Middle-Class Income Group - Are you?

Wow.. it had been a year since my last active post. Well many things happened throughout the whole year of 2010 including moving to a new place start out new adventure (it sounds so nice but actually it isn't) till i finally successfully taken the 1st step further into the financial / investment world by registering for the June 2011 CFA level 1 examination. Well now that i am back and very determined to keep this active, i would basically just like to share something called "middle class income group"

Before i go ahead to talk about this, i have a few questions that i would like you all to do some thinking. No need to give me the answers, you just keep it with you or you might want to share it with some your friends too during tea time. 

• What is the amount written on your monthly paycheck?

• Are you currently servicing your car loan? if so, what is the ratio of your month repayment to your paycheck?

• Do you have any monthly installment for your new iphone, bb or dslr etc? if so, what is the total monthly installment and the ratio of it to your paycheck?

• Now here's the knockout blow. Given a new 20x70 double-story terrace house @ a not so prosperous housing area will cost you around MYR350k at least which translate into a monthly installment of MYR1773 given the current interest rate. Boys and girls, after paying off the fixed installment, your paycheck balance enough to pay for home installment and no need to feed on bread and water everyday?

So my dear friends, do you realize that our pays are seriously under paid? or should i rephrase it to be do you realize that our pay here are the only thing that doesn't undergoes inflation other than FD rate. But then what is the big deal? Nowadays people are applying mortgages under joint income so the MYR1773 shouldn't be a problem. Short term it isn't however guys, do you want your wife to work until she retire the same age as you as well in order to payoff the mortgage... 

 

For some couples, they tend to live above their means when comes under by taking a loan under joint income. Eg, a couple with a combined income of 7k might want to buy a semi-d for 500k which is around 3k per month and this haven't factor into their monthly living expenses and end up having debt management issues.

That is why we can see a lot of fresh income earners or those average income earners rather to stay under the same roof with their parents or rent a room someplace near his/her workplace and paying 1k plus monthly for a Civic. Not to say they fail at planning is just that what they earn is not enough for them to have a house, a car and a family vacation once in a while.

Right now all of us might be asking, so how much we earn per month only qualify us as a middle income group? The answer is it depends on how you want to live your life but be under your means. But if you want a figure, i think should be the range of 5k if you want to own a 350k house and a 100k car and with 50% of your income to spend on your expenses. 

Enough said, for me i still need to increase my salary 100% in order to make it into the "middle income class"... which is short term is near to impossible... this is reality and it's sucks. 

Till then.....

Beauty of Long-Term DCA Investing

No. of Years	Total Investment (RM)	Total Income Earned (RM)	Total Fund Value (RM)
1	5,300.00	407.59	5707.59
2	7,100.00	1,022.27	8,122.27
3	8,900.00	1,863.45	10,763.45
4	10,700.00	2,952.41	13,652.41
5	12,500.00	4,312.36	16,812.36
6	14,300.00	5,968.74	20,268.74
7	16,100.00	7,949.35	24,049.35
8	17,900.00	10,284.61	28,184.61
9	19,700.00	13,007.79	32,707.79
10	21,500.00	16,155.27	37,655.27
11	23,300.00	19,766.86	43,066.86
12	25,100.00	23,886.09	48,986.09
13	26,900.00	28,560.59	55,460.59
14	28,700.00	33,842.44	62,542.44
15	30,500.00	39,788.62	70,288.62
16	32,300.00	46,461.44	78,761.44
17	34,100.00	53,929.07	88,029.07
18	35,900.00	62,266.07	98,166.07
19	37,700.00	71,553.99	109,253.99
20	39,500.00	81,882.03	121,382.03
21	41,300.00	93,347.77	134,647.77
22	43,100.00	106,057.92	149,157.92
23	44,900.00	120,129.23	165,029.23
24	46,700.00	135,689.38	182,389.38
25	48,500.00	152,878.02	201,378.02
26	50,300.00	171,847.93	222,147.93
27	52,100.00	192,766.21	244,866.21
28	53,900.00	215,815.61	269,715.61
29	55,700.00	241,196.06	296,896.06
30	57,500.00	269,126.22	326,626.22

Risk Profile	Moderate
Initial Investment	RM3,500.00
Saving Period	30 years
Rate of return	9.0% per year
Additional investment	RM 150.00 per month
Recommended Fund	PB Balanced Fund

However i need to clarify that this illustration is supplied in response to your specific request and is for your use only. It is based on hypothetical future inflation rates and investment performance. The illustration is intended as a financial planning tool to assist individuals in their financial planning. There can be no assurance of future performance as actual returns will fluctuate with market conditions. The illustration reflects compounding at a hypothetical fixed rate of return and rate of inflation and is not intended to project the performance of any specific investment vehicle. Please note that periodic investing does not ensure profit and does not protect against loss in declining markets.

Many people invest but only some become wealthy. Why?

The mistake many people make when investing is that they treat their investment as saving.

So what is the difference between saving and investing? Saving is what you do to build up funds for something, like a holiday, and when you have the amount saved you withdraw your capital from your investment and spend it on the holiday. After the holiday you have nothing left, and start the process all over again.

But building wealth is different. People who want to build wealth invest their money for the long term in 'growth assets' such as shares and property.

Their strategy is to spend the income that the investment produces, but to leave the capital invested. They don't withdraw the capital, so it stays there growing and compounding, and producing more and more income each year.

If you do this it will take you quite a while longer initially to get to your investment goal , but in the long run you will find that the extra wait has been worth it. As the years go by, you will have an increasing additional income stream from your investments and your standard of living can rise accordingly!

Investment Goals

Through out the time, we keep on mentioning about investment goals and our investment vehicles must be tailored to suit our investment goals. But then do we really know how to draw out our own investment goals and the quantum of each goals ranging from short, medium to long term.

And here is some examples of Investment Goals :

Short term (1-3 years)

• Overseas holiday
• Car
• Taking time off work to care for a baby

Medium term (3-7 years)

• Deposit on a house
• Boat
• A sabbatical or extended break from work

Long term (7+ years)

• Childrens' education
• Holiday house
• Retirement/early retirement

There is one thing we need to take note of is the key to successful investing which include identifying your investment goals, and the time frame over which you will invest. When you already have an investment goal well drawn out, you are in a head start for a successful investment. :)

Investment 101- Basic Investments that you and me should know

Throughout our life, we often found that our investment objectives do change. As for young investors like me and you who are now working and being able to generate a steady stream of income annually, capital appreciation may be more important for us. However when we are closer to our golden retirement years, risk-free fixed steady income is more important.

It is a good thing that we do know how to determine and when to change our investment objectives, but what kind of investment portfolio does matches our investment objectives time to time...

Keep read on and learn a few investments in Malaysia that i feel we should know :) 

-Annuity

-Common Stock

-Corporate Bond

-Life Insurance

-Money Market

-Mutual Funds

-Real Estate & Property

-Real Estate Investment Trust (REITs)

Amanah Saham Bumiputera

After the press release saying that thru Maybank2u.com you can buy additional ASB units, i think it is time to see what does ASB offers.

Fund Information:

Fund Name	Skim Amanah Saham Bumiputera
Type	Income
Category	Equity
Launch Date	January 2, 1990
Objective	To generate long-term, consistent and competitive returns to the Unitholders whilst ensuring the preservation of capital at minimal risk tolerance level.
Potential Investors	Those who understand investment risk and reward and expect to benefit from long-term growth of the Fund through re-investment of distribution (if any) as well as to receive regular income (if any) on their capital.
Eligibility	MALAYSIAN BUMIPUTERA
Investment Manager	Permodalan Nasional Berhad

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Transaction Information:

Price per Unit	RM1.00
Form of Investment	Investment book, Certificate
Minimum Initial Investment	Investment book-10 units
Minimum Additional Investment	Investment book- 1 units, Certificate- in multiple of 1000 units
Maximum Investment	Children Acc- 10000 units, Adult Acc- 200000 units
Approved Fund Size	UNLIMITED
Sales Charge and Redemption Charge	NONE
Payment of Redemption	On-the-Spot redemption
Cooling Off Period	None
Financial Year End	December 31

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Fund Performance- Year end December 31 06 07 08

Net distribution per unit (sen) 7.30 8.00 7.00

Bonus per unit (sen) 1.25 1.00 1.75

MAYBANK AND PNB LAUNCH MALAYSIA’S FIRST ONLINE FACILITY FOR ASB INVESTMENTS

APRIL 20, 2009.

JOHOR BAHRU - Maybank and Permodalan Nasional Berhad (PNB) today jointly launched Malaysia’s first online facility for making additional investments in ASB units. With this facility, ASB investors can top up their ASB account online via Maybank2u.com, without the need to visit a Maybank branch or Amanah Saham Nasional Berhad’s (ASNB) office. 

This new service was launched today by the Prime Minister of Malaysia, Dato’ Sri Mohd Najib bin Tun Haji Abdul Razak, after the official opening of the Minggu Saham Amanah Malaysia (MSAM) in Johor Bahru. 

Also present at the event were the Deputy Prime Minister, Tan Sri Dato’ Haji Muhyiddin bin Mohd Yassin, Menteri Besar of Johor, Dato’ Haji Abdul Ghani bin Othman, PNB Chairman, Tun Ahmad Sarji bin Abdul Hamid, its President and Group Chief Executive, Tan Sri Dato’ Hamad Kama Piah Che Othman, Maybank Chairman Tan Sri Mohamed Basir Ahmad and President and CEO Dato’ Sri Abdul Wahid Omar. 

The new service marks a milestone as it offers ASB investors the convenience of making additional investments via Maybank2u.com from anywhere in the world. Another unique feature of this service is that it accepts additional investments to third party ASB accounts, thus allowing family members or guardians to invest for their loved ones. 

Tun Ahmad Sarji said that the new service underscores PNB’s commitment towards making unit trust investment accessible to all. “The digital generation is comfortable with using the internet for all manner of transactions, so this step is timely in capturing the evolving needs of a new generation of Malaysians. We’re happy that Maybank is willing to work with us to achieve that goal.” 

Tan Sri Hamad Kama Piah said that going online was part of PNB’s ongoing effort to fulfill its mandate. “We take our socio-economic objectives very seriously and providing an online service for investment was a logical step to take. We had the same objective in mind when at our own cost we computerised the Post Office back in the 1980s, so that Malaysians could invest no matter how remote the location. We want to achieve an investment savvy society, and reducing the barriers to investment is a key component of that goal.” 

“So we are very honoured to have the YAB Prime Minister launch this service at MSAM, because it is part and parcel of the same strategy, our “ White Ocean ” strategy of achieving social goals through value innovation. Value innovation here is to continuously create value for our investors by always moving forward with our products and services. MSAM contributes by providing a platform for information and education on financial planning and investment, and at the same time showcasing the technologies made available by service providers that can make investment less time-consuming and complicated. Through the exhibits and the myriad activities we have planned for this week, we want to make sure that Malaysians, especially our youth, have the knowledge and facilities as well as every opportunity to plan for their own financial freedom.” 

Meanwhile, Tan Sri Mohamed Basir said that the new service will appeal to those who are technologically inclined as well as encourage other investors to become more savvy by leveraging on technologies for their investment needs. 

“We are pleased to work with PNB to offer this innovative alternative for investors to increase their ASB investments,” he said. “Given the continuous interest in ASB unit trusts among the public, this new service will certainly reinforce Maybank’s leadership in online banking for which we command over 54.8% of market share today.” 

Maybank President and CEO, Dato’ Sri Abdul Wahid Omar said, “The introduction of this service offers an efficient and safe electronic payment alternative as investors do not need to travel to PNB agent offices or carry cash when making additional investments. They also do not need to queue or wait to be served at the counter. They are not restricted by locality to invest and can even ask their loved ones to do for them.” 

“Maybank offers the largest network of over 380 branches where the public can make investments in its ASNB stable of unit trusts and we will work with ASNB to provide even more valued added services to investors in the future,” he added. “Our users have benefitted tremendously from Maybank2u.com which today offers an array of services, including payments to the largest number of payee corporations which number 700. Business partners on the other hand, benefit from our large customer base of over 3.6 million internet banking users.” 

Investors who wish to use the online service must register as a Maybank2u.com customer and have an active ASB membership number. The investor is only required to enter the ASB membership number, a security Transaction Authorisation Code (TAC) and select his savings or current account to pay for the additional purchases. All successful transactions can be printed for record. 

The minimum investment amount is RM1 and the maximum is RM200,000 subject to the investor’s purchase limit and funds available in the customer’s savings/current account. The new service currently only allows for additional investments and in this first phase is available online from 12.01 am to 5 pm ( Federal Territory working days). Those who wish to view their investment status or make withdrawals are still required to go to any Maybank or ASNB offices.