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Monday, September 23, 2013

The Rich Don't Save, They Borrow

As the Bank Negara Malaysa (BNM), the Malaysia Central Bank trying to tighten the borrowing rule, I’ve been read­ing a lot of arti­cles lately about ways to get out of debt, and I’m not impressed at most of the articles that I've read. It's not that the articles are bad, I just don't really agree with most of the articles. I know that most of the articles will advice on repaying debt as soon as possible and have more savings and stuff like that, which I don't really agree as we are not optimizing the money well enough.


Having said so, I don't really mean that we should go and buy lots of stuff and then finally go into bankruptcy. In my opinion, one should really have the balance between debt and cash, in order to fully optimized the money to improve the lifestyle. In fact, a lot of affluent people have certain level of debts that they are comfortable with.

To begin with, there are two kinds of debt, often called “good” debt and “bad” debt. Good debt is the money that you borrowed and spend which will in turn generate income to you. Bad debt on the other hand is money that you borrowed and spend but will not generate income to you. While many financial planners or advisers categorized property loan as good debt and vehicle loan as bad debt, I don't really agree with that. Property loan might be "bad" debt if the property don't generate income, eg. you cannot rent out the property due to no tenant while a vehicle loan might be good debt, if the vehicle can turn out to be income generator, eg. car rental.


Hav­ing no debt can be a good thing, but one will not be able to take advantage of the current low interest scenario, and for every dol­lar you save in the banks, earn­ing you less in inter­est than infla­tion and thus los­ing you money, rep­re­sents a lot of money other peo­ple can use to make more money. The bank can lend out mul­ti­ple dol­lars for every dol­lar they have stored in sav­ings.


Always do what the rich do. Even if one have the cash, I will say it will definitely be a bad idea to buy a business, real estates or even stocks full cash without leveraging the low borrowing cost provided by the banks. We always read news about whenever the rich buy busi­nesses, real estate, even stocks, they bor­row money to do it, they get grants, sub­si­dies, what­ever. They use lever­age to keep money work­ing for them. The savers empower them. Even the Sage of Omaha embrace leveraging when it comes to private-equity buyout recently - read more on Berkshire-Heinz-Deal.

Having said so, it doesn't mean to say to go all out and lever­age every­thing to buy on things that will not be generating income for us.  One has to be smart, and buy smart and make more money than you pay for that money, oth­er­wise you’ve got “bad” debt. Bad” debt makes people poor, it doesn’t mat­ter whether it is a nice car or a big screen HDTV or a bad invest­ment. People still lose money whenever a debt is categorized as bad debt.

Sav­ing isn’t the path to wealth, and the sys­tem isn’t corrupt either. It is just that not putting money into good use that makes the poor people poorer while the rich richer by fully optimizing their money. Incomes generated only determine one's capability in making money, but it will not bring one to the next level if he or she does not know how to utilized the money - and this is how the rich will then become wealthy. Read more on Rich or wealthy, which are you?


In conclusion, spent money (expenses and savings) is dead money, and dead money can’t make you anything. Money has to be put into good use to generate more money; and again this is why I named this blog Money Master, because as Money Master, we instruct the money to work for us - like what all the employers do, instruct the employees to generate money for them.

Thursday, September 19, 2013

Silver Sky Imports

Tibet and Nepal trade culture between the Buddhism and Hinduism and are home to many unique instruments of meditation and relaxation. However, it is not easy to get or collect these unique instruments of meditation and relaxation especially from these two nations; but Silver Sky Imports provided the services that one would easily love it because by using the service from Silver Sky Imports, one can buy these instruments of mediation and relaxation directly from the web, without having the need to fly over to Tibet and Nepal and still risk disappointment of not getting what he or she wants.

Wednesday, September 11, 2013

Apple unveils new iPhone but stock still drop...

Apple Inc. (AAPL) unveiled two new iPhones, including a cheaper $99 version in bright colors and an updated high-end device, in a strategy shift by Chief Executive Officer Tim Cook to reach a broader range of customers around the world. 



AIMING AT BROADER MARKET?


The product introductions underline how Apple, which was a trailblazer when it debuted the iPhone in 2007, is increasingly following the strategy of other smartphone makers that offer handsets in different colors and prices. Until now, Apple only released one new iPhone model every year. As competing devices running Google Inc.’s Android software gain in popularity in the $280 billion smartphone market, Apple is expanding its iPhone lineup to reach more customers.

Well, if you think the announcement could help Apple's stock rebound, think again....apparently, according to analysts, there is lack of excitement and surprises of the announcement, given that most of the information has already been leaked to the internet, a couple of months back. 

Apple was also not as aggressive on price as some investors had hoped. “Many investors were hoping for that one single atomic event where they got aggressive on pricing,” said Gene Munster, an analyst at Piper Jaffray Cos. “Instead, in Apple’s own way they think they can accomplish their goal -- gaining market share -- without blowing up their margins.”
Nonetheless, offering iPhones at lower prices also poses risks. With a lower-priced iPhone, Apple is “walking a tightrope between growth and profitability,” said Sarah Rotman Epps, an analyst at Forrester Research.

The company’s shares down 2.4 percent to $493.74 as of 3:36 p.m. in New York.

Monday, September 9, 2013

When 20 cents Are Not Just 20 cents

I guess every Malaysians should already know by now that the petrol price will go up by 20 cents, two days after the whole nation celebrated a subdue Independence Day. Malaysian celebrated the country's 56th Independence Day on the 31st August this year and the announcement of the petrol price hike by 20 cents was made by the Prime Minister on the 2nd of the September.



While the subdue Independence Day celebration clearly shows that the government is running out of fund, not many of us would have imagine that the government would increase the price of the RON95 petrol by 20 cents, and clearly this move brought criticism from almost every one. And while it is hard to swallow, everyone will have to accept the fact that the petrol price will go up by 10% no matter what.

There is an economic story behind the hike, although the "hike of the petrol price" should be more referred to as the reduction of the petrol subsidy - because that is actually part of the subsidy rationalization plan that was promised by the government even before the election. One very clear reason for the reduction of the subsidy is to reduce the government deficit to prevent further downgrade by Fitch. And yes, after the announcement, Fitch maintain the rating on Malaysia's debt and clearly stated that the government is on the right track but not doing enough.

Some are praising and applaud the move, and although I agree that the government should, I still think that petrol subsidy should be the last one to get reduced. The 20 cents petrol price hike might not seems much, but the 20 cents hike are not just 20 cents hike. Many of us will dropped the 20 cents coin without realization, but the current 20 cents are not just 20 cents. It will leads to more 20 cents increases and further reducing the purchasing power of the Malaysians.

In fact, by raising the petrol price, the prices of other goods and services will go up accordingly and finally Malaysians are the one suffering for the mismanagement of the Malaysians' money by the government. Just the day after the announcement, the Real Estate and Housing Developers Association (Rehda) announced that the property prices might go up 10% because of the material transportation cost. Service providers that uses petrol or diesel will increase the price of their services accordingly - the public transportation will charge the increase to the fares; while transporters will charge to their customers which will indirectly push their customers to increase the price of the goods.

We do not have much choice but to just lower down our expenses. While it is not the 20 cents that makes the people angry at the government, it is because the 20 cents will not just be 20 cents. It is whenever the government coming out the austerity plan, it is the people who has to bear the brunt  while politicians continue to enjoy their larger than life style. If the whole nation should face austerity, it should starts with the government not having their rights to pump the petrol using the nations coffer and they should be the one to have pay cut rather than increases; just like what the private sectors will do, should they have austerity.

Monday, September 2, 2013

10% increase in petrol...TIME TO CUT EXPENSES!!

If you are following, the Malaysian Prime Minister, Datuk Seri Najib Tun Razak has announced the increase of petrol price. 

Price for RON95 petrol and diesel will be raised by 20 sen per liter from midnight. While 20 sen probably doesn't send an alarming response, an increase of 10% in the petrol should be alarming. 



The move is aimed at reducing the fiscal deficit, thus saving RM1.1bil per year for the Government, said Prime Minister Datuk Seri Najib Tun Razak.

Najib said despite the increase, the government would still be subsidising 63 sen for RON 95 petrol.

"The subsidy rationalisation will be carried out in many stages. The first is that the price of RON95 and diesel will be increased by 20 sen per litre from 12.01am Tuesday," Najib told a press conference after chairing a meeting of the Fiscal Policy Committee (FPC) on Monday.

There have been talk of ways the government would do to help the lower income group in Malaysia but all of that remain as talk while the increase in petrol has become a reality. Well, for those of you who are interested to talk about politics, you may but I think it's time for Malaysians to start planning for their expenses....tighten the spending maybe...let's not forget that our Ringgit (RM) is also becoming weaker.

Here are the few actions that should be considered:

1) Taking public transportation



Ever consider taking public transportation to work? Well, if you have not, maybe it's time to consider this option. If you're taking LRT, you probably spend about RM150 max on a month for your transportation. If you're driving, you spend at least RM150 for your parking, and maybe approximately another RM300 on your petrol. Let's not forget those who are paying toll as well. 

2) Carpool

sometimes you even have parking benefits when you carpool

Well, we all know not every places in the country are convenient enough for public transport. If you are facing this issue, the next option: Carpool. 

Here are a few benefits of carpooling. You get to save half of the transportation expenses. You have companion while travelling or when you are stuck in a jam. It is safer. Well, maybe it's time to look for people who stay nearby to go to work together. Some office even prepare special parking for those who carpool...one of these companies is Intel...I've seen it at my brother's office.

3) Eat in

The idea of cooking makes me vomit. I would rather be home and drink Oats, Milo, eat bread etc. Well, that's me....but maybe it is indeed time to consider eating in. The food prices in Malaysia is going up during each Festive seasons, each time the government declare an increase in petrol...each time that they have the opportunity. 



Here are the few reasons why eat in is much better...

a) Healthier - the food outside nowadays are food of MSG and the amount of sugar in a drink is unbelievable. The number diabetic patients in the country has also increase tremendously. This should be a worrying trend. 

b) Safety - whether in Mamak or restaurants, robbery cases, snatch thefts etc have increased. By eating in, you just reduce your risk of being a victim to these bastards.

c) Quality time spent with family. If you are staying with your family (unfortunately I'm not), eating in gives you family time....quality time with your family. Whether you believe me or not, there is nothing more enjoyable than eating with people who love you and would do anything to take care of you....


4) Spend on affordable luxury/activities



I know it doesn't seem to fit in as the topic is suppose to be on cutting down expenses but here am I, talking about spending on affordable luxury. 
I think this is important because ultimately, we did not want to be working everyday just for the sake of saving money. Here are some affordable luxury that I will recommend:

a) Internet usage (data plan included)

There are many people who don't usage data plan even until today but find themselves spending more on SMS, phone calls etc. Internet is an affordable luxury...in fact, it is a need for most people. Get yourself an affordable smartphone and internet...then you'll realize you'll be spending a lot lesser at times. Don't believe me? Try it!

b) Gym or sports

Some people do not want to spend on sports but at the end, they end up spending their weekends in mall, paying for parking, movies, expensive meals and yup, they basically spend more than those who pay for gym or go for sports. Sports is one of the most affordable and important luxury and activities that one should join. 

c) Reading

Most people don't read these days....so if you don't read, you're losing on some cheap activity. How many of you know that there are so many important source of free reading materials on the internet (see, that's why I said internet is important). You go to Reader's Digest online and you'll find plenty for yourself to read...magazines like Men's Health, engadget and many more...all of these offer interesting and exciting updates for you. For those of you who love manga/comic books, you could easily find it on the internet as well.


5) Choose to stay nearby your workplace



I remember chatting with a friend of mine who talk about buying property in areas like Puchong and all. Well, if you are not aware, one will have to spend about one hour to one and a half hours to reach his or her working place if they are working in the city center. The jam is frustrating and you'll have to pay expensively for your travelling. So, if you have a choice, choose to stay nearby your workplace. That's what I'm planning to do by considering a property in Jalan Ampang, nearby my working place. It's definitely more expensive to buy in city center than areas like Puchong, but the benefits are plentiful. So, the next time you want to complain about the jam, remember...sometimes, it was your own decision to stay far away from work.