under BNP without realising it. So that’s my two cents. Hann, over to you.

Hann Liew:

I love that. For me, the ideas are good, but how it’s being executed may not be in line with how we want to promote in terms of Financial Literacy. So, my view on BNPL is very simple. I think the idea of BNPL is fantastic. It’s extremely inclusive. So right now, the ability to have kind of interest-free payments in a pre-BNPL world was the domain of high-income people with credit cards. There’s this amazing thing called EPP and then they made use of it. And then people who couldn’t qualify for those things were just left out of the entire system completely, which I feel by nature, doesn’t sound very inclusive.

And for me, I always love inclusion, I like things which will bring more people into the fold, to expose more people to kind of the various tools that are available to make Cash Flow Planning better. Most of them are interest-free, some of them are also fee-free. And they charge the merchants basically.

So the idea is great, but I sort of feel the execution of BNPL as a business is the one that we should be very aware of. The execution of BNPL is highly predatory. Meaning, exactly what you said, right? The idea is good, it’s actually very interesting, it’s inclusive, but it’s being used to encourage the wrong kinds of behaviours.

What I love to see is BNPL used for is for people who need things like, “I need a new washing machine. I need it today. I can’t afford it today, but I probably afford it over the next three or four months. What am I going to do? I can’t wash my clothes at home, etc.” These kinds of behaviours, I think, are fine. It’s the luxury good stuff that is being predatorily marketed to people now. But I guess for me, this happens everywhere. And if you ask me, I prefer inclusion rather than exclusion.

I’ll use a classic example for this. Even in the credit card world, you know, domain of the M40 and T20. Two-thirds to three-quarters of people don’t pay their credit cards on time. So even for supposed rich and educated people, they don’t do that right. So I don’t think we should be discriminatory towards people who are lower-income, who can’t qualify for a credit card and say, “No, therefore, you also shouldn’t, you definitely shouldn’t be getting BNPL service.”

What I think we should do is to look at it in totality, which is that these two products are great as tools, but are currently wrongly used and marketed. And we should be looking at it in totality, both these kinds of tools, perform similar functions. Both on the good side, as well as the predatory side.

I believe Bank Negara is, so that’s kind of what I hope to happen soon because BNPL is coming in fast right and coming hard for Malaysians. We just need to make sure we protect the most vulnerable people. So that’s my view. I’m not saying I love BNPL, I just think, as a tool it’s great. It’s just you know, as a tool knives are good, but they can hurt people too.

Suraya Zainudin: 

Just a really quick one, I promise. You mentioned inclusion. It is okay for the whole inclusion thing not to include (debt), but that’s only my own personal view. 

Q6 – I only have personal loan and home loan, how can I finish this loan super fast? Can you give me good tips?

Suraya Zainudin: 

Next question, Anonymous asked, “I only have personal loan and home loan, how can I finish this loan super fast? Can you give me good tips?” So Hann, how do you finish a home loan and personal loan super fast?

Hann Liew:

Oh, if only I had a magic button to do that for you, dear Anonymous. If you do have a personal loan and a home loan, quite likely the personal loan interest would be a lot higher than your home loan. I can’t solve all your problems.

But what I can do is say look, if you’re willing to do a bit of kind of financial magic or financial engineering, you might want to consider using some of your home loan, increasing the balance a little bit, make sure it’s extremely low interest versus your personal loan, and clearing off your personal loan just like that. Because that way you’re trading in a high-interest loan, personal loans are currently somewhere between 5-10%, flat, or 9-18% on a home loan APR basis.

I can’t promise you it’ll be gone super fast. But at the very least, you’re going to be saving quite a lot of interest if you did that. So use the home loan, maybe do a top up and pay off the personal loan, and reduce your commitment as well as your long-term interest. So for me, that’s kind of one way I will look at it. 

Now, if you don’t want to do that kind of financial magic, you could just focus paying off more than what you’ve committed to and therefore pay down faster. And if you ask me which one to pay down first, definitely the personal one first, because that’s likely to be high interest. That’s my view. And we do that a lot for customers at RinggitPlus. Suraya, what do you reckon? Anything to add?

Q7 – How to use credit card to pay another credit card? How to get a 1% interest credit card.

Suraya Zainudin: 

No, nothing to add to that. That’s a perfect answer. So moving on. I think this is another one of your domain, Hann, “How to use credit card to pay another credit card? How to get a 1% interest credit card.” I think this person maybe means, does the 1% interest credit card exist, and how to use a credit card to pay another credit card. That’s called a balance transfer credit card. RinggitPlus offers this kind of things as well, yes? Do you want to explain?

Hann Liew:

Sure, sure, thanks Suraya. I mean, RinggitPlus, we are quite known for credit cards. We do much more than that, obviously, but the first thing we’re known for is you know, expertise in credit cards, so I can very clearly answer these two things. 

Number one, how do you use a credit card to pay another one? Very simply, two ways. Number one is called Balance Transfer. What happens is you apply for a new credit card. Within that credit card application, kind of 3, 4, 5, pages in, you see something called a Balance Transfer Application, where you put your old credit card with the balance on it, the old credit card’s number, and the amount that you want to transfer over to this new credit card.

So maybe you’re incurring interest at kind of 15-18% a year on your balance right now, you apply for a new card and you transfer the balance over. There are all kinds of promos happening now you can get it for 0%, maybe with a small fee. And then you have to buy yourself time to actually pay it off and pay much, much lower interest, if not none at all, for the first 6 to 12 months. So that’s one way to do it.

The second way to do it, and a lot of credit card companies are starting to promote this is a kind of cash instalment on the credit card, which I would say, look, beware of this, have a look at the rates. It is low, say lower than 3-4%. Yeah, that’s totally fine. It’s a lot better than paying 15-18% on your current balance. So you can take off a small amount on your new credit card and pay off yourself without having to do this kind of financial engineering, apply for things and get it approved. 

The next question is a tricky one. How do I get a 0% interest rate credit card? Good question. I prefer to get a 0% interest rate credit card, not a 1% interest rate credit card. If you pay off your balance in full every month, you can get a 0% credit card. I know it’s probably not the answer you wanted but credit cards can be 0%. So why not make use of it?

And if you say hey, look, I need more than 45 days, make use of things like those balance transfer programmes, get your interest costs down, or, you know, things like EPPs, where you’ve got a large purchase, whether it’s kind of a washing machine or a fridge, or a car that you can get on a credit card. Sure, no problem. 0%, sounds good to me.

What do you reckon, Suraya? Any other tricks you want to add to that?

Suraya Zainudin: 

No, just a final reminder for everyone listening to always pay your credit card balance in full every month if you want to avoid that interest because (15-18% interest) is a lot. 

Q8 – Crypto, stocks or property, what is best to invest?

Suraya Zainudin: 

Alright, the next question. George asked, “Crypto, stocks or property, what is best to invest?” Okay Hann, if you don’t mind, I’m going to take this one first. I want to say this is not financial advice, but obviously this is financial advice. So what I’m going to say instead is take what you like, don’t take what you don’t like, (it’s just) another person’s opinion.

So my opinion is that you can try any investment you want, any opportunity you want, no matter how risky it is, as long as you only use 1-5% of your assets. I think that this is way better than the conventional advice. You know, learn everything that you can, before you do the investment and things like that. 

I will tell you many, many reasons why you should do this approach. Number one is because you will minimise your total loss. Even if you lose everything from any high-risk investment, you will only lose between 1-5% of your assets.

Number two, there’s a bias for action. More often than not, doing is better than not doing. And many people who say, “Oh, you have to learn first”. Even experts right now, top experts, crypto experts, property experts are learning new things all the time, even years into entering that investment. So there’s no possible way a beginner can learn everything before they start. So start first.

Number three is that you will learn better when you start a new investment. You will now read The Edge, read books, you will want to learn more about it, you’ll be more motivated. Number four, experience is always better than theory, you can read all you want but it’s only by learning by doing that you will learn the emotional rollercoaster that is associated with the investment. 

Number five, and this is an important one: your research might suck. The information that you get from friends and family, is biased. Let’s say you have parents or you have whoever else saying that, “Oh property is good,” “Crypto is good,” and “Gold is good,” and “Stocks is good.” The reason why they say that is because by you getting the same investment it will help to maintain the price, it will keep getting higher.

Let’s say you’re the type of person who find information by Googling them. Do you really think that all those information on the first page of Google just by magic? There are digital marketers whose job is to put this information where your eyeballs are looking at. And this also includes things like online forums. I know of companies that plant fake reviews of investments, or whatever forums in order to mislead people or to hype it up more than they should. 

Number six, and this is also a very important one, it will filter out a lot of scams. Chances are, if you only use 1-5% of your assets, it’s a smallish amount. Let’s say you have RM10,000, 1% of that is maybe like what RM100?

And scammers, they love to give you all this FOMO, like, “This is a once in a lifetime opportunity”, “Oh you have RM50,000, great, our package to buy in is RM50,000”. You won’t want to gamble all of your money, all of your life savings away. That’s the main worry that I have when people jump into any investment.

So in short, do any investment that you want, but limit your losses. Hann, how about you?

Hann Liew:

That was a lot. George, great question. That’s kind of the million-dollar or in some cases, multimillion-dollar question for most people. You know, as a licenced financial planner, it’s hard for me to say, “Hey, look to do this, this or this,” without knowing much more than just the question. But what I would say is, I can share with you a few concepts, which should help you in your decision making.

I think what Suraya suggested is a very extreme version of the barbell strategy. Keep most of it in safe stuff. I think that’s a great way to start if you’re a beginner. If you’re looking for investment advice, I think the key is to remember, nobody should be giving you investment advice, without first knowing your circumstances. So in this example, I can’t tell you what to do. 

But what I can share with you is a few things that should help you along your way, regardless of where you are. Number one, look at what your position is today. And then once you’ve done that, I want you to remember one word, which is diversification. So if you’re entirely in property right now, maybe consider investing outside just property. That’s what diversification means.

I’ve got a client who had all his money in the Malaysian stock market and asked me, “Hey, is this a good investment? Should I invest in property? Should I invest in all these kinds of things?” Same question. And what I told him was like, “Look, you’ve got quite a lot in stocks already. Try diversifying. Move across more asset classes and build a portfolio which is well diversified.”

So regardless of what the correct answer is, and honestly, there’s no correct answer, focus on diversifying. So if you have a lot in property, go to stocks, go to other things. If you’re a lot in stocks, go yet again, go to other things. That’s one.

Second, there is no such thing as the best investment. Markets move, financial markets, asset markets, like even crypto markets move in cycles. You might have heard the terms bull market and bear market, expansion, recession, these things impact prices of things. And nobody, I repeat, nobody can tell you where the prices are going tomorrow or next year. They can guess but you know, the guess is almost as good as yours.

So the trick there is not to time the market in terms of a specific asset class, “I think crypto is good right now,” or “I think property is good right now.” It’s about making sure you’ve got enough exposure to many things. And then consistently investing throughout the cycle. Whether it’s through a bear market, you’re putting money in regardless.

For me, with those two kinds of mindsets, you can’t go wrong. Diversify, and be consistent with your investing and yeah, feel free to experiment like what Suraya says, experiment with and try it out. So that’s the only thing I would add to that very, very scary question.

Suraya Zainudin: 

One last bit I want to add to that is do all of your speculative investments in addition to your consistent ones every single month. Every single month, make sure you’ve already put money in EPF, already put money in all your other safe investments and then whatever is leftover, you can play around. Consider it your fun or even entertainment money.

Q9 – [On BNPL] So businesses are crazy for it because of the great potential profit, but who’s going to protect consumers from these dangers? It seems like credit card 2.0, what can we do?

Suraya Zainudin: 

Alright, the next question is from Ruiz Asri, who’s behind the super cool The Personal Finance Challenge YouTube channel. Another question about the BNPL. “So businesses are crazy for it because of the great potential profit, but who’s going to protect consumers from these dangers? It seems like credit card 2.0, what can we do?”

Earlier in this talk, we have already spoken at length about BNPL and how it is predatory, but also promotes financial inclusion. To answer your question Ruiz, right now, because it is not regulated, it is kind of up to individuals like me, like you Hann, like personal finance content creators out there who are talking about these dangers.

I have seen many people actually speaking out about this and telling people about the dangers. Especially for Muslims, reminding each other that the majority of BNPLs are promoting Riba and Riba is haram. There’s only one BNPL company that is Shariah-compliant, so if you must, then pick the Shariah-compliant option.

Q10 – How do I know if I have enough money to buy a property? Any advice for fresh grads on how and when to buy property? The thought of being in debt scares me.

Hann Liew:

Okay, I think the next question is from Nadia. And we’ll probably answer this one and then look to move to the live questions just to see what’s on there. There’s quite a lot there. 

Nadia’s question is, “How do I know if I have enough money to buy a property? Any advice for fresh grads on how and when to buy property? The thought of being in debt scares me.” Nadia, it scares most of us. Suraya, I want to know what you think, I want to hear what your thoughts are on this. Because this sounds exactly like the kind of advice that you tend to get asked a lot.

Suraya Zainudin: 

You know, the other day on Twitter, somebody was asking, “Do you have any goals to achieve before the age of 30?”, and many people actually answered, “House and a car”. And both of these things are liabilities. And it is extremely, how to say… Not cannot but you have to be very, very, very realistic.

Remember, for a house in Klang Valley, you’re talking about at least, depending on the house price on the market, at least RM1000-1500 or RM2000 per month. And then a car is at least RM500 per month. That’s already RM2000+ that you have to allocate, just to pay off these two huge commitments per month. So do you want to rush? But if you do, the best thing is to think 2, 3, 4, 5, times before you commit to these things.

But if you are already in the situation, then try and see how you can work on this asset. For example, if you already own a house, try to rent out some room so you can reduce your commitments a little bit or try and rent out your car or use it towards a side income so you can use it to pay off your financial commitments.

For many, many people, I understand that these two things symbolises adulthood, and I don’t blame them for wanting it. But you have to remember that, considering the Department of Statistics says that in 2020, the median salary is just roughly RM2000 per month. Do you really want to spend it all on just these two items?

Hann Liew:

I love that. Because for me, it’s a step away from just thinking about, “this is how you should live your life”. And I think most people should look at how they live their life based on what they want, rather than what society demands. But I guess Nadia is asking for number-driven tip. Let me try and fill that in. I love your view, by the way, but I’ll try and see if we can help Nadia, just be explicit in answering the question, “How do you know if you have money to buy property?” 

Very simply, two tests. Test number one, do you have at least 10% for down payment? I know there are plenty of offers out there that say zero down payment that kind of stuff. But for me it’s a good test to not just delay that gratification but to really put yourself in a strong financial footing.

Do you have enough for at least a 10% down payment plus maybe 1-2% more for the property transaction costs and stamp duties and stuff like that? So if you’re looking for a RM300,000-400,000 property, you have at least RM35,000-45,000. Good test, right? That’s when you know, okay, I can start thinking about it.

The second test is when you do think about property and then you look at the mortgage, home loan or 90% of that remaining balance, is the instalment going to be more than 30% of your income? If it is, you’re probably going to be overstretching yourself. Yet again, I know many banks are saying, “Don’t worry, you can loan up to 50-60% percent of your money, of your income.”

But for me as a financial planner, most people that I’ve spoken to and analysed who are well in control of their money have it way below 30%. Most people I speak to who don’t have their money in control, are way above that. So for me, that’s why the 30% Rule really makes a difference. So you know, RM1000 a month, is that 30% of salary? If it’s more than that, you might want to reconsider, you’re probably not ready. And yes, the thought of debt should scare you.

Last thing I want to add is, I think of cars and houses differently. Cars are utility, (it’s) an asset which depreciates. Housing is likely, but not guaranteed, an appreciating asset. And basically you’re locking in inflation, you’re letting inflation work on your side rather than against you if you’re renting. So that’s kind of a benefit. The cost of doing that is lack of liquidity, you’re tied down to one house, it’s really difficult to dispose of it takes you a year. So you trade in a bit of flexibility. But you do lock in the fact that you protect yourself from future rent increases, because of inflation, etc. And you’re in control of your own kind of living costs, essentially.

So Nadia, do those two tests. If you pass, then you’re probably ready. Then the question you should ask, which is Suraya’s point, is do you even need it? Or do you actually just want it? So that’s a couple of tests there. Good question.

Q11 – Adakah patut Personal Loan dipanjangkan kepada 20 tahun kembali seperti dahulu, komitmen rendah, maka kuasa beli meningkat dan ekonomi grow?

Suraya Zainudin: 

This question is an interesting one, Mr. Muhamad Firdaus is asking, “Adakah patut Personal Loan dipanjangkan kepada 20 tahun kembali seperti dahulu, komitmen rendah, maka kuasa beli meningkat dan ekonomi grow?” Should personal loans be lengthened to 20 years, so purchasing power increases and the economy grows? Hann, this is a tough one, what say you?

Hann Liew:

Very tough and for me personally I vote for no. One of the great things that the Bank Negara has done in the last 10-15 years has been to control or put regulations around these kinds of personal loans, the same kind of “bad mindset” that we were talking about with BNPL earlier, which is encouraging consumers to do things which are not beneficial to them (and) predatory marketing done by lenders.

I think, by nature, a personal loan is for personal expenses. If there are things that you want to buy which are asset-based, to increase your income or increase your wealth, there are loans available already. You’re taking home loans to increase your wealth by buying a home. ASB financing, you increase your wealth by getting ASB. For increasing your income we have PTPTN.

Personal Loans are typically used for personal consumption which I’m not in favour of, honestly. And the second reason is because in terms of financing, (personal loans have) the highest interest, higher than car loans and home loans. So I would say no for those two reasons. What do you reckon?

Suraya Zainudin: 

Same answer. I’m just going to translate it for the benefit for Encik Firdaus over there. Encik Firdaus, apa yang Encik Hann cakap tadi ialah, sebaiknya personal loan, tidak wajar untuk dipanjangkan. Banyak sebabnya, tapi salah satu sebab ialah dia memudaratkan kita sebab interest dia sangat, sangat, sangat tinggi. Bayangkan kalau dipanjangkan ke 20 tahun, nanti interest dia sebenarnya sudah melebihi jumlah asal barang tersebut.

Q12 – Macam mana nak mencari sumber dana dengan mudah yang kurang syarat dari institusi kewangan yang syarat ketat tanpa duit dan tak mampu bergerak untuk niaga?

Suraya Zainudin: 

Okay, so we move on to the next question, also actually in Malay but a very popular question, “Macam mana nak mencari sumber dana dengan mudah yang kurang syarat dari institusi kewangan yang syarat ketat tanpa duit dan tak mampu bergerak untuk niaga?” How to find sources of financing, with less terms and conditions if we have health problems? 

Hann Liew:

I think Encik Aziz wants to start a business, and from what I can tell, he’s having trouble finding financing. There are many sources of financing for new businesses these days, especially for small businesses. You don’t have to take a loan, that’s not the only thing you can do. Lots of grants are available for small business, especially with the latest PENJANA, PEMULIH and PEMERKASA plans from the government. So that’s one.

Second, if you’re looking for financing, there are actually many sources outside of banks that you can get. So be sure to find those that are regulated right by Bank Negara and SC. There’s things like P2P players, which can help you source from the public, that’s quite useful. Or you know, ECF if you’re willing to give up some of your business equity. Crowdfunding is another way to do it. Many ways other than just going to a bank. What do you reckon, Suraya? You’re a small business owner. Any tips for Encik Aziz?

Suraya Zainudin: 

Maybe satu je. I just want to add on here, untuk sesiapa yang dekat sini yang nak mencari sumber kewangan, sumber income (tapi tak tau nak buat apa) boleh contact satu agency ni, nama dia Institut Keusahawanan Negara yang ada organise webinar, workshop.

Banyak jenis cara untuk dapatkan punca pendapatan, tak semestinya online ada juga offline dan juga bengkel-bengkel yang boleh masuk untuk belajar. Jadi, daripada mereka juga boleh tanya dimana boleh dapat dana kalau nak kembangkan bisnes kecil yang kita ada. Okay, so that’s my contribution from there.

Q13 – Macam mana nak uruskan kewangan dengan gaji bawah RM1300?

Suraya Zainudin: 

Let’s move on to the next one. I think this one is the final one that we can do Hann, before we end the session. So this question is asked from Nur: “Macam mana nak uruskan kewangan dengan gaji bawah RM1300?” Let me expand that to, “how do we manage our income, our financial life, with a small salary?” What do you say, Hann?

Hann Liew:

What I’d say is, the obvious statement is that we can’t change the fact that structurally in Malaysia, salaries, average salaries, starting salaries are low. That’s kind of a macro thing. As an individual, we can’t change that. Maybe through a little bit of activism, call your MP, etc, you can do that. But for your own self it’s difficult (to change things).

So the only thing I would say is look, find whatever ways to increase your income. So that’s hopefully something that you can focus on other than just save, save, save. I’m not saying get a second job. I’m saying, hey, look like how do I increase my skills? How to increase my marketability in the open market, increase my salary? Can I do anything extra, not just for my employer, but for myself, that helps me increase my income?

But for me, regardless of what income level you’re in, right, there are two main ways to look at how to, I guess uruskan kewangan or, or manage your budget. In terms of saving there are very easy, pain-free ways to save. So for example, if you’re finding that you’re spending quite a lot on housing and transport why not figure out a way to not do that? You might have to inconvenience yourself a little, move closer to your workplace, then you don’t need a car, for example. Live closer to your workplace and save.

And second, can you live below your means regardless of what salary level you’re in? So for example, if you’re earning RM3000 a month. Can you live like you’re earning RM2000. Can you challenge yourself to do that? That’s the kind of thing that puts control in your hands rather than anyone else’s. Like, the government should do something for me, the country should do something for me. But can I live like somebody who’s earning RM2000? And I’ll save the difference. And I know, it’s tough to do. But that’s just the mindset that you can have. 

And this applies regardless of whether it’s RM3000, RM1500 and “I only earn RM1300” like you said. Can you live like somebody who’s earning RM1100? That’s RM200 (a month). Can you do that for your financial future? You reap the benefits of doing that, nobody else. So hopefully, that gives you a bit of encouragement. 

(There are) two ways: increase your income as much as you can and have a deflation mindset in your in your life. Which is, can I live on less, and still be happy? Knowing that I’m sacrificing for myself and nobody else. Suraya, does that make sense to you? And would you like to add to that?

Suraya Zainudin: 

II like what you say about there’s so much that we can do for activism, and we should definitely hold our politicians accountable. They’re supposed to take care of their citizens. However, don’t let them take more time than you should. Spend maybe like five minutes being angry, and then back to relying on yourself. Because at the end of the day, you (can only rely on yourself and) can’t budget your way out of poverty.

However, my addition to that is your strongest resources right now is your access to community support. So wherever that you can find help, find help. There are people who are doing so many different kinds of various kinds of creative ways to both decrease expenses and to increase income. For example, renting together with a bunch of friends in order to keep accommodation expenses super low, or share your car with family members to keep transportation costs super low. But beyond that, you have no choice but to first and foremost, rely on yourself. So don’t complain and then not do anything after you complain.

We are nearing the end of our session today. Do you want to give your final word before we wrap it up?

CONCLUSION

Hann Liew: 

Yep, sure. I think this has been really as always very enjoyable. I think personal finance should not be just lots of theory, lots of coats with shirts and ties, talking down to people. It should be really answering people’s genuine questions and uncertainties and helping solve problems. That’s exactly what we do at RinggitPlus. So hopefully, check it out. But for me, I think it’s been a really tough year and a half. And not just for the country. But for us personally. And our personal money. 

I hope you guys have learned quite a bit about money stuff, not just financial theories, but money things from myself and Suraya over the past hour. From the organisers side, there will be a pop quiz right after this session. There’ll be heaps of lucky draw prizes, so have a go at the quiz. Hopefully, some of the answers we gave should help you with those.

And thanks so much for listening. Never give up on yourself. You can do it. The power is in your hands to make a change to your own financial future. Back to you, Suraya, for some last words.

Suraya Zainudin: 

Yes, my last word for today is just to keep doing what you need to improve your finances. We’re not promising any quick fixes. It’s going to be super hard before it’s going to be easy, but it can and will be easy and you can make your own luck.

I’m noticing that we have some questions related to insurance so any of you who are interested to learn more about insurance at 2:30, there’s a session called, “What Is General Insurance and Why Is it Important For Me?” so learn about general insurance later, right after this.

And then at 4pm, we have a session called “Kepentingan Takaful dan Insuran dan Program Voucher Perlindungan Tenang”. So for those of you who consider yourself as part of the B40 community, please attend that one because the government is giving out free vouchers for you to be insured.

Alright, so that’s all from me and also from Hann. Thank you again for joining us today. Sorry to everyone who we couldn’t answer today. We have time limitations but feel free to reach out to us online. And thank you for supporting the Financial Education Network and also the Financial Literacy Month. So see you soon, next year, hopefully. Take care everyone. 


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