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Malaysians Share Actual Unpopular Opinions About Money

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It all started when I posted this on Ringgit Oh Ringgit’s Facebook and Twitter page:

It got some pretty freaking amazing answers. Rather than losing them forever in social media, I thought I’d compile them and turn it into unpopular opinions: money edition-article. Thank you so much for everyone who gave me permission to post their answers here.

Here are some unpopular opinions about money, in no particular order:

#1 – ASB and EPF will no longer deliver high returns

The Pelham Blue Fund – There is no way ASB and EPF will be able to deliver +5.5% p.a. dividends each year in the next 5 years, simply due to ever larger deposits and lower market returns. There will be a point where ASB yields can no longer offset interest charges on ASB loans.

Take the EPF: It currently has RM800bil in assets. To ensure dividends of 5%, it needs to generate RM40 billion in income (profits) every year. When it hits RM1 trillion, the income needed goes up to RM50 billion. The fund’s investments are still predominantly in stocks. When the stock market falls, there’s an income shortfall that has to be met as the portfolio value declines. It’s bloody difficult to generate an extra RM10 billion in pure profits in any given year, of course.

At the same time, more and more deposits are coming in. Simply put: achieving 5% returns is easier when you have RM500 billion in assets, compared to RM1 trillion. That’s what yields tend to do: they narrow when asset size grows AND when markets go bad. We have both of these in abundance right now.

Lastly, if you see these funds delivering above 5% returns at a time when the stock market is in decline (the KLCI has fallen 11% over the past five years), then your dividends are not reflecting actual returns. Some creative accounting may be going on.

Just look at what happened with Tabung Haji.

#2 – Channel money into EPF investment early in life

Edmund Ngo – Making extra contributions individually into EPF during your early single working days. This would leverage on the dividends and compounding effect.

It’s unpopular because people say:

  1. The money should be used for investment,
  2. You can’t touch it if you need it for an emergency,
  3. The govt is the one managing our EPF money
  4. Retirement is sooo far ahead

Number 2 could be a big point, to which my suggestion is to:

  1. Set up an emergency fund first
  2. Contribute around RM100 to RM200 to the EPF contribution monthly for 1 -2 years
  3. After that, redirect the money to investments

That 1 or 2 years of extra funds can snowball to something significant.

#3 – Renting property is better than buying property

Kenny Lim – Rent > Buy. The benefits of renting over buying:
  • You don’t have to wait to move in (compared to 2 to 3 years for new projects)
  • Your overall financial commitment is less(additional costs to buying a house include loans from the bank/deposit money/MOT/Legal and Loan fees)
  • Less commitments to buying a house mean more spare cash/savings for a rainy day

Hasyimi BahrudinHome ownership is not necessarily better than renting. Which one is actually financially better for you depends on a lot of factors.The biggest factor for me is how much flexibility do you require? If you have a career that requires you to be flexible in where you reside (e.g. you work in an industry where it’s normal to change jobs every 2-3 years), it doesn’t make sense to purchase a home and lose that flexibility.

If after 2 years, you get a job offer with much better pay, but it requires a longer commute from where you live, you either have to suck it up (and increase your expenses due to longer commute), or turn down that offer. If you rent instead, you can just move nearer to your new office a few months later (if they really want you, you can even bargain with the company to cover your relocation expenses).

Of course, understand that I am arguing that in the context of finance. In reality, there are values to purchasing a home outside the realm of finance which you don’t get from renting, such as:

  • Having a fixed place you can call home, especially if you have kids, since moving that often might not be a good experience for some kids
  • Having the freedom to do whatever you want with your house
  • The social status of owning a home (i.e. you get to brag about it lol)
  • Passing down a house over generations

If these things are valuable to you, then it makes sense to buy a house instead of renting. Just that financially it may not be the better option.

#4 – Don’t invest in fixed deposit

Spidey JimmyDon’t need to keep money in FD. Invest in something else. Buy medical and insurance for rainy days.

#5 – Women want guys with cars

@MyManagersLife – Having more money does not bring more ladies unless you have a Honda Civic. This (the discussion) was happening among my friends circa 2004 – 2008.

This is the part of our lives where we discover that women don’t care much about money back then as long as you have a car (favourably a Honda) so that they can show off during 1) dates, 2) family gathering, and 3) shopping for groceries for the week. Not sure how unpopular this opinion is but somehow most of us strive to work hard in college days to own a car.

#6 – Our lives are controlled by others

Adam Mashrique – The people who control our money supply have more control over our lives than we are led to believe. Most people have no clue how our monetary system works, despite being obsessed with making money.

Monetary economics and the process in which new Ringgit or US Dollar is created, are taboo subjects in modern society. Knowing monetary history: how it used to work and how it works now can help a lot in preserving and expanding your wealth. Youtube has many documentaries you can start with. Here is one:

#7 – Money is meant to be spent

Anna Tan –  Money is meant to be spent, not hoarded. I’ve been part of societies/churches where it’s always ‘fundraise fundraise fundraise’ and ‘we can’t do that project because there are no funds’. But then they have cash in the bank/accounts they don’t use and the excuse is “must keep for in case”. WHAT CONSTITUTES AS IN CASE?!

#8 – Don’t buy insurance, buy stocks instead

Enthel Tan – Not my opinion, but I know of people who don’t buy insurance because they believe that the money they contribute to insurance can be better invested for a higher return on stocks. If anything major happens to them, the long-term return from the stocks will be more than what they’ve paid for the insurance to cover them.

Needless to say, this can only apply to those who know how to sound invest wisely.

Bonus #9 – Pro-Malay affirmative actions does not work

Suraya (ie Ringgit Oh Ringgit) – Affirmative actions designed to uplift poor Malays out of poverty does not work… because in many cases, the rich, elite Malays take those opportunities for themselves.

(And before you can say ‘oh but Malay companies hire Malay people’, please. Even Malay-controlled companies favour non-Malay applicants‘)

We need to go away with race-based privileges and make needs-based policies instead. Who needs financial help and support? Give it to them, racial background be damned.

What is YOUR unpopular opinion about money?

I want to know 1) what you think of the above unpopular opinions, 2) your counter-arguments, if you disagree with them, and 3) other unpopular opinions about money that you may have. The more unpopular, the better.

Go on, ruffle some feathers. I dare you.

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  1. I agree with #2, that’s what my future plan going to be in a few years time when I convert from full time employee to doing business & freelance.
    I have seen my family members suffer from the lack of retirement planning and it reminds me to have a back up net no matter what. Most probably I will save a certain amount to reach 500k by retirement, for example. It’s not the ideal retirement amount, but at least I will have something to fall back to. And it also allows me to work on my goals with lesser financial worries.

    1. Hi Cheryl,

      Thanks for your comment and experience-sharing, and all the best in making your transition!

      P/s – Nice-looking website and photography you have there! Followed your IG 🙂

  2. “Who needs financial help and support? Give it to them, racial background be damned.” – Preach sista! 🙂

  3. #1 – ASB and EPF will no longer deliver high returns.
    My take: I’ll milk it while it lasts. 2018 ASB declared 7% return p.a & my ASB loan is lower than that.

    #2 – Channel money into EPF investment early in life
    My take: Contribute in full 11% to EPF & your employer will match your contribution at 16%. But if one is constantly withdrawing from EPF for education & purchasing a property, channeling extra funds into EPF will only have a nett-off effect (money in: extra contribution & money out: education/property loan) with no substantial fund growth.

    #4 – Don’t invest in fixed deposit
    My friend an analyst once told me that insurance is lazy investing by lazy people & if you run the numbers for both, the FD payout will beat the insurance yield over the years. I haven’t run the numbers so I choose ASB lor.

    #8 – Don’t buy insurance, buy stocks instead
    I’ve seen with my own eyes that a stock my mother invested about RM10k years ago is worth RM200k today.

  4. “There will be a point where ASB yields can no longer offset interest charges on ASB loans.”

    Disagree. Bank interest are heavily depends on the ASB dividend particularly from previous year distribution. Pretty sure the bank’s Base Rate will change in parallel to the distribution rate. If the dividend of the year is lower, bank have no choice to lower their interest rate to retain their customer, if not, everyone will terminating their loans.

    1. Hi lotter92,

      Re: ‘Pretty sure the bank’s Base Rate will change in parallel to the distribution rate.’ – Fact or opinion?

  5. these are some further unpopular ones.

    don’t underestimate FD. FD is protected by PIDM and is tax free. there are still PAPER FD which doesn’t appear in m2u listing which is used for “hiding weath” or to buy cincin so it cannot be traced back. some returns 4% can be higher than mainstream mutual funds which NETT cost/fees is roughly the same range.

    epf returns of 50b to yield 5% is piece of cake. i will believe if epf market cap is close to 25% bursa market cap. it’s not about the figures it’s about the percentage. black rock vanguard tamasek etc can return more than 50b why not epf? the key is to open up foreign market for epf so it can invest in foreign opportunities to sustain 5%+ returns.

    when buying insurance ppl like to buy products that they don’t use due to exploitation of fear marketing. if an “insurance” returns you 1mil upon death, it’s not insurance it’s making money out of ur grave. when u passed away u don’t need 1mil u just need 100k for funeral cost. ur family should be self sustain after one yet of funding from insurance, not relying on you. when an insurance gives u high cash value or pays u certain amount for x years after x investment, it’s not insurance, it’s an annuity products hidding as insurance that protects ur life(fear). insurance is good at insurance if u want invest go with specialised ppl, the same way u don’t find a plumber to do gardening. btw some public mutual islamic funds (gold)comes with freeinsurance.

    buying a house is also serving as a forced savings and hedge ur savings with inflation.

    if u don’t spend ur money on loved ones now, ur loved ones will end up spending inherited money from you and won’t thanks u. ask sifu genxyz

    ok spent too much time here. kthxbye

  6. Some other unpopular opinions

    Your money is always your children’s money. However your children’s money is never your money.

    Your house is always your children’s house. But your children’s house will never be your house.

  7. It really opens my eyes on how we Malaysians think about money.

    Agree with most of the opinions, stay indifferent with some of them (because they are more of a personal preference).

    But I’d say three of them are misleading and dangerous:

    #6 — Our lives are controlled by others. The reality is that our lives are not fully under our own control because it’s controlled by laws of nature. But it only gets controlled by other people when we allowed others to — worse, via a tool called money.

    #7 — Money is meant to be spent. Money is a multipurpose tool. Exchanging it for things and experiences isn’t the only function. Using it to hedge for security, creating values, and helping others are some of its other critical functions.

    #8 — Don’t buy insurance, buy stock. The statement was right: Stocks generate significantly more returns than insurance. But both of them serve a different purpose. Stocks might make us more money 20 years later, but it won’t save our asses for unforeseen misfortunes 6 months later.

  8. Suraya,
    What do you think about gold?
    Is it worth investing in?
    Some say it’s hidden wealth and cannot be confiscated even if you’re muflis because there’s no black & white on how much gold you keep.
    What say you?

    1. Hi Aiena,

      I don’t do investment recommendations. I only share what I personally invest in. And yes, I do have gold.

      Re: cannot be confiscated – I guess if you buy and hide physical gold, ie jewelry or gold coins/bars, you can get away with keeping it hidden. I’m not sure if they take records if you buy over a certain amount though. There have to be measures in place one. BNM is very strict with money laundering

      To know more about gold as an investment, browse through my gold-related articles here: https://ringgitohringgit.com/tag/gold/

  9. Personally think that insurance is still important . As a person work in medical fees, I do see some of the patient unable to get treatment because of money

    1. Hi Grace,

      Thanks for your comment. Can I ask something I’m curious about – being in your line of work, what do you know about insurance that the rest of us don’t?

  10. Hi Suraya
    very interesting comments. just wanna share my thoughts on the opinions.

    #1 the lack of returns have nothing to do with the fund size of EPF or PNB. The S&P500 market cap is over $20 trillion and it has returned 10% p.a. on average for the last 90 years. one of the possible challenges for EPF/PNB to get returns is a deep focus on Msian stocks where the funds have become too big for the FBMKLCI. in this sense, they have both said they want to diversify their funds. while i’m not saying that this will definitely push up returns, i think global diversification is the way to go.

    #2 early investing is good but EPF isn’t the only avenue. in fact the youth can afford to have higher risk allocation than EPF to get higher returns.

    #7 is true but doesn’t address big-ticket spending. eg if you want to send your kid for further studies tomorrow, you needed to have NOT spent your money (i.e. save) over many years.

    #8 insurance isn’t investing. even the investing portion in insurance isn’t insurance, it’s just the insurer investing on your behalf. i would say though that buying a term life policy gives more bang-for-buck coverage and leaves a lot more money for you to make direct investments than thru an insurer. which brings me to my unpopular opinion:

    a term life policy which is cheap in the early years and gets more expensive in later years is much better than a policy where the premium is fixed throughout the policy. the early cheapness lets you focus on needs and takes out expensiveness as something that stops you from getting proper coverage. the premium savings will allow you to invest for the future. besides it only gets really expensive into your 50s which if you had a career focus would allow you establish enough wealth to have some kind of self-insurance

    1. Hey Julian!

      Love your reasoning behind getting cheap term life policy. The price difference can be very big and best utilised elsewhere, especially for education and self development

      I’m also somewhat comforted by the fact that if all else fails, at least we can sort of go back to public hospitals, which is cheap and good (but slow)

  11. 1# Agree. The dividend rates have been declining over the years. Soon they will no longer be attractive. As inflation creeps up, the fixed price of RM 1.00 per unit will work against the intetests of investors as there will not be any capital gain to help cope with it. Malaysians should instead look to our bursa for answers. Risky as it maybe, it is still the best vehicle to get returns that can comfortably outpace inflation. Invests in safe havens like good quality dividend stocks or reits provide better returns than EPF or ASB as they offer both capital gain and high dividends when bought at low valuation. If in doubt , seek help.

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