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:
- The money should be used for investment,
- You can’t touch it if you need it for an emergency,
- The govt is the one managing our EPF money
- Retirement is sooo far ahead
Number 2 could be a big point, to which my suggestion is to:
- Set up an emergency fund first
- Contribute around RM100 to RM200 to the EPF contribution monthly for 1 -2 years
- 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
- 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 Bahrudin – Home 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
#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
#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.