Sunday, December 26, 2010

Check Tyre Manufacture Date and its Certification

I still remembered when I got my first car and I didn’t understand the importance of changing new tyre until my tyre broke into pieces in the middle of the highway. That was due to the tyre was too old (> 7 years old)and the rubber become too hard. I couldn't imagine the tyre can just break into pieces at that time! :)

From that time onwards, I always pay attention to my tyre and to make sure it gets changed maximum every 4 years. Well, the usual recommendation is  you should always change every 2 years to 4 years for safety purpose. The reason is most tyre manufacturer only has 4 to 5 years warranty period. So assuming if your tyre is brand new, you can only used up to 4 years or 5 years.

Wait a minute! If you buy a tyre in 2010, does that mean you should change in 2014? Well, that is only true if your tyre was made in 2010. If your tyre was made in 2009, you should change in 2013 and if your tyre was made in 2008, you should change in 2012 (which is 2 years after you buy a new tyre). So, it is extremely important to understand when your tyre was made? If it was made in 2006, your tyre has already expired although you buy a new one. You’re being cheated!

How to check tyre manufacture date?

Well, tyre manufacture date can be found from your surface of your tyre. What you need to do is look for the 4 digit numbers. First 2 digit numbers represent the week of the years (1 year has 52 weeks) and the second 2 digit numbers represent the years after 2000. Here are the few examples that you can see from your tyre:

As you can see, the 0907 refers to this tired was made in week 09 of 2007.

The manufacture date (i.e. 2307 - week 27, 2007) is usually stamped at the right side of the DOT code as you can see below:
However, I’ve seen not all tyres are like that. So the rule of thumb is just to search for the entire tyre that contains the 4 digit numbers. So, please make sure you check your existing tyre (is it already expired?) or the new tyre that you buy (is it really new?).

My recommendation: You should only buy new tyre with less than 1 year old. Please check every time you get a new tyre and don’t be cheated. This is also good for your safety.

P/S: Well, if you don't see any 4 digit numbers. This is usually the 4 digit numbers are at the other side of the tyre. For some tyres, only one side have the manufacture date information. An inexperience worker may not aware of it and fix your tyres wrongly. The date should be always faced outside.

US, Europe or Malaysia Certification?

There are basically 2 international standards of certification. In US, the DOT code is being used and in Europe, the E-mark is being used. Your tyre should at least contains minimum one of them (either DOT code or E-mark).  The following shows example of DOT code and E-mark (e.g. Eii or E4) from your tyre:

However, as for Malaysia certification, it is usually marked with the “Sirim” logo and the word “SNI” (optional).  The following shows example of the “Sirim” logo (i.e. MS) and the word “SNI”.

Well, “Sirim” and “SNI” is in fact not a big deal (although it seems to be a big deal). If you have the “Sirim” and “SNI”(optional) mark on you tyre, you still want to make sure you have a least one of the either the DOT code or E-mark on your tyre. Having US or Europe certification is most  important thing.  If your tyre is made in Malaysia, the "Sirim” and “SNI”(optional) marks must be there.

My recommendation: You should make sure your tyre must at least contain the DOT code or the E-mark code. If you're Malaysian and you really scared (in Chinese, we call it “Kia Su”), you can make sure your tyre has the “Sirim” Logo but please also make sure it contains DOT code or the E-mark code as well. If you’re super scared (i.e. super Kia Su), you can make sure you tyre has 3 of them (i.e. DOT code, E-mark, and Sirim)!!!


Tyre is the most important safety that we all should pay attention to but it often gets ignored.  You should understand how to read these codes on your tyre (at least the manufacture date), to make sure it is not old or expired (i.e. > 4 years) and make sure it has the proper certification (i.e. DOT code or the E-mark). You should also often check your tyre condition (e.g. enough air pressure – usually is 32 psi for normal compact car). Good luck!

Merry Christmas & Happy New Year 2011! Drive safely too…

Friday, December 10, 2010

How to be Public Mutual Gold Member?

Ignore this post if you're not interested in Public Mutual funds (biggest unit trust company in Malaysia)

You may or may not have heard of it. There is a thing called “Mutual Gold” membership from Public Mutual. You will get this status when you have invested at least RM 100K investment in any of the load funds (i.e. funds that have sale charges). For example, investing in no-load funds (e.g. bond or fixed income fund) is not eligible for this Mutual Gold membership.

By the way, I got this status 2 months ago! :) This is how the package looks like:

It is calculated based on the Mutual Gold Qualifying Points (MGQP). Basically RM 1 of investment is equivalent to 1 MGQP points. You probably haven’t realized, this MGQP is also stated in your investment statement too.


(1) If I’m the second holder of the fund, am I qualified for MGQP?
 No. You must be the first holder of the fund to be qualified for MGQP. That also means that you should NOT simply switch to second holder especially you invest together with your spouse.

(2) What are the benefits of being Mutual Gold member?
Well, you can just check it out from the public mutual website here.

(3) If my fund’s NAV drops, will be my MGQP reduced too?
No, it won’t. It will be reduced if you sell your fund or switch to no-load fund (e.g. bond or fixed income fund).

(4) Will my MGQP increase if the NAV goes up?
No too. The capital gain from your investment will not be considered for MGQP. For example, your invest RM1K after 1 year, your balance become RM1.5K, your MGQP will still remain at 1000 points.

(5) Which benefits of Mutual Gold that you find most useful?
For me, I particularly like the following benefits of becoming the Mutual Gold member (well probably you have different list): 

  • Free personal accident insurance (Well, this is free insurance. Why not?)
  • Quarterly statement of accounts (Hope it at least provides more information than what I can get online)
  • Free switching fees - 18 switches per annual (No more excuse that I shouldn't switch to optimize my investment)
  • Email update for quarterly fund review (Not sure how useful this is, have to check it out)
  • Free will writing service (Cool, this is usually NOT free service)

p/s: Well, wish you will get your mutual gold member soon if you're public mutual investor. The next thing is the Mutual Gold Elite which required 500K MGQP(points).

Saturday, November 06, 2010

How do others perceive you is NOT important?

I’m going to share with you this very interesting topic, that I usually share this with my people and other leaders verbally. This is the first time, I write this down in the blog. Let’s see if you really find this interesting…

When you just graduated from university or when you're still in school, you usually do not care how others perceive you as long as you think you're doing a right thing or the things that you like to do. So you don’t care about their perception as long as their perception is wrong or not valid.

However, the more you have grown up, the more you found out that how others perceive you is important. This is mainly because how others perceive you can turn you into who you are being perceived as. Others may perceive you wrongly, but the fact is whether their perception is right or wrong or the truth, it doesn’t really matter because what they perceive will turn you into what they want you to be. Do not believe me? Let me tell you why…

Have you heard of micro-messages?

You may not notice that your body send out millions of micro-messages every moment, every day.  These are all hidden messages generated from your body language which eventually can become a very powerful programming language to program another person’s mind without you even notice it. Let me give you an example:

Assuming you have 10 employees who work for you, one of them (let say employee A) is very stupid in your perception somehow. So everyday when you come to work and you see this employee A, your body language (although it is not obvious) send million of micro-messages to this employee A and the micro-message is “You’re Stupid”.  You’re actually sending millions of this affirmation message - “You’re stupid” to program this employee A’s sub-conscious mind everyday you see him. This message is then translated to “I’m stupid” by his sub-conscious mind and eventually turns this person to be really a stupid person even though initially he is not. The technical term for this is called “Neuro-Linguistic programming” or “NLP".

What so powerful about this micro-messages is that they can remotely program somebody sub-conscious mind. Of course, these-messages become even more powerful if more than 1 person to send the exact same micro-message. For example, you influence another manager to think or perceive the same about this employee A, thus not only you but also other managers also send exact the same messages to this employee A. The more people send the same message to this employee A, the higher chances this employee A will turn into what they want him to be.

How to defend these negative micro-messages?

Well, if what I said is correct, then everyone can remotely program anyone as they like. Well, not really. First of all, you can’t easily control your own micro-messages because it is in your sub-conscious mind.

For example,  you can NOT easily force your sub-conscious mind to send a micro-message that conflicts with your perception.  Secondly, you may not be so easy to remotely program a highly confident people because you’re sending a million of messages (i.e. You’re stupid) to him but he might be sending even more messages - thousands of million of micro-messages (i.e. I’m clever) to himself!

Who care as long as I’m confident?

Well, are you sure you are 100% confident? If the answer is absolutely yes, you got it. You do NOT really need to care about how others perceive you. If your answer is no, then you should really care on how others perceive you.

When they perceive you good, they send good micro-messages to you. When they perceive you bad, they send bad micro-messages to you. Good or positive micro-messages eventually help you to build-up your confident. That is the reason you should care about how others perceive you.

Usually people care about how others perceive them is because they may not understand themselves much. That’s why understand how people perceive them can help them to understand who they really are.

However, I’m talking at the different level that let’s assuming you understand yourself and what other perceive you is wrong, you still need to care about their perception. This is because this perception is extremely powerful and important that it eventually can turn you into someone else that you’re not. This due to the micro-messages and Neuro-Linguistic programming as I mentioned above.

Well, agree or disagree? Do you care how others perceive you? Any comments?

p/s: Having said so, if you care so much of how others perceive on non-important stuff, that may NOT be a good thing to you too. This is because you’re focusing on the wrong thing. So prioritizing and choosing what you should look at others to perceive you is also important. By the way, my very old post that you may find interesting: The Power of Perceptive Reality.

Sunday, October 31, 2010

Should I worry about retirement?

Have you every thought of how much money that is needed for your retirement? If no, probably you want to start thinking about it now. This is an interesting article I get from “thestar” newspaper: Is savings enough for retirement?

Apparently from the survey by AXA Retirement scope 2010, Malaysian seems pretty aware of the amount of money that they will get after retirement (i.e. 54%) as compared to the rest of the countries except India is ranked number one. This is a good sign as least you still know exactly how much you will earn or get after your retirement.

On the other hand, I’m not sure if this considered to be good news or it simply means other countries have taken care of their citizen’s retirement therefore they don’t really care about it? Countries such as UK and Australia, you can see that they don’t really care about it. I think this is mainly due to the fact that their governments have taken care of their retirement. That is also one of the reasons why people like to migrate to Australia. :)

Having said so, if you look at the data, majority of people around the world still do not really give a damn about retirement. Because more than half the population do not aware at all how much they will earn after retirement. “Who cares? There are still plenty of time!” - this is the most common reason why people still do not want to take it seriously. But I afraid by the time you start thinking about retirement, it is probably too late…

Let’s look at this another data for Malaysian’s perception on whether their retirement income is sufficient or not. As you can see, (35% + 2%) = 37% think their retirement income is sufficient. It used to 62% in 2007 and now this drops dramatically.

Looking for Solutions?
  • If you ever want to know the amount of retirement fund that you need for your retirement, you can look my previous example, how one can calculate the retirement fund: 10 Years Retirement Plan is Possible.
  • Once you know exactly how much is needed for your retirement, you have 2 solutions. First solution is to earn more and the second solution is to spend less. You can check out my previous post: 2 Solutions to Retire Rich.

Discussion: Since we’re now in the trend of getting more and more people neglecting retirement planning, how should we fix this? Should we increase the awareness of the people OR should the government take care of it so that we all do not need to worry about retirement (like what Australia and UK do)? What do you think?

Sunday, October 24, 2010

Understand Net Asset Value (NAV) in Mutual Fund

Although Net Asset Value (NAV) is a general term but it is commonly used in relation to unit trust or mutual fund. If you invest in stock, then you probably know the stock price for each single unit stock.

So, NAV is something similar to stock price but it is usually meant for unit trust or mutual funds or exchanged-traded funds(ETF). NAV per unit is the price or value of each single unit of the funds. Let’s look at the formula:

NAV per unit = (Total Asset of the Fund – Total Liability of the Fund) / Total Number of Units

Note: When people say NAV, it usually refers to NAV price per unit of the fund although the "per unit" is not explicitly mentioned.

For example, if the total net asset of the Fund A is $100 million and the number of unit issued to the public is 150 million units, the NAV would be ($100M/150M) = $0.67 which is 67 cents of each unit of Fund A.Well if you’re not finance people, this is probably too technical for you. Let's make it the simpler definition of NAV. NAV is the unit price of a mutual fund! Is this simple enough?

What does NAV mean for you?
It basically really means NOTHING to you. Okay, okay, perhaps something. It tells you the value of the unit price of a mutual fund. Just like stock, it tells you whether a fund is too expensive or is still cheap? Wait a minute! Can you really tell? No, you don’t because it is all about comparison. You need to compare at least 2 funds to tell whether the NAV is expensive or cheap. 

FUND N.A.V ($)
A 0.67
B 0.90

If Fund A is cheaper than Fund B, what does this mean? It means you can buy more units from Fund A with the same amount of money. E.g. with $1K, you can buy ($1K/$0.67) = 1492.54 units from Fund A and ($1K/$0.90) = 1111.11 units from Fund B. 

But does this mean you have more units and you will earn more? No, it does NOT tell you the performance of the funds because the value of your investment is always the same which is $1K. So eventually, it basically means NOTHING to you too. Unless Fund A and Fund B started out the same day with the same price, then you can only tell that the Fund B performance is better than Fund A or else you can’t conclude anything out of it.

In my opinion, the NAV of unit trust or mutual funds doesn’t really mean anything. It just tells you the current price of the unit trust but it doesn’t tell you the performance of the fund. You shouldn't buy a fund because of it's NAV is cheap. When choosing a unit trust or mutual fund, one should look at the fund’s financial objective, how good is the company management and does the fund has shown any good track record and etc.

On the other hand, don’t forget the investment is all about emotion too. Let’s look at the Fund A vs Fund B above. What do you think majority of people will buy? Fund A or Fund B? Fund A is cheaper right? So the chances for Fund A to go up is higher than the chances for Fund B to go up? So when everyone buy Fund A, the price of the Fund A will go up eventually?

So now back to you, will you buy fund because of the cheap NAV?

Saturday, October 16, 2010

Malaysia 2011 Budget – Personal Finance Highlights

If you’re Malaysian and you probably have already known about this Malaysia 2011 budget announcement. Well, what should you react from your personal finance perspective? Let’s see some of the highlights which I think may be important to you.

Note: You may also interested in Malaysia 2010 Budget and see what could do out of it if you’re not aware of it…

(1) Flat Toll Rate Until 2015 for PLUS owned highways

This is at least good news for me and also for those who travel often through the PLUS highways. Hopefully we’re all still here until 2015, I’m quite sure we’re. Hahaha…

(2) 50% Stamp Duty Discount and Full Loan for First-Time House Buyers

This is not applicable to me as I am no longer a first-time house buyers. :( Basically you will be entitled for this 50% stamp duty discount if you purchase house within RM350K.This is Eligible for S&P/SPA executed from 1 Jan 2011 to 31 Dec 2012. Also, if your family income is less than RM3K per month, you do not need to pay 10% down payment too. You can get 100% loan for the houses priced below RM220K. Well, this is not applicable to me again.

[Update:17 Oct 2010]
In case you do not aware, previously we already have this 50% exemption discount on stamp duty but only for your house that not exceeding RM250K. The discount is until 31 Dec 2010. Now it seems like they increase to RM350K but ONLY for first time house buyers.

[Update:19 Oct 2010]
 I don't recommend for those who can NOT afford to buy a house to take up the 100% loan. If you can't effort, don't buy. The reason is the total amount of loan interest you pay will be a lot and it is just not worth it. Unless you're really a property investment guru, I will recommend you to use this safest property investment strategy.

(3) Maternity Leave is now 90 Days

This is only for government servants and you will get fully-paid maternity leave for 90 days. So nice! It stated allow flexibility to self-determine maternity leave as long as it doesn’t exceed 90 days. But who doesn’t want to take up to max? Maybe if you’re female, you should consider to join the government sector. Being a school teacher seems like a good choice. :) I will go for it if I were a female. lol! :)

(4)  Increase Minimum Salary for Workers

Security guard salary will be increased to RM500 – RM 700. For those who are security guard, this will help. Anyway, I have no idea the salary for security guard is that low. The current average salary for a security guard in Malaysia is between RM 300 and RM 400 but I  think for those in private sector, it should be more than that. A wage council to be setup to decide the minumum salary for workers in Malaysia. I guess this doesn’t applicable to me again, this is mainly for those of you who have very low paid salary.

(5) Service Tax to be Increased from 5% to 6%

Huh, what’s up? I”m speechless… I think what you should react is to eat less in restaurant and cook more for yours

[Update:17 Oct 2010]
Based on the feedback & comment from Chong, I just realized that the scope of service tax has been extended to include subscribers of paid broadcasting services such as Astro. This is bad because now you want to pay the extra 6%. It used to without this charges. Perhaps you should consider to unsubscribe Astro if your Astro usage is really low.

This also affected the hospital bills too not just restaurant. Basically you will need to pay extra 1% for your hospital bill too. This may be a burden to certain people.

(6) Cheaper Mobile Phone

The will be removal of the 10% sales tax on ordinary mobile phones. Initially it is stated for all type of mobile phones and it actually means all type of ordinary phones. So iPhone or any smart phones are not included as long as your phone can access to internet. This move seems like target to those who do not afford to buy mobile phone. I hope this move doesn’t encourage people to change phone even more often! :)

[Update:23 Oct 2010]
Since many people asked me to clarify, it seems like all the while there is no sales tax for smartphones or those with Internet applications (which I"m not aware of it). So this 10% sales tax discount has no impact to smart phones at all. So you can go ahead to buy your iPhone now and don't need to wait for next year! :)

(7) Cheaper Branded Stuff

Import duty tax will be removed for 300 popular tourism items to promote Malaysia as Asia’s shopping haven. So you can now spend more especially for girls who like shopping a lot.  Yes, I know spending money is fun but please watch out your spending while shopping and further more this move is really meant for tourist.. :)

(8) Private Pension Fund for Self-Employed

This is good news for those self-employed as now they’re entitled the same benefit with employee. There will be RM6K tax exemption same as EPF too.


Well, what can I say more? Did I miss any important? You can share that with me. I hope at least you’re happy with some of them especially you’re the self-employed or first-time house buyer. This budget is really have no effect to me at all except for the 6% service tax. But that should be affecting everybody… :(

P/S: Remember to keep your broadband receipts for 2010 tax deduction.

Sunday, October 10, 2010

Gold Price Going Up Because of 2012 Prophecy???

You may have been noticing Gold price keep going up, but why? When do you think is the peak? What is your theory? This is an interesting theory that I heard from a friend and whether is truth or not…


Have you ever thought of the increasing of Gold price could be due to the 2012 doomsday prophecy? Not everyone will die and assuming if you’re somehow able to survive from it, what is the most valuable stuff at the time and moving forward? Yes, GOLD is the answer.  So, what will you do? Yes, buy Gold and when everyone buy Gold, what happen? Yes, Gold price goes up!

So now, back the fundamental to support this theory which is how many of us in this earth believe that the 2012 prophecy is real? If you did research on 2012 prophecy, you may realize there’re many coincidences that leads to a same conclusion and the more you do research on it, the more you think that is real.

Even if this is hoax, what is the purpose of this hoax? Who created it? Could driving the Gold price up be one of the reasons? Regardless of the truth and as long as:

“If you believe people are believing 2012 prophecy, Gold price will continue to rise!”

This sounds crap, huh? So, what does this mean? This means the Gold price will continue to rise until 2012. If you really believe in 2012 doomsday, you should buy physical Gold now and keep it (assuming you think you can survive). If you think 2012 prophecy is a hoax, you should buy Gold now until probably the beginning or the mid of 2012, you should sell them all. Alternatively if you’re a conservative investor, you can now sell all your Gold and keep your cash until the Gold prices drop badly after 2012. Later on, you can start buying back Gold…
What is your theory? This sounds stupid huh? Who knows this prediction could be real? Let’s see…
P/S: If you scare and don’t know what to do, you can apply DCA in buying Gold too. Good luck!

Sunday, September 26, 2010

Making Use of NCD for Your First Car?

For those of you who have purchased car, you usually won't know about NCD (i.e. No Claim Discount or NCB or No Claim Bonus) until you plan to sell your car or buying a new car. Your car agent will usually tells you about this NCD/NCB and how you could make use of it.

Well, this post is not really just talking about NCD but whether you should make use of the NCD for your first car purchase. It may be a smart move, but is it? Let’s check it out…

What is No Claim Discount (NCD)? 

NCD is a discount given to the car insurance policy holders when they want to renew their car insurance. If no claim is made (e.g. due to the accident) for a certain period of time (based on the table below), you will get discount in terms of % for the premium that you should pay.

Beginning of Private Vehicle Motorcycle Commercial Vehicle
1st Year 0% 0% 0%
2nd Year 25% 15% 15%
3rd Year 30% 20% 20%
4th Year 38.33% 25% 25%
5th Year 45% 25% 25%
6th Year 55% 25% 25%
Note: This table applicable to Malaysia automobile insurance only.

For example, your insurance is $1K and after a year (2nd year) and you do not claim it, you will entitled for 25% discount. That means you only need to pay $75 for the second years. This applies to the subsequent years. Please also note that the discount is different for private and commercial vehicles and motorcycle as well.

Buy Your First Car to make use of NCD?

If you’re one of the smarter people, you probably already have an idea to make use of this NCD because the NCD can be transferred to your second new car. So, what you do is to buy your first car “as cheap as possible”. That could be the second hand  or used car. The cheapest the better because your 1st year has no discount at all. You buy the second hand car and use it for 6 years (depends on how much discount you want) and sell it later on to purchase your second car. You are then entitled the 55% discount of the insurance premium for your second dream car.

Don’t get it? For simplification, let’s assume your insurance premium is the 5% of your call value and see the following example:

(1) Purchase your first car as cheap as possible:
  • First Car Value: $10,000
  • Premium: $10,000 X 5% = $500
  • First Year Payment: $500
  • Second Year Payment: $500 X 75% = $375
  • The subsequent years: <do your own math>
(2) Sell your first car and purchase your dream car, transfer your NCD to the new car:
  • First Car Value: $100,000
  • Premium: $10,0000 X 5% = $5000
  • First Year Payment: $5000 X 55% = $2250 (You save by 55% – explained below)
  • Second Year Payment: $500 X 55% = $2250 (You save by 30% – explained below)
  • The subsequent years: <do your own math especially your NCD is not at maximum yet>
Note: For a very accurate premium calculation, you can talk to your insurance company or you can refer to this car insurance calculator from Kurnia here. - (Malaysia only)

So what does this tell you? This tells you that by making this smart move, assuming you purchase your second car directly without any NCD, you save up to 55% for your first year and 30% (55%-25%) for your second year and so on. So the smart move is really:

“Buy Your First Car as Cheap as Possible and Use It for 6 Years Before You Buy Your Dream Car”
Is this really a smart move?

Everything comes with a price, you buy a cheap stuff and what is the trade-off? No trade-off? Are you sure? Yes, there is a risk and the risk is the maintenance of your first car. However, there are people saying that the maintenance cost is way lower than the insurance premium if you buy your dream car directly. Well not really, it all depends on how high your maintenance cost right?

The maintenance cost is really depending on how well you understand your car. Huh? Yes, how much you understand your own car. Let’s share my own experience here. I used to have an old car (i.e. > 10 years old) and every time I went to service, averagely it costed me around RM500 and sometimes even more if changing parts was required. I then passed this car to my dad to use. Surprisingly, the average maintenance cost now is less than RM 200 for every services. How could this happen?

This is because my dad “KNOW EXACTLY” what the car needs and don’t need. He knows the car well and able to negotiate with the mechanic and go into technical when possible. Do you need to change the parts if you can fix it? Why can’t you fix it rather than changing parts? Is it because you’re lacking of skills? Do we need to change break oil that often? Well, there are just too many things. The sad thing is nowadays you hardly find any honest reliable mechanic out there. Everyone now is just too money oriented.

Now, back to the question is making use of NCD to buy your first cheap car is a smart move? Yes, only if you can make sure you do not blow up your maintenance cost of your first baby. But how? Let’s see the list if that make sense to you:
  • Make sure the car is really low maintenance (get someone who knows car to evaluate the car that you want to buy). You need to make sure it can last for 6 years too if you want to get the 55% discount.
  • Has a very reliable and trusted mechanic who won’t simply drain out your money (hardly find nowadays – probably only those in the village or “kampung”).  
  • You’ve knowledge on car (mechanical parts), you know what exactly is needed or not needed for your car. In the workshop, you usually instruct them what to do and you pay for their services to do that. As a matter of fact, some mechanics become reliable and trusted only when they know you know exactly what they’re doing. Well, this is our world...
If you’re scare of taking the risk, then you don’t need to buy a very cheap car (e.g. used for 15 years). You can buy the 5 years old car for example. It will still save you some money. Good luck. Now you know this tip, would you ever consider this smart move?

Sunday, September 19, 2010

How to make decision to buy? - Buying Decision Guide

I started this topic because I met someone who may influence my buying decision process during my China’s trip. Well, read on and see if that will change your mind too. Here are the 3 steps generic buying decision guide that I come out with...

Almost everyday we come across to make decision whether we should buy or NOT to buy something. Should I buy this product? Should I buy this insurance? Should I buy this house? Should I buy this stock? Should I buy this unit trust? Wow, there’re just so many things we want to buy but how do we make decision? What is the guideline?

Step 1: Understand Your Buying Purpose

The first thing that you should all do before you start buying stuff is to understand the purpose of buying a stuff. That stuff serves certain purpose, what is that? Don’t ever fall into common trap that you do NOT even understand the purpose of buying a stuff. Of course in order of to understand the purpose, you must also need to understand and familiar yourself if the products. Keep in mind one thing very important is a same product may serves different purpose to different people. So you still need to identify your own purpose of buying the product and not to be influenced by the person who sell you the product.

No matter what, there MUST be a purpose. Even though if you buy a stuff for the fun of it, then the purpose is for “fun of it”. It is as simple as that. If you really have no idea of the purpose, then you shouldn’t buy that stuff at all!

Step 2: Does the purpose meet your needs?

Now, you understand the purpose of buying a stuff but is the purpose justifiable? Is the purpose really meet you needs? Is this what you’re really looking for? Do you really want to buy a stuff for the purpose of just for the fun of it? Well, it depends on much you value the “fun” then. In reality we have many needs and what is the most important thing is to prioritize our needs. Do you have needs that you haven’t met yet? Then, why don’t you buy stuff to meet those needs first?

For example, buying laptop or buying an iPad is more critical to you? Which one serves the purpose that really meet your needs the most? If I used $2K to buy an ipad, what are the things I can buy to even more to satisfy my needs with the same amount of $?

Step 3: Are you affordable to buy?

Once you understand the propose of the product that meets exactly your need, it is time for you to buy. However there is one question, is the product too expensive to you? Well, this probably the most subjective thing. What is considered as affordable and what is not? Well, this is my own rule of thumb for a very obvious reason that you are NOT affordable to buy a stuff when:

  • You need to take loan to buy (except for housing)
  • You need to take monthly instalment to buy (although is 0% interest)
So, what if for those NOT so obvious reasons? Does that mean you can buy? Yes, as long as it doesn’t affect the key purpose of your savings. Theoretically in personal finance, there are few purpose of your saving. You save for the purpose of:
  • Emergency fund – E.g. 6 months of your salary fund for family or your personal emergency. Is this fund affected?
  • Investment fund – Every month you invest part of your savings or earning. Do you still have $ to invest monthly?
  • Insurance fund  - Every year, you need to reserve some money for your insurance premium. Is this affected?
  • Other funds – You’re planning to buy something expensive with this fund that you have save for the past few years. Is this affected?
As long as buying this new stuff that doesn’t affect any of the saving purposes that I mentioned above, you can go ahead to buy. Why not? However being said so, if you still has loan or credits that you haven’t pay yet, you may need to seriously consider whether you should settle your debt first. I would pay up all the debt first before I start purchasing any new thing! Good luck!

[Updated on 12 Dec 2010]  You may want to revisit step 2 or perhaps step 1 as well if you find that you're not affordable to buy in Step 3. Is that something that you really need? Is there any cheaper alternatives? Good luck!

What do you think of these 3 steps buying decision process? Does that sound reasonable to you?

Wait a minute!

Speaking or writing is always easier than doing. What if you meet the following people who want you deadly to buy their product? What if your wife or girl friend wants you support her to buy things from her? What if your family member are selling stuff? Would you support them to buy stuff that you don’t need at all? or you make yourself that you need the product?

What about a very pretty girl that have ever met come and approach you to buy something from her? Have you ever approached by a sexy pretty salesgirl? What is your reaction usually? What if the sales girl goes beyond the line especially when your wife is not around? Wow!

Well, in reality we don’t buy stuff based on our logic – like the 3 steps process I mentioned above. We buy stuff based on our emotion and yes, it is love too. Either you fall in love with the product with no reasons, or the sales girl. You make decision by your emotion and you usually don’t think so much without considering much.

Do you agree? What are your experiences?

Sunday, September 05, 2010

What is Your Investment Return?

You may face similar conversation below during your daily activities but not to the second stage of the conversation because we always measure the investment return based on the "Amount"
rather than the "Percentage" .

So, who do you think is the smarter investor? Scooby Doo or Son Goku (Dragon Ball)?

Investment return should always be expressed in "percentage" rather than in "amount" for comparison. In this example, Scobby's investment return is $1K/$5K X 100% = 20% wherelse Goku's investment return is $10K/$200K X100% = 5%. It is clearly Scooby has the higher investment return although the amount is way less than Goku.

Not only just the "Percentage", the investment return should be expressed in the "Annual Basis" too which is kind of a standard way of measuring investment return in the financial world. If you don't want to use "Annual Basis" as a base, it is okay too as long as the comparison has the same common ground (e.g. using 6 months to compare).

P/S: Anyone think that Goku is the smarter investor here? Yes, he could be - using money to generate even more money with low risk investment return? What is your opinion?

Monday, August 30, 2010

Restricted Stock Unit (RSU) Tax Reporting in Malaysia

If you work for the U.S. based company, you probably have heard about Restricted Stock Unit (RSU) but do you know what is the tax implication? If you're not interested in RSU, you can ignore this article...

Restricted stock unit (RSU) has been quite sometime with us as a replacement of stock option in many companies and suprisingly there are still many of us do not understand how how the tax reporting works for RSU. This article explains the RSU tax reporting in Malaysia and is applicable to rest of the countries as well since this is pretty general thing.

What is the difference between RSU and Stock Option?

A very funny statement I always heard from my colleage: "Wow! Why such a so big amount stated in my EA form?! I didn't even sell or excersise any of my stock!" Huh? Perhaps most people still do not understand the key difference between RSU and stock option:

  • Stock options are taxed at the time when your stocks are exercise or sold by you.
  • RSUs are taxed at the time when your stocks are vested or released to you by your employer (that's why you see such big amount in your EA form because your broker automatically sells your share to pay for the tax - see detail explanation below).
Notes: EA form is the form issued by an employer to tell how much earning of the employee and employee use this form to file for income tax annually.

What is the RSU taxable amount?

The RSU taxable amount is based on the total value of shares vested or released by your employer. For example, you're granted 400 RSUs in 2009 for 4 years to and only 100 RSUs will be vested in 2010 and the subsequent years. When the 100 RSUs are vested now at the closing price of $20, your total of RSU gain is $20 X 100 = $2000.

That means now $2000 is your taxable income.  Depends on your country tax law - In Malaysia, the Tax withholding rate is 26% (for year 2010) which means your total taxable withholding amount is $2000 X 26% = $520. Please keep in mind that this is just an estimated tax that your employer will deduct from your salary (based on the country tax withholding law).

The next thing is your brokerage (e.g. E-trade, Smith Barney and etc.) will sell enough shares to pay for this estimated tax. For example the next day, the closing price jumps to $21 and your brokerage sells 26 shares and the brokerage fee is $25. Therefore the total earning of this transaction is  $21 X 26 - $25  = $521. So now you use this money to pay for the tax withholding amount (i.e. $520) and the remaining $1 will be deposited to your account and shown in your EA form.

I know this could be confusing, so I try to summarize what happen here:
  • Total RSU Gain: 100 X $20 = $2000.  It is calculated based on the vested unit and closing price of the vested date.
  • Total tax withholding amount: $2000 X 26%= $520. Your employer calculates the estimated tax withholding for the vested RSUs based on the closing stock price.
  • Your broker sell enough shares: ($21 X 26 - $25 = $521) at the closing price of that day (i.e. $26) to cover the amount of tax withholding and $25 brokerage fees. This earning is used to pay the estimated tax withholding amount (i.e. %520) to the Income Tax Office.
  • The remaining money: ($521 - $520 = $1) will be deposited to your account and will be stated in your EA form.
Note: The closing prices is calculated based on the average of highest and lowest prices of that day. E.g. the highest price is $21 and the lowest prices is $19. Therefore, the closing price of that day is calculated as $20.

Note: The example may still subject to the currency exchange. E.g. You still need to convert the currency back to MYR. For simplicity, I just purposely ignore that...

Are you still confused? 

Some of you may still be confusing and the most frequent question that I heard is:
"Why tax me at MAX (i.e. 26%)? My tax bracket is not yet reach 26%!"
RSU Gain is the key! It really doesn't matter because the very MOST important thing here is NOT the tax BUT your RSU Gain. In this example, your RSU gain is $2K. It will be stated in your EA form. If your actual tax is less than 26%, that is perfectly okay because the tax withholding by your employer is just an ESTIMATION. This is nothing new. If your tax deduction is less than the actual, you pay back and otherwise you claim back your money.

Do you find this useful? Let me know if you have any questions to clarify.

Monday, August 16, 2010

Simple Way to Remove Gallstones Naturally - DIY

Do you realize health builds wealth? If no health, there will be no wealth. Perhaps you agree but you often neglect about it...

I came across this term in the past weeks that in fact our body has STONES!!! There are in fact 2 types of stones that we have in our body:

  1. Gallstone in our Gallbladder
  2. Kidney stone in our Kidney
I've heard of kidney stone but never heard of Gallstone. I learned about this from a friend who is currently pursuing his Chinese Traditional Doctor. These stones can be removed by surgery but there is a simple way to remove this stones by Do-It-Yourself (DIY) before they become too serious. I've tried the Gallstone removal DIY but not yet on the Kidney stone. So here is what I did and would like to share with you guys:


(1) Olive Oil - Go to any grocery store and look for one. Make sure you buy the "Extra Virgin" quality of the olive oil.

(2) 7 Lemons - You can buy more just in case not enough and you can buy either Green or Yellow. I personally buy both of them.

(3) 15 Apples - You can buy either Green or Red and I personally buy 2 of them. I heard some said Green apple is better. Well, it is up to you.
(3) 20g of Epsom Salt (Magnesium Sulfate) - You need to go to any pharmacy to purchase this. Not all the pharmacy have this, so you may want to search around. 

(4) Shaker - Buy the one has measurement with (i.e. ml) indicator. If no shaker is also okay, as long as something that you can measure with 10ml, 125ml and 250ml. 

(5) Fruit Juice Squeezer - This is optional but better to have one. If no, you can just use your hand to squeeze out the juice! :)

Steps (8 Days)

1st - 4th days: 
  1. Eat as usual and try to eat less meat. 
  2. Please make sure you eat until 70% full will be enough.
5th - 6th day:
  1.  Squeeze 1 lemon and pour the juice into 1 liter of water. Make sure you finish this 1 liter of water within a day and you can spread it out the whole day.
  2. Eat at least 4-5 apples per day. I mixed both red and green apple.
  3. Eat only plain porridge only for your 3 meals. It can be rice (Chinese), oat, and wheat porridge. Avoid taking oily and salty food. Plain porridge, remember? Don't add anything in the porridge to make it tasty...
7th day (fall on Friday or Saturday):
  1. Repeat the same thing for 5th and 6th day. 
  2. 1 PM - Completely stop eating anything after 1 PM. You can still drink but no food at all including the apple. That means you have to finish eating 4-5 apples in the morning. You still can drink water after 1 pm. However, please make sure you finish drinking the l liter water of lemon juice by 6 PM.
  3. 6PM - Mix 10g of Epsom salt with 250 ml water. Drink it! :) It is better you make sure you stay at home while drinking this because you might want to go toilet every often. This depends on the person as this is vary from one to another.
  4. 8PM - Mix 10g of Epsom salt with 250 ml water and drink it!
  5. 10 PM - Squeeze out the lemon juice and mix with 125ml of lemon juice with 125ml of olive oil (total is 250 ml). This may taste disgusting but it is still okay for me because I really like the lemon juice. After you drink, you should go to sleep directly. Good luck!
Notes: For your information, lemon and apple is used to soften the gallstone so that it is easier to come out. Eating porridge and not eating the last day after 1pm is to make sure your colon is empty and won't block the gallstone from coming out. Drinking Epsom salt water is to force your feces to come out so that there is no blocking the path. Finally the olive oil and lemon juice is to force your gallstone to come out. Hope this explains a bit...

8th day (fall on Sunday if you work on Saturday)
  1. This is the day you're releasing your gallstone from your body. Please make sure you stay at home and don't go anywhere. If you want to collect your feces as a proof in order to see the stones by yourself, you can do that too. Good luck!
Important: If you work on Saturday, please make sure your 5th day is on Thursday so that your 7th day is fall on Saturday. If you're not working on Saturday, you can choose your 5th day is Wednesday. The reason is that you need to stay at home for the 7th and 8th day and you will need the toilet a lot. (Again, this depends on person. For myself, I don't need the toilet that often - just one time in the morning)


I borrow a net (made by metal) from a friend and use this net to collect my feces during the 8th day. After that, I wash it and wow I really can see the stones! Here you go:

The biggest stone I have is around 6-7 mm. I read it somewhere that 8 mm is considered as serious. I tried to break it and the color is actually green inside the gallstone which I believe is due to the cholesterol based on the description I read on wikipedia.

Do you want to collect your own feces? This is really up to you. I want to try it is because I want to prove this method is really working and see something really come out from my body. I probably won't do it the next time as it is really troublesome. By the way, please don't do this too often as the Epsom salt is something that bad for your stomach. By right, you should continue to do this after 3 months until no more stones are coming out from your body. Well, I hope this is something worth sharing about our health and I will research more on the Kidney stone removal DIY next...

P/S: I've been sharing this to a lot of people (including my friends, my colleague, my family) and most of them are really interested. Perhaps it is cheap or free? There're few programs out there (could be direct-selling) which require you to buy their products for this Gallstones removal. However, I don't think you need to buy their products because all you can Do-It-Yourself naturally. Good luck!

Detail of gallstone in wikipedia: Gallstone

Sunday, July 18, 2010

Cap and Trade Summary & Review

I work with U.S. people in my day-to-day job and one thing common that I found out about them is they like to come out solution that appears to be a real solution but in fact is not. In short, if you just listen to what they talk without further analysis, what solution that they have proposed will seems to be really making sense.

However, with further thinking and detailed technical analysis of their solution, it will usually ended up that their solution is just another hoax. It all started with the burst and follow by sub-prime mortgage crisis. Perhaps now Cap and Trade could be one of them too - a possible brand new 3 trillion dollar market by 2050?

See the video clip below  from Annie Leonard who is also the author of "The Story of Stuff":

If you have difficulty to understand the video, you can also read my following summary and discussion on this "Cap and Trade" system. I hope that will be easier to understand.

What is the Cap? 

Global warming is due the emission of Carbon Dioxide (i.e. CO2) into our atmosphere.  In order to prevent and slow down the global warming crisis in the future, the cap is invented to tackle this problem. The intention is to limit how many CO2 that you can release to our atmosphere. The goal is to reduced the current CO2 emission by 80% by year 2050. So the dotted-line in the graph below is the "Cap".

Carbon permits or CO2 emission allowances was then invented in order to accomplish the goal to stay below the cap. It is like a license or permission to pollute the air. Government issues this carbon permits to companies who would like to pollute the air. As you can see from the graph, the number of permits will be reduced every year in order to meet the goal target in 2050.

[Discussion] I think this is definitely a right thing to do and it is always good to set goal that we all know where we're heading too. Good strategy in fact to so save our world! Don't you think so?

Devil One: Cap and Giveaway

The next question how are the Carbon permits are distributed? The government in fact is giving these permits for free based on the history of a company how much they polluted the air in the past. This is  called "Cap and Giveaway". What was suggested by Annie is instead of giving permits away to them, we could sell to them and use the money for better purpose (e.g. build a clean energy economy).

[Discussion]: I do not completely agree with it. Assuming if we sell the permits to those companies. Who will be going to bare the cost of their products? Consumers? So it ends up we pay more because of they're polluting the air? So indirectly, we're actually paying the government to allow those polluter to pollute the air? I don't think selling the permits will work too.

Devil Two: Offsetting

I think the most evil about this system is probably because we make this thing "trade-able". For companies which pollute less than the allowable permits, they can sell the remaining permits (i.e. offset permits) to those companies which want to pollute more than the allowable permits. This seems pretty reasonable as long as we don't go beyond the Gap as whole.

This is the part the system gets complicated and confused. Theoretically, it should work but that is another story in reality due to the complexity of measuring the amount of pollution. How to tell how much a company is polluting? If we can't measure it, how much permits we should give? What about the transaction costs involved in buying and selling permits? Consumer bares them? How about those company pollute less in U.S. and transfer their pollution to Asia since Asia doesn't participate in this Cap and Trade?

Devil Three: Distraction

The "Devi Three - Distraction" as mentioned by Annie is not really key message as compared to Devil 1 & 2 above in my opinion. What she was really want to say is the Cap & Trade protects business as usual and have no intention of saving our world. In short, it is a scam. :)

[Discussion]: As you can see, the really evil about this Cap & Trade to made this rule trade-able, something similar like stock market. It becomes so complex that no one is really know what is going on and forget about the original intention. U.S. once again create something out of nothing (i.e. predicted a brand new 3 trillion dollar market by 2050).

So, can we conclude Cap & Trade is a scam? I think no one can prove it right and of course no one can prove it wrong too. Similar to Sub-prime Mortgage, is that a scam? What do you think?

P/S: As usual (which I find it difficult to understand) for more details about Cap & Trade, you can visit the Wikipedia: Emissions Trading.

Monday, July 05, 2010

Different Experiences for My Trip in China

This is not a financial article but a pretty standard in my blog which I talk about my travel experiences. This is my second trip to China and my first trip to China is probably 5 years ago. Some of these experiences maybe sensitive to some of you but this is only for sharing purpose. You may experience a different thing if you have visited China. Let's see what is my take away from this trip...

Wasting Food to Show Off

I think this is typical a Chinese culture especially when someone is paying for the food. During the trip, I really saw a lot of this kind cases. They order a lot of food and purposely not to eat them for the purpose of showing off (for the one who pay the bill) or giving respect (i.e. give face in Chinese) to the one who pay the bill. For example, 5 people order 15 dishes and they consume less than 10% of the food. I'm surprised with this and they don't take away to food after that. I think this defeats the purpose of the culture and simply misused it. Do you agree?

Cheap, Cheap, Cheap ...

Shanghai and probably Beijing (I guess only) is the most expensive places you can find in China. If you know how to find the loophole, you can find cheap stuff in Shanghai and Beijing too. Food is large portion and cheap. What I really enjoy is eating the seafood in Dalian and Dandong. It is really so cheap to eat a seafood like fresh abalone. You can't even find fresh abalone in Malaysia. Other stuff is also very cheap but that is only applicable to local stuff (made in China). Of course if you buy imported stuff, it will be more expensive than in Malaysia. Converting to RM is divided by 2 and to Europe currency is divided by 10!!! (maybe 8 or 9 now). So if you're business man, you will know what to do...

Eating Dog Meat is Legal

Yes, eating dog's meat is legal in China and I see a lot of restaurant selling that. However eating bird's meat is illegal in China. I'm not sure how true this is and I heard from my driver. Perhaps China is lacking of birds and too many dogs? True?

Wearing Helmet is Not Required

At least in Malaysia, wearing helmet is required for those motorbike driver. That is for safety purpose. In China and from what I see, the way they drive the motorbike is a lot more dangerous than in Malaysia and why don't they need to wear helmet? Is that because their skills are really good? How about the accident rate?

Order Food Style is Different

In Malaysia or other countries that I have visited, the waiter will usually give you sometime to think about what you want to order after giving you the food menu. In most of the restaurants that I had visited in China, the waiter will just stand there and wait for you to order after they give you the menu. I usually tell them that I will call them when I'm ready to order. Is that their culture or because they want to be fast?

Security Check at Metro?

Weird thing is, security check is at all metro station entrance. It is similar to the security check that you go through the airport. They will scan through all your luggage and hand bag as well.  I guess the reason they're doing that is to prevent people from bombing the train? Is that really preventable? I've no idea and I just feel that really troublesome to go through it every time...

No Facebook, No Youtube, No Blogger!!!

No wonder my blog has no China visitor because it has been blocked. I can't blog too in China :( and Facebook and Youtube are blocked too. The only way to bypass this in China is go through "Paid VPN" because most "Free VPN" has been blocked too. Perhaps China Government treats all their citizen like kids and not allow them to watch pornography online. The question is, when the kids will grow up? Is that a good thing to do?

 P/S: Now if you've visited China before, do you experience the same things I do?

Saturday, May 15, 2010

Keep Your Broadband Receipts for Malaysian Tax Relief

This blog post is just to remind all of you (i.e. Malaysian only) to keep your broadband receipts (e.g. Streamyx, Maxis, P1-Wimax, PenangFON, and etc.) for tax relief starting from this year - 2010. This is based on one of the items (which I find them most useful) in 2010 Malaysia budget announcement.

Since this is new thing, I think many of you may still do NOT aware of this yet or may have just forgotten that you can claim up to RM500 for tax relief for 3 years - starting from 2010 to 2012.

What else receipts you should keep? Well, you probably have known already such as medical, sports, and book/magazine receipts. See my previous post for the summary: Tax Savings Tips for Malaysian.

By the way:
  • Do you know you can have tax relief for buying a house too? Of course there are some conditions and the offer is until the end of this year, 2010.  However, it doesn't mean you must go for it which I discussed in my previous post - Tax Deduction for Property Purchase
  • Do you know 60% of your premium of critical illness life insurance can have tax relief under the medical insurance policy? Of course for life insurance policy you can claim up to 100%. Many people do not aware this and for more detail, you can read my previous post - Tax Relief Tips for 36 Critical Illness Insurance.

Saturday, May 01, 2010

Safest Way to Invest in Forex in Malaysia

In my previous post, I talked about whether one should invest in Renminbi (RMB) and one of the readers recommended us to buy AUD instead. Well, all these recommendations are good but always keep in mind that no investment is 100% guarantee. However, the purpose of this post is not going to tell whether you should invest in AUD, NZD or GBP but rather to share with you the safest and easiest way to invest in Forex in Malaysia.

The fact is there are so many Forex scams out there especially those offer the Forex trading. The funniest comment that I heard from a friend (I'm not sure if that is true) is when he wanted to sell, the system doesn't sell immediately but the rather delays it until the price is dropped. This happens almost every time we wanted to sell. At the end, he was always selling at lower prices and made a lost.

"Foreign Currency Fixed Deposit"

To me, the easiest and safest way to invest Forex in Malaysia is to open a "Foreign Currency Fixed Deposit" account from the local banks in Malaysia. I"m not sure if other banks offer this service (I assume yes - you can clarify that if I"m wrong) but Public Bank in Malaysia does offer this service. Yeah, I'm the fan of Public Bank...

Steps to Open a Foreign Currency Fixed Deposit Account in Public Bank
  1. Go to "Public Bank" Office
  2. Press "Customer Services" button and wait for your turn.
  3. Once you're at the customer services desk, tell the banker that you would like to open a "Foreign Currency Fixed Deposit" account. Of course you need to tell her what currency you're interested in.
  4. After that, the banker will ask you to queue at one of the front counters (e.g. counter 8) so that they can issue the foreign fixed deposit statement to you.
  5. You will get something like this once everything is done:

Note: I choose auto reinvest the interest and auto renew the FD. You may also want to ask them whether there are any promotion before you decide. Sometimes they have promotion of putting 1 month of FD has higher rate than 12 months.  In that case, putting your FD in 1 month will earn more. By the way, minimum amount of investment is RM10K.


I think investing in Foreign Currency Fixed Deposit is the safest and easiest way to invest in Forex in Malaysia because it goes through official bank (although sometimes bank does play some tricks that seem to be like a scam). Another benefit of investing in Foreign FD is you will earn some interests out of your investment too.

So, wondering the easiest and safest way to invest in Forex in Malaysia? Just go to Public Bank...

Monday, April 12, 2010

Should I Invest or Buy Renminbi - RMB?

As you have probably known that China is one of fastest growing economic country in the world.  If not, why I want to say Chinese is the 21st century languge? So, now back to the question should you invest in Renminbi (RMB) or Chinese Yuan (CNY)?

Before we answer that, let's look at Chinese Yuan (CNY) or Renminbi (RMB) currency trend for the past 15 years. I plotted the Malaysia Ringgit (MYR) to RMB and you can plot it by yourself for your own currency. The trend should be around the same regardless of what currency you're comparing to.

What you can see here from the graph is the RMB has been staying flat since 1998 until today. Now we raise another question of whether the RMB will continue to be in flat? You may also wonder why the RMB currency is flat but on the other hand China is the fastest growing economic country?

Why RMB Currency is Flat?

It is probably due to the battle between China and U.S. both economically and politically. In fact the China government wants it to be this way so that they can keep exporting their stuff at the cheapest price to U.S. as compared to other countries (because other country's currency is appreciating). This leaves no choice for U.S. to buy or import stuff from China and not from other countries.

Imagine if China let RMB currency to be appreciated and U.S. used to buy a pen for US$ 1, now they have to buy a pen for US$ 1.50 from China. U.S. may switch to buy from other countries and China will lost their income (i.e. less in exportation). China doesn't want this to happen. So, what China does is to play around or manipulate their own currency by making sure it doesn't appreciate. Now we raise another question, is RMB currency under-valued?

Is RMB currency really undervalued?

If you ask China, China will tell you that RMB/CNY is NOT undervalued. Perhaps they don't want to let you know that they're manipulating the currency? The funny things is other than China, everyone seems to think RMB/CNY currency is undervalued. One of the obvious reasons is that RMB currency does not really appreciate in-line with China's economic growth.

So now U.S. is pushing China to revalue the RMB. Do you think China will revalue the RMB? If yes, do you think RMB currency will appreciate? For me, YES!!! If no, RMB will probably stay flat but will it appreciate in future? For me, YES!!!


In reality to answer all these question, there are no absolute answer and what I have explained so far is in the most simplest form. It is in fact a lot more complex than what I have explained. I'm also learning in progress. :) So all the questions that you have, eventually it is still back to you to make your own call. For example, should I invest in RMB currency? It is totally up to you.

Here are my answers:
Q: Should I Invest in RMB or CNY?
A: Yes, you should because RMB or CNY currency is currently undervalued.

Q: Why RMB or CNY is undervalued?
A: Because everyone "perceives" RMB or CNY is undervalued.

Q: Why everyone "perceives" RMB or CNY is undervalued?
A: Because RMB or CNY doesn't in-line with China's economic growth.

Hope these pretty common-sensed answers satisfy you especially you're a long-term investor like me. Don't wait anymore, go ahead to invest in RMB before it appreciates! Good luck!

p/s: I don't buy RMB directly but I invest in RMB by opening a foreign fixed deposit (FD) account though local bank. I find it is the easiest way to invest in Forex especially for long term investor like me.

Sunday, March 14, 2010

Public Mutual Fund Agent is No Longer Needed in Malaysia?

In Malaysia, we used to “NO CHOICE” and must go through the mutual fund agent to invest in unit trust or mutual funds. Moving forward is that still necessary? Let's look at the following reasons why I think mutual fund agents/consultants may no longer necessary(physically) in the future .

(1) You Can Now Purchase New Funds Online

We used to required an “agent” or “consultant” to do that for us or we need to go to the bank ourselves to fill-up the initial investment application form. All these steps are no longer needed with the Public Mutual Online. You can basically do everything EXCEPT “standing instruction” and “selling the unit trust units” in public mutual online.

How to Register in Public Mutual Online?

There are few methods but the easiest method is to go through PbeBank.Com. You basically just go to “Investment” → “Public Mutual Online Registration” to request the pin number. Once you have requested the pin number, they will mail you the pin number and you need to activate your pin number within the 30 days in Public Mutual Online website.

(2) You Can also Perform Standing Instruction Investment Online

Many people including many Public Mutual agents do not aware of this service actually can be done online. Yes, it is not done through Public Mutual Online but Public E-Banking instead. These are the steps you need to do when you're in

  1. Go to “Investment->Public Mutual->Investment (Registered)” to register all your Public Mutual fund's accounts.
  2. Go to “E-Standing Instruction->E-SI Creation” to request the PAC.
  3. Select “Public Mutual Investment – Registered” as Transaction Type
  4. Follow the rest of the screen instructions (e.g. First Effective Date, Frequency and Occurrences) to set the standing instructions (e.g Invest RM100 monthly to Public Growth Fund)

Discussion: Do you think mutual fund agent is needed?

So now back to the question, do we still need the agent physically since we can go through all these online? You may disagree with me but these are the 2 KEY reasons I need the unit trust agent. Now all these can be done through online, I'm wondering what's the purpose of those agents anymore?

You may think their consultations, investment advice or recommendations are still valuable. This probably still valuable to some of the people but most of the agents that I've met do not provide really very useful information to me mainly due to the fact that those information I've already known or I can know it from somewhere else (e.g. the prices trend, new launch funds and etc.)

I think moving forward down the road, mutual fund agents are no longer necessary but they should continue to think of a new ways (e.g. expand their role?) to satisfy their customers. I may wrong. What do you think? Do you agree or disagree?

Saturday, March 13, 2010

Top 10 Hottest Topics Since 2006

These are the top 10 hottest topics (based on number of page views) since this blog was started in 2006. In fact, most of these topics were posted in 2008 and 2009. Let's check it out:

Top 1: Invest Gold in Malaysia Through Public Bank
Here I talked about that you can invest gold in Malaysia through public bank and the reasons why I invest in Gold.

Top 2: Simple Way to Explain Subprime Crisis
This is probably the best post that I've ever had to describe the complex subprime crisis in a very simple way. I rewrite this post at least 3 times to make this as simple as possible. Hopefully, I achieve what I intent to do.

Top 3: FD, Savings, Inflation and EPF Rates in Malaysia
This shows the fixed deposit, savings, Inflation and EPF rates in Malaysia since 1996. Sometimes it is fun to look at the historical trend....

Top 4: Get Rid of Worms in Stomach
Interestingly this post is the top 4 in my blog. I'm not sure whether I should be happy with it or not. Anyway, the video here is disgusting based on some of the readers comments but that is not the whole point...

Top 5: Understand Retrenchment Labor Law in Malaysia
I guess people who reach here are the one just being retrenched? I'm sorry for that. I think it is important to understand what is your rights when you're retrenched. Who knows?

Top 6: Story of Stuff Summary & Review
It talks about how stuff works and I just summarized what the author had said. She have the second version now and I probably will write another review for it if I think is useful.

Top 7: How to Calculate Housing and Car Loan
This is probably the most important post because many people has no idea the car loan interest is actually higher than the housing loan interest. It seems lower but it is not...

Top 8: Dell Inspiron 640m Review
I recently bought a new Dell Studio 1555. Perhaps I should write review for it again? Anyway, you can just ignore this post if you're not interested. It was intended for very specific niche readers. :)

Top 9: Which bank should I choose for best FD rate?
This posts show the latest FD rate (yes, outdated already) and the key message is I personally think that we shouldn't follow which banks offer the best FD rate.

Top 10: Fastest Way to Get Rich By Swisscash
Swisscash was one of the very famous “High Yield Investment Plan” scams. By title it seems like I was supporting it but I”m not. I don't totally against it if you like this kind of stuff and know exactly what you're doing...

P/S: One of the readers commented whether I have other similar useful posts that he was reading. I honestly do not know about it. Perhaps the one that he was reading is the only one that useful. Anyway, I come out this idea just to list out the top 10 highest pages views of all my posts and hopefully you may find some of them to be useful or interesting.

But can number of page views tells these top 10 posts is the most useful one?

Sunday, January 31, 2010

Understand Money as Debt Concept

I came across this video sometime ago and personally I found it very interesting that you may want to watch it. This video was created by Paul Grignon in 2006. It is quite a long clip (i.e. 47 minutes) and I think it is worth spending watching it. You may need to watch it few times too because it is kind of difficult to understand.

This movie shows how the basic banking system works and how the money was eventually evolved into no longer represent value but debt. Let's watch it and if you're lazy, you can read my summary below. :)

What are the KEY messages from this video?

Message 1:
Money Is Now Backed by Loan or Mortgage

Yes, bank used to create money only if they have the real gold with them or someone deposit the gold to bank. But this is not how the bank operates today. Bank created money as long as you take loan from them and promise to pay back. Money is no longer backed by Gold but backed by the loan or mortgage. In short, bank loans money that they don't have and in reality the money now is actually created out of “Nothing”. Let's see how this works...

Message 2
: Bank Can Create as Much as Money We Can Borrow

As soon as we realize the bank creates money out of nothing, a new legal regulation is invented to protect our rights. This legal regulation is called “9 to 1 Fractional Reserve System” to limit how much money the bank can create.

In short, if the bank has $1K cash in hand and they can loan out up to $9K to us based on the 1:9 fractional reserve system regulation. However, does this really limit the bank to create money up to $9K? It seems so but in reality they can create the money up to $90K which is 1:90 ratio. Let's see the following example how this works:

Assuming when the bank started, the bank has $1K cash in bank. This means the bank can loan up to $9K to all of us. So, let's say Person A take the loan of $9K to buy a car from Person B. Based on the person A's promise to pay back the money, bank will create $9K cash and loan it to person A.

The tricky part is the Person B will then deposits $9K to the bank. Based on the 9:1 federal reserved regulation, the bank can then reserve $900 ($9K/10) and loan it out the rest which is $8100 ($90:$8100 == 1:9).

So it moves on to next loan transactions until the bank can't reserve anymore money. See the table below for the subsequent loan transactions until the bank can't reserve anymore money. At that point in time, the bank will have total of $10K cash in hand and the total of $90K loan has been created.

2 very important questions to ask yourself here:
  • Initially the bank has $1K and now the total cash in hand the bank has is $10K. Where does the $9K come from?
  • Initially the bank can only loan up to $9K. Why now the total loan is $90K?

The answer is pretty simple – the bank create money out of each loan transaction. With just $1K, now the bank can somehow create extra $99K($9K + $90K) out of all the loan transactions. So $1K has been somehow magically becomes $100K ($1K+$99K). Assuming $1K is backed by Gold, then $99K is now backed by loan. It seems like the banks only create $9K but in reality $99K (x10 times) of money has been created out of nothing.

Therefore, bank can create a much as money that you can borrow! As long as new loan agreement is signed, a brand new money is created!

Message 3: Our Monetary System is NOT Sustainable?

In previous example, you will notice that majority of the money that we have today in this economy is created by loan or debt. Therefore in other words, the money supply to this economy is equal to the total amount of loan principal. However, when you pay back to bank, you're paying not only the principal but the interest of the loan.
  • Money Supply = Loan Principal
  • Money Owed = Loan Principal + Loan Interest

The total of money circulate in this economy is approximately equal to the total of loan principal. So now you need to pay the extra loan interest to the bank, where do you get the money from? There are only 2 possibilities:
  • Not everyone will not able to pay back the loan together with interest
  • To avoid that from happening, bank will supply more money to the economy by creating more loans

In order to sustain this monetary system, more debts needs to be created to make sure the system have enough money supply to pay back the loan interest. The funny thing is when more debts are created, more debt interests are created too. Thus, more money you owe. This is the exponential thing and are fixing the things or making it worse? Will this continue forever or will it collapse one day?


Now we know the truth that money is created from debt and the questions to be discussed here are, is that really wrong with this system? What's wrong with creating money as debt? What's wrong to have exponential growth? Is this man made or natural? Who should we blame if this is not right? Is this government fault? The most important question is that shall we even fix this system? If we want to fix this system, can we accept the consequences? Even if we want to fix this, can we?

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