Why I never buy insurance

In my working career, many insurance agents approached me to buy all sort of insurance. As we are not familiar with the jargons they use, I just felt very insure to buy any insurance at all. Looking at the reports from the newspaper, I am grateful that I didn't buy anything. Just prudent saving to cover for the rainy days.

Making it hard for claimants
Consult a doc and read the fine print before signing up for a health policy
Hundreds of true-life trials of the insured

My policy of buying insurance, if at all necessary, is to buy "fit for purpose", eg, never buy life insurance to cover house loan. Just a housing loan insurance will do ... cheap and do the job!
Just to clarify, I am concerned about life insurance and critical illness insurance. Terms insurance is a form of saving and is normally straight forward.

To retire, you need at least RM1,000,000

For young people, retirement seems to be so far away!  I remember that when I first started to work.... and that was 30 years ago, retirement or reaching 55 seems to be such a long way. I remember drawing my first salary of S$1000 and they were mostly used up by the end of the month. First month, I bought myself a watch costing S$230. I am still using it today. On my second month, I decided that I need to paint the whitewash wall of my room. The rest was history. At the end of a year working, I saved a little. I came to Miri to work.
First, I decided that, I am not going to live on overdraft or bought anything on loan. So, I bought myself a small motorbike to travel to office. I saved enough and bought a Toyotal GL for RM19K. Then I went to learn how to drive!
I read an article on The Star today and it is quite disturbing! To summarise:

• Average EPF saving at retirement for most people is RM146K and 70%  of them used the whole lot in 3 years
• Average life expectancy is 74 years - so 20 more years of living without income to "worry" about
• If we spend about RM4000 a month, a million ringitt could last about 20 years
• If you want to retire with a million ringgit, start saving and investing before 40. To play safe, start saving the day you start working.
• Most Malaysia under-invest and under-save
• If you want your money to grow faster, the return must be more than 4% inflation

The big question: Are you willing to sacrifice short-term thrills for long-term value which helps to build up your saving and investment to exceed RM1 million?
You can invest in properties, unit trust and others low risk investment.
By the way, I am also an unit trust agent. If you are interested, please let me know and we can discuss.

How long can your money stretch?

I was chatting to a businessman this morning and asked him about his business. He said “Not very good. People seems to have less money to spend…”. 30 years ago, businesses drop off after the 20th of every month. A few years ago, people get “poor” after the 10th of every month. Now, their pockets seem to dry up after just one week. Why? If I look at the middle and lower income group of people, their pay packages did not progress with inflation. I just look around and ask people about their pay. Fresh graduate may get less than RM1000 per month. 30 years ago, I was paid that amount.
Actually everything is now so expensive. Essentials like fish, meat, egg, rice, etc, have increased the prices by almost 5 times over the last 30 years. Eg, egg cost RM2 against RM10, bread was RM0.40 against RM2.50. What do you think? Are you feeling the pinch of the ever rising cost?

PM thinks we should not complain...

Hear what our PM said:

PM: RM50 for credit card not a big deal

HUA HIN: Describing Budget 2010 as “painless”, Datuk Seri Najib Tun Razak said the people should not complain about the Government’s decision to impose a RM50 annual service tax on principal credit and charge cards.

Instead, the Prime Minister said they should look at the overall benefits offered by the Govern-ment in the Budget.

“They are getting the RM1,000 tax relief and those paying tax at 27% will now pay 26%.

“So, they get two (relief measures) and only have to pay RM50 (per credit card). Don’t tell me they cannot pay RM50?” he said after a meeting at the 15th Asean Summit here yesterday.
Source: http://thestar.com.my/news/story.asp?file=/2009/10/25/budget2010/4974446&sec=budget2010

I don't normally blog about political stuff. But for this issue, I think I have to highlight this so that we, as a citizen knows what is happening and what needs to be done.

My comment is that it is not RM50 that matter. It is the string of implications following it. I wish the govenment think through rather than trying to solve problem in a simplistic manner.

Deceiving kindness

There is a company who gave very good retirement benefit to staff. Literally everyone who retires will become quite rich, perhaps millionaire. One fine day, the company announced that they are going to replace the retirement benefit scheme with another scheme which is going to be even better, ie, the financial return is going to be much more.
So, the company employed professional to give presentation to staff and also provided spreadsheet to convince the staff that the scheme was better. Many employee opted for the scheme.
However, within a few years, the scheme did very badly and the financial return was extremely poor.
The change was done at the time when:

1. The stock market was on a bull run, ie, increase;
   
2. The scenarios taken were very positive - everything good and nothing bad.
   

In this situation, people tend to be optimistic and fail to be realistic. The lesson learn is as follows:

1. Never believe your company will change your benefit to something better;
2. When you are dealing with something linked to stock market investment, just remember that whatever goes up will come down. Therefore, a balanced scenarios must be made, ie, you must consider the possible best and possible worse, ie, worse case which had happen.
3. Don't be greedy.
   

10 more possible reasons why you aren't rich

I summarise a long article to this:

1. You care what your car looks like.
2. You feel entitlement: You believe you deserve to live a certain lifestyle, have certain things and spend a certain amount before you have earned to live that way, you will have to borrow money. That large chunk of debt will keep you from building wealth.
3. You lack diversification: Do not keep all your eggs in a single basket.
4. You started too late: The magic of compound interest works best over long periods of time.
5. You don't do what you enjoy: You need to enjoy your job.
6. You don't like to learn.
7. You buy things you don't use.
8. You don't understand value: Does your purchase brings you values?
9. Your house is too big.
10. You fail to take advantage of opportunities: Keep your eyes open!

Financial Freedom

I was reading Adam Khoo's self made millionaire web last night and his advices for financial freedom is as follows:

• Willing to take responsibility for your actions in life.
• Do not procrastination.
• No more excuses.
• Stop blaming other people or circumstances.
• Willing to take action to achieve your goals.
• Willing to learn.
• Willing to leave your comfort zone.
• Money is not evil.
• Gaining financial freedom is a MUST.

So if you want to gain financial freedom, start doing all the above.