5 Core Things Needed To Retire Early

It was a casual saturday and I’d normally stop by my favourite bookstore to top up my family’s weekly groceries.

It was then that I come across this amazing book called “Your Way to Financial Independence”, authored by Yap Ming Hui. He’s been helping a lot of people planning out their life and achieve financial independence – his company (Whitman Independent Advisors Sdn Bhd) helps people to achieve this. Check their page out if you are keen to restructure your life plans at https://whitman.com.my/.

I only imagine the idea of financial independence and retire early in life so that I can do things that I deem much more important than working around the clock and have no time to do the things I’m really passionate or care about in life such as spending time with my loved ones.

Hence, I believe it is vital for me to get my notes into other people’s notes. Knowing key knowledge in life earlier in life will help reduce your stress in future to come. Just like Jim Rohn said, ignorance is not bliss – ignorance is pain and tragedy.

In this article, we’ll be going through 5 very simple cores to take note if you plan to become the master of your money. I believe this will pose as an important turn around in reader’s life if people know these infos early in life.

1. Spending

Knowing where you stand in life is important. This is the same in spending, knowing how much you spend every day or every month determines your financial standings for that period.

An important note from the book, very simple –

The more you spend, the less savings you have.

The more you spend, the more money will be needed to maintain your lifestyle.

Spending relates very closely to our wants and needs, being aware of your wants and needs will help you steer your way to a more controlled spending life.

2. Return on investments (ROI)

The main idea here is that wealth will work for you better when your ROI is higher.

How do you get high ROI?

Well…

There’s ROI from properties, stocks, bonds, businesses, dividends, compounded bank interest and so on – we only need to get a good research before getting our hands on those investments.

But be alert to get ROI that is above the inflation rate. Otherwise, your money will lose its value across time. It’s as if we didn’t invest at all.

Read more at the links below to know a little more about investments you can start!

3 Surprisingly Creative Ways To Make Money From Properties

Stock Trading For Beginners

Making money while you sleep – the compounding bank account (ASB)

Now let’s continue..

3. Savings

Savings and spending are like yin and yang – they are closely associated with one another.

Just like mentioned previously, the more you spend means the lesser you save.

When we retire, the money we saved will be utilise for our daily wants and needs. But the best way to use that big chunk of money upon retirement is that we invest it and earn dividends in return.

This is where big savings are important so that we only need lower “Return on Investments (ROI)” to sustain our daily life after retirement.

Take an example,

Josh who saves $16,000 a year would need to achieve ROI of 18.3% to accumulate $1million in 15 years time compared to the same Josh who saves $36,000 a year that needs only 8.3% ROI to accumulate $1million in 15 years.

Which Josh do we choose to be?

The point is that saving money consistently bears high result financially and save you more time to buy your financial freedom in the future.

Have a read at…

How You Can Save $1300 A Month With $3000 Salary

and find ways how you can save your money better!

4. Time

When it comes to time, it means to forecast the period where certain of our wants and needs will appear in the foreseeable future.

For example, the time when:

1. We send our child into their tertiary education

2. We drawdown our retirement funds

3. We will marry or our children get married

And so on.

It could be a cash inflow or cash outflow depending on our needs and wants but normally big events in life. This is so that you can roughly estimate how many savings you must have or maybe a certain ROI you need to have to ensure your financial independence goals are still in check when the time comes.

5. Inflation

When it comes to investing, always take into account inflation rate.

Why?

Because your ROI might be lower than the inflation rate. This will result in your investments losing out money whether short term or long term – and we don’t want that.

We expected a return on the money we put to work – what if after 5 years you discovered that your financial status is still the same?!

That’s a nightmare.

Hence, make an effort to check the current inflation rate and which investments whether individually or aggregately are able to beat the inflation rate.

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How To Achieve Financial Independence

Now that you have clicked on this title, you must have been wondering what is financial freedom? Or…

You have already set yourself up for financial freedom in future to come but you haven’t figured out how.

That’s great! It means you have successfully gotten out of the rat race way of thinking – at least from a state of mind.

Now it’s time for action. Now it’s time to see how you will set your new life direction so that you can arrive at a new destination.

Before we start, know that different people have different meanings for financial freedom.

Does it mean being debt-free? Does it interpret as being able to travel other countries twice a year? Does it mean living your daily life without worrying that your money might run out one day or another? That depends.

What is your meaning of financial freedom?

To cut things short, this is the general outline that I learned from attending financial seminars and meet people who already obtained financial freedom and those who are already charted to that destination.

Assume we are doing this in order of sequence:

1. Work

Yup! That’s the reality of it – you have to work and by saying work it means the job you earn your main income. It’s the job you work to pay your monthly living expenses like utility bills (electricity, water or phone), housing and car installments, as well as other monthly legal obligations.

This is where it all starts – it is the first stage.

The key to this stage is when your salary comes in, who do you pay first?

Yourself!

That’s right, yourself.

You will have to allocate a certain portion of your salary aside for yourself. This leads to the next stage…

2. Savings

This is where the warm up begins – you will have to be disciplined and set your goals.

You will have to save every month until that money accumulate into a huge pile of resource. You need to calculate how much you need to save before you believe that huge resource can help you achieve that freedom.

Have a read at 5 Simple Ways To Save Money and How You Can Save $1300 A Month With $3000 Salary to get wider ideas of how you can save better!

When we already have that huge chunk of money, you might asked what happens next?

This is the point where you make money work for you.

When the time comes, when you believe you are ready to get to the next stage – whamm!!

You invest that money!

And that leads to the next big part which is investing.

But before we go any further, we’ll have to consider another important part to achieve financial freedom and this is applicable to the massive people out there.

This is simply because having a single income from a single work may not be enough to accumulate that huge chunk of money. You will need a second source of income or maybe a third or fourth.

And that leads to our 3rd step….

3. Side hustle income

Many times we’ve heard people working 2 jobs at a time to sustain their life – well you are probably right.

But the idea is that the money used from your main work to pay your loving expenses. Your daily work is used to settle your daily expenses such as basic bills (electricity, water and phone) and other recurring expenses like rents and daily foods.

On the other hand, your second job is what you use to build your fortune.

It can be any jobs, you can start by selling stuffs online, become an insurance agent, open a business, become a beekeeper or even a painter – anything that you love.

Then you save your money and build that huge chunk of money that you can invest and in return, get you that recurring income.

Or…

Without investing, you can simply get recurring income from the people’s demand provided that your service to the society gives value.

Value. This is one of the secrets that Jim Rohn, a great motivational speaker once shared – to attract the world’s wealth, we must become the people that can create and give value to the society.

And I think that’s wonderful information.

Now that you know how to accumulate the huge chunk of money, step 4 plays an even vital role.

Step 4. Invest

Invest – It’s a big meaning for a short word.

Money will lose it’s value in time to come. Things like inflation will inevitably be one of the major cause. Money will not grow unless we put it to work, now that we have worked hard enough to get money.

This is why we need to invest.

We invest to sustain our wealth. To make sure that the money grows more while we are occupied with other matters.

We have traded our time much enough that it is now time that the money will work for us and saves us more time to do the things we really want to do in life.

I always like to invest in things I already know well, and not invest into blurry confusing things. I still prefer the traditional way of investing.

This brings us to step 5.

Step 5. Passive Income

While there are many other forms of investments in this world, I will highlight the most common yet effective investing instruments that are still relevant till today.

It’s none other than by investing in properties. With this, you’ll get recurring income from renting. Imagine if you have 10 houses that each gives you $800 a month – that’s $8,000!

Can you live off with that? I know I can.

You might wonder how to start investing in properties – have an overall understanding by reading 5 traits of a good property to invest and get good rental and 7 steps guide to buy a house – the complete guide. This should help you get that booster understanding about real estates in general.

If you are still young and having fun in your 20s but are getting prepared to settle down – you’ll be ahead of your time by knowing the top 5 tips to buy a house in your 20s.

Better yet, boost your investment income by knowing the 4 unbelievable ways you can maximize your rental income!

Imagine you get yearly dividends from 20 types of stocks that each gives you $200 a month – that’s $4,000 a month!

You might be wondering how you would begin this great journey through freedom by learning stock trading. Have a brief understanding here!

Wow…

How about making that monthly commitment to save a portion of your income into the compounding bank account. Let’s say you save $600 a month for 35 years – that may grow to around $1 million after 35 years.

This is where you will be able to see how to make money works for you! Even when you are sleeping.

It’s just amazing. You can either use that money yearly – though you might lose the benefits of compounding or you can just wait for it to grow big. If you can’t benefit from it then maybe your family can!

We’ve already worked hard to get that big chunk if money and we should not risk it by investing in things we do not know – in things that may not exist 10 years to come.

And that brings us to the final step.

Step 6. Dream

Now that you have worked your ass off, you can now live your life without worrying about money!

Your debt is settled and no one have any claims on you every single day because now you are free.

Free to do what you want and free to live how you want it to be.

This is where you can do the really significant things in life because you have solved the money problem.

This is where you can buy your dream.

It can be anything.

Spending time with your wife and kids. Innovate something creative and beneficial to the society or even as simple as helping/coach other people become financially free – just like you did.

You can also opt to help poor people when you are free. Help them escape poverty and coach them the ways of attracting wealth. In return, you will feel what it means to truly live. You will only gain more when you give more because giving to charity makes you richer.

a quote by Tony Robbins from one of his greatest books, “Money: Master The Game” –

The secret to living is giving.

It’s a noble cause.

This is why financial freedom is important. You’ll be able to chase matters beyond any money concerns because you are now free. Upon achieving financial freedom, you can now chase a life purpose that is bigger than just making money and meeting ends meet – with financial freedom, you will be able to create a more meaningful life.

How You Can Save $1300 A Month With $3000 Salary

I am no expert in this but I am very much aware of the importance when it comes to savings. Why is this crucial?

Opportunities or emergencies may arise surprisingly at any time. There will be a time when out of a sudden someone would want to sell their business, a company is looking funds to grow business, or there is that hot property going on auction way below market value!

Hence, It is up to us to ensure that we can grasp the opportunities when the time comes or at least prepare ourselves financially in event any emergencies arise. Here are the ways you can save $1,300 a month with $3,000 of salary.

Travel Cost

We all have places to go each and every week. Like many, we would have to incur costs to travel to work. I’m staying on a suburb far from the city center, Kuala Lumpur.

It would normally take me more than 1 hour on busy days to work – that is about 28 kilometres (km) per trip, a total of 56 km one day. Below are the costs I incurred per month:

Fuel = $400 ($20 per day)

Toll = $200 ($50 per week)

That would be a high $600 a month! And I ain’t liking it.

Solutions?

I opted to use public transport instead. Since then, travelling cost was cut approximately half! Which is roughly $400 a month now for both car fuel and toll fees.

Not only this help save a lot money but also help to save my travel time and reduce stress of going through traffic jams.

Food intakes

Another way to save is that I chose to cook my own meal – most of the days normally costs me around $100 – $150 for a month worth of food stocks or ingredients.

Aside that, I would simply buy my daily lunch supplies at cheaper price at a petrol station selling cheap cooked foods where I normally pass through everyday when I go to work – that is if I have too packed of a schedule. Costs me $3.50 per lunch box containing fried rice, an egg and a bit of gravy – pretty cheap and neat right?

But then again, there are days that we have that friends night out or Friday night outings so I wouldn’t mind spending a bit for that particular session since I have already saved a lot of margins on other areas. In total, food supplies would cost me around $150 – $250 a month.

Education loans

Yes, you read that right – education loan payments. I’m still actively repaying my education loans every month. That would cost me $100 a month which is not too high of a burden but still a great obligation to meet.

Phone bills

This would normally costs me $120 for my phone bills and I think that is still quite high for me.

I believe you can try and minimize your phone bills by finding better phone plans. If you can reduce your phone bills by $20 a week, that is $200 extra savings a month! and I’m quite sure there are way more awesome phone plan deals out there.

Home installments

This would costs me $800 per month inclusive of maintenance. However, now that I rented it out – the rental income I generated with the right strategies gave me an extra boost of $200 – definitely great! Check out 4 Unbelievable Ways You Can Maximize Your Rental Income and 5 Traits of a good property to invest and get good rental for greater knowledge of how you can boost your property investing game.

Life insurance

I focused on life insurance because if ever I am faced with a critical sickness and I am unable to work any longer, my insurance would be able to settle all my bank loans pertaining my debt on properties owned. Not only that, the insurance package would also allow the accumulation of cash value where it would have a certain amount I can withdraw as extra money after certain period has passed – you can say that it is like investing while insuring yourself.

By doing so, I would not have to burden my family members to pay the housing loans if I am cripple and not having enough capabilities to work any longer. It costs me as low as $100 a month and it helped cover so much trouble for me in future to come. So if you find yourself still young and just started your career life, take up an insurance but be careful of scams and take up insurance coverage on areas you deem only important for the coverage you want.

Let’s say if your company already have unlimited coverage for your medical expenses, then maybe you can opt not to take medical insurance – for example. I would suggest you to take up insurance from reputable companies.

Have a read on “MRTT vs MLTT? Get yourself insured before buying a property” to get a good glimpse of general insurance knowledge that can settle all your housing debts in event you can’t work anymore. However, this condition will only work if your insurance coverage is more than your full housing debt.

Be mindful that insurance companies find it hard to consider your insurance applications after you are critically ill because it would be a loss to the company – sad truth unfortunately. So take advantage of your good health and ability to generate income now and apply one before the aforementioned happens alright! :))

Costs breakdown:

Car fuel and toll = $400

Food intakes = $150

Phone bills = $120

Education loans = $100

Home installments = $ 800

Life insurance = $100

Total expenses = $1,670

Amount saved = $3,000 – $1670

= $1,330! 

“A penny saved is a penny earned” 

~ Benjamin Franklin

So what can you do with these much savings?

1. Apply an auto-debit (Standing Instruction) from your salary account into your compounding bank account. Doing this will help you Making money while you sleep – the compounding bank account (ASB) just like Tony Robbins advised in his greatest book, “Money: Master The Game”.

2. Invest the money in stock market.

3. Save all of them as your next home deposit.

4. Give to charity (help people in need). Always bear in mind that Giving to Charity Makes You Richer!

5. Provide some money to your parents or family members as presents.

6. Gather enough money and be ready to launch or buy a potential business.

7. Put it in your flexi-bank account to reduce your monthly home loan interest (yep, that’s what it’s called in banks, flexi-bank loans).

And the list goes on….

But whatever it is, always bear in mind that for every dollar you saved would give you better chances of grasping the opportunities when it comes. Have a read at 5 Simple Ways To Save Money to get bold ideas to save money better.

You can’t simply start saving when the opportunity or emergency happened right there and at that time right? That is insane! If you start saving at that very time, the opportunity would have gone into other people’s hands.

You need time to save money enough to be able to take advantage of the opportunities that falls before you. Never the less, knowing that you are reading this article till the end would mean that you care for your financial securities and your future – that YOU want to make that change! Good luck hustlers!

Making money while you sleep – the compounding bank account (ASB)

When it comes to investing, you don’t have to become a genius or squeeze your brain to the extreme by figuring out stock investments, index funds, gold investments and many more complicated investments out there. In this article, we will talk about an investment that can make money while you sleep – It is a financial instrument that helps multiply your wealth by many folds. Even Tony Robbins, one of “Top 50 business intellectuals” by Accenture, really stressed on the potential power of compounding in his book, “Money: Master the Game”. But knowing how much the compounding power holds such super potential, how come we don’t see many people taking advantage of it?

“If you don’t want to work, you have to work to earn enough money so that you don’t have to work”

– OGDEN NASH

Based on the book “Money: Master The Game”, the key to having your financial freedom is to work hard enough and accumulate massive abundance of money – which then makes the money work hard for you. This compounding technique is your main road to financial freedom and acts as your freedom fund. Cutting to the chase, the main criteria to make money while you are sleeping is as simple as – discipline, have a portion of money to put aside in your bank account, and  having determination not to disturb the portion allocated. But I would like to think of the money you put aside not as your savings – but investments; investments that will grant you your dreams!

This would require you to make a significant financial decision in your life. What decision? It is the fixed amount of money that you are willing to set aside every single month out of your income stream. How much amount of your money you are willing to park inside your bank account and leave it untouched no matter what happens in your life, no matter how desperate you are – that is the sacrifice. But heed my words that your sacrifices won’t be in vain for the money you put aside will keep on accumulating and grow, and keep on growing on dividends until you see that the income it produces on compounding effects will be big enough to help with your lifetime needs and wants and for the people you care.

“Riches are not an end of life, but an instrument of life”

– Henry Ward Beecher

Some examples that have compounding effects are like the retirement scheme in The United States, 401k – or in a more relatable context in Malaysia, the Amanah Saham Berhad (ASB). Let’s take an easy example:

 If you take a 100,000 loan for 30 years. Every month you put in RM 650 – this would give a return of approximately RM 8,000 a year for the first year, and you will have about RM 17,000 the second year. How does this happen?

1st year

If 1 month = RM 650,

12 months = RM 7,800 (this is the amount you will save in your bank for one year)

With an average of 7% return annually for ASB,

You will get RM 7,800*1.07 = RM 8,346, you just invested and obtained a great amount of approximately RM 8,000 a year!

2nd year

Assuming the monthly payment is the same as 1st year, you will still pay full RM 7,800 a year for the second year.

But,

The calculation would be calculated as dividends on top of dividends, what do you mean?

It means,

[RM 7,800 (full year payment) + RM 8,346 (first year payment + 7% dividend)]*7% = what do you get?

RM 17,276!!

Who would give you RM 17,276 in two years?! Plus, you can now put a 10% deposit for a RM 170,000 house now – simply awesome. So how much can the amount grow to in 5 years? – it is RM 47,995 but this excludes yearly or quarterly bonuses that the banks may announce which means the amount should be higher than RM 47,995, crazy right? The amount will keep on accumulating like a snowball because it grows dividends on top of dividends from previous years. Having all the necessary capital, you can now take steps to proceed to know the 5 things you should consider before buying your first house or you can start by knowing the basics of buying a house through the 7 steps guide to buy a house – the complete guide – it is all up to your own pace.

“My wealth has come from a combination of living in America, some lucky genes, and compound interest.”

– Warren Buffett

Now imagine a bigger vision – after 30 years that 100,000 loan you took may have stretch to RM 600,000! just by applying consistency and discipline – who will give you RM 600,000! let alone RM 1000! Using the power of compounding you will be able to achieve financial freedom!

But always and always make sure to have that minimum amount saved in your mind and take action to do the needful, put the money in your compounding bank account. Tony Robbins advised, “turn your should into your must!” and in this case having that clear mind to achieve financial freedom and make that fixed amount saved in your bank account must be your must! This is only the surface about investing and we are not even talking about active aggressive ways of investing. all you need is discipline and patience after making that calculation and follow through to your plans, goals and visions so that you can cater a happy life for you and your loved ones.

 

 

4 Great Tips For Getting your Housing Loan Approved

1. Usage of credit cards

There is nothing wrong with having 10 credit cards but you must pay on time. The problem with credit cards is abusing the given credit amount – you swiped your credit card one time.. and then one more… and another swipe.. and at the end of the month you found out you have used more than you can pay – yikes!

I attend a talk by a professional bank officer regarding credit cards and it was an eye-opener. I found out that bankers will see you as having little money the more you use your credit cards. It is also recommended that you use a maximum usage of 75% of your full credit amount – recommendably 50% for better chances of getting your loan approved.

It is also recommended that you use a maximum usage of 75% of your full credit amount –

recommendably 50% for better

chances of getting your loan

approved.

It was also discovered that if ever, there is a record that shows you paid your credit cards late – there is high likelihood that your loan applications get rejected. To sum up, high use of credit cards equals high chances loan applications gets rejected.

So what’s a good credit card practice to get most of your loan applications approved?

1. Maintain good track record of credit card payments
2. Maintain credit card usage approximately 50% of total amount

2. Status of work or company

Lets say if you are a creditor or a bank yourself, would you be concerned what your debtors are working as? – of course you do!

From bank’s perspective, they do not know how credible you are and whether or not you are able to meet your commitments. This is why what you work as and who you work for are important.

Banks would normally opt to lend to people from companies with credible backgrounds and track records. A company that always pay their employees’ salaries or EPF fees late are excluded from being reliable.

The lenders would also need to have a job that can proof to the banks that they can ensure a continuous income to meet their monthly commitments to the banks. Banks would normally see contract-based workers as risky lenders because their work contract can be terminated at any time. But then again, in this situation maybe you will be able to convince the banks by your high savings amount – that may work.

3. Savings

Having a certain amount of savings is an extra point you get from the banks. It would be much easier for banks to assess your risks and behaviour from the money you saved. The best amount of savings is around 6 months of your salary – why so? This is because in normal circumstances people are able to settle down and look for a job or to restructure their short term plans within 6 months – I call this the calm down period.

‘The best amount of savings is around 6 months of your salary’

Savings can come from anywhere such as bank accounts, asb, tabung haji, or an investment account. However, savings are not income. Incomes are money that comes in your bank account on regular basis with an estimated amount each period unlike savings which you don’t earn on them.

What if you own company shares or you act as a shadow director for a company and receive dividends on it? Is it considered as income?

Yes! It is an income and I urge you to save the dividends as banks would see the dividend incomes as part of your earnings. Save around 30% to 40% of your income as this will help banks to determine your capability and credibility to meet your commitments with the banks – remember, every dollar you save is a dollar you earn.

4. CCRIS records

The Central Credit Reference Information System or commonly known as CCRIS is a system that helps gather credit information from borrowers who participates in financial institutions – banks, insurance brokers, or private companies in normal circumstances and produces credit reports (contains outstanding loans, special attention account, or bankruptcy status of a person) that will be utilise by the financial institutions. CCRIS record is important to gauge our financial capabilities.

So, what is a good CCRIS record?

1. Your credit report shows 0:0:0. This is the ideal record because the higher the number means no months having outstanding loan. PTPTN, housing, and car loan is normally included as part of CCRIS assessment.
2. No 12 months outstanding credit payments.
3. No outstanding amount in your special attention account. Take note that you may thought that the card can cancel itself after you have used up all your credits with the intention of not using it anymore and you think its okay not to manually cancel it – this is where it gets scary. The credit you didn’t pay will be transferred into your special attention account and it will be there forever until you manually call the banks to cancel and pay the outstandings. Whenever you want to apply for a housing loan, make sure to clear any outstandings you may have due for a long time.

To sum it all, you will be able to obtain higher chances of getting your loan approved by applying the 4 main tips as aforementioned. Also, you may need to take into consideration of what you can actually own. Sometimes the banks may approve of your loan but you may face difficulties to pay the banks’monthly installments – so don’t bite more than you can chew. Take things slowly and enjoy your wealth growing process.