The Best Personal Finance Summaries - 29 April 2019
We are trying another template. Are you able to scan through it easier this way? Let us know in the Facebook group!
Also, we have finally put together what you can always expect from us. The first one is that our goal is to give you insights that really help you with how you use / invest your money. Whether that's breaking down the things to look for in the perfect insurance plan or how to grow your wealth far faster than the typical investment, you will definitely find information here that only seem to be talked about by the super rich.
Question of the week
Have you ever gotten car rental insurance? If so, how did you decide on where to get it?
Let us know in the Facebook group
From Us
The Ultimate Guide to Car Rental Insurance
A few newsletters ago, CS mentioned that he was going to be traveling around New Zealand for 5 weeks. His goal was to keep the whole trip (including flights) to around RM9000. He was close but what had caught him flat footed was the car rental insurance. He had initially believed that his travel insurance would have covered all the costs of car rental, but when he dug into his policy, he found out that it would have only covered a small amount. If anything were to have happened, he would have been on the hook for it.
So he had no choice but to pay the RM45/day to make sure he was insured.
In order to not allow that to happen to anyone else, we have decided to write the ultimate guide to car rental insurance.
If you have any recommendations for getting car rental insurance, let us know!
Money in Daily Life
Is your debt a heavy burden to you?
Check out the six effortless ways to help reduce your debt written by Mia Taylor:
- Take use of apps such as Cents, ChangEd, Tally that help to pay down debts.
- Set up direct debit to a savings account dedicated to paying off loans.
- Split your debt payments in two or even four in a month.
- Increase debt payments when you earn extra income, instead of spending it.
- Transfer your debt to a lower interest rate, e.g. credit cards' rate is over 20% but interest rate for a line for credit is only around 5%.
- Use prepaid gift cards instead of credit cards.
Kim Kiyosaki shared a few steps to get out from credit card debts as well:
- STOP accumulating credit card debt.
- List your bad debts (consumer debts) and the amount owed.
- Prioritize your credit card debt that you can pay off in the shortest time.
- Find additional income and use it to pay your debt.
- Celebrate small success and continue to pay off your debt!
Here are some helpful tips to grow your savings:
- Set savings goals and gradually increase your savings allocation.
- 50/30/20 rule for budgets. 50% of your income goes to essentials such as housing, 30% goes to lifestyle choices such as restaurants, and 20% goes to savings.
- Organize with savings and budgeting apps.
Mia Taylor listed nine signs it's time to change your insurance companies:
- Unjustified, sudden rate increases.
- You have a renters insurance and you just bought a home.
- Unfair claim denials.
- Increased complaints from consumers.
- Your insurer is not keeping up with the times.
- You do not understand your coverage.
- Poor customer service.
- The insurer is financially vulnerable.
- A big change in your life such as marriage, buying a house or starting a family.
On a side note, if you are looking to get insurance but don't have anyone you can trust, send us a message and we can recommend a few we would trust.
In addition, here are a few tips on how to pick a travel insurance policy by Holly Johnson:
- Make sure your policy includes trip cancellation or interruption insurance.
- Pay extra for medical coverage. (Imagine how much it might cost if you break your hand in a foreign country!)
- There are benefits that you may not need, e.g. Accidental Death insurance which may be covered in your life insurance policy.
- Always buy a travel insurance before you take your next trip!
The classic book As a man Thinketh by James Allen suggested that man is the sum of his thoughts. It means that if a man think negatively, he will reap negative consequence; if he thinks positively, he will receive positivity. The author recommends everyone to develop abundance mentality by a few simple ways:
- Be grateful for everything you have
- Set radical goals and reverse-engineer them for success
- Invest in yourself. Read, exercise and go to classes.
- Do something everyday that scares you
- Stop bad-mouthing others
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Grow Your Wealth (Investment Related)
If you haven't start to invest, you probably collect paycheck in exchange of your work. However, the best part in investing is making your money to work for you instead of the other way. Most investors focus on capital gain and ignore the cash flow and they might overlook the benefits behind the cash flow generated by investment.
Kim Kiyosaki listed the main reasons to favor cash flow over capital gains:
- You will not be affected by short-term market performance because you receive stable income from rental or dividend.
- Investors chasing capital gain may not be able to sell the asset at profitable price, which is a risk of losing their capital.
- Cash flow is more of a passive income, your money will be working for you whether you are working or playing golf.
- Capital gains are taxed at higher rate than cash flow.
Suraya, a local blogger has compiled a recommendation on 10 best books to learn about investing according to Malaysians:
- Rich Dad, Poor Dad by Robert Kiyosaki
- Who Says You Can't be Rich Working A 9 to 5 Job - Mark Chua
- Think and Grow Rich by Napolean Hill
- What I Learned Losing A Million Dollars by Jim Paul and Brendan Moynihan
- Principles: Life and Work by Ray Dalio
- Bogleheads' Guide to Investing
- A Random Walk Down Wall Street by Burton Malkiel
- The Incredible Secret Money Machine by Don Lancaster
- The Intelligent Investor by Benjamin Graham
- Money Master the Game by Tony Robbins
Dividend Magic, a blogger dedicated to generate dividend income, recently shared his experience in investing in P2P financing. He learnt an important lesson in P2P financing from the defaulted notes: Never overexpose yourself to one single issuer. In fact, investors can alter their settings in Funding Society to decrease the maximum exposure to one issuer.
KC Lau, on the other hand, shared his thought on five things to consider before investing in P2P financing:
- Relatively higher return - The return on each investment can go up to 14% per year after the service fees. The fees are not charged until you receive the repayment from borrowers.
- Affordability - The minimum amount for each investment is only RM100!
- Poor Liquidity - Unlike fixed deposit, your capital invested in Funding Society is tied up for the entire duration of the financing without any option to withdraw the fund.
- Default Risk - Funding Society recorded default risk of 0.85% in the platform. (KC personally invested in 180 notes and five of them defaulted over the last two years)
- Tax Bracket - The interest income earned from Funding Society is taxable under the Income Tax Act 1967. Hence, if your chargeable income is above RM70,000, your return from P2P financing may not be as appealing as you need to pay over 20% tax for the income.
Besides, he suggested that investors should set a low per note exposure and spread their investment evenly to mitigate the default risk.
Coincidently, both of the investors choose Funding Society as their preferred P2P financing platform in Malaysia for its meticulous filtering process on issuers.
FYI
You're awesome :)
Cool Opportunities
BigPay - The Best Travel Credit Card for Malaysians?
If you ever travel out of Malaysia and use your credit card, then this is BIG (pun intended). AirAsia has released BigPay, a prepaid mastercard that you can easily top up through the BigPay app and be able to use instantly.
But more importantly, BigPay charges you at the real exchange rate (which means they charge no fees). This is something you won't get if you were to go to your bank or some exchange counter.
In fact, I've already saved over RM 10,000 using this card (you can read about it in our BigPay Review)
Anyway, if you don't have one yet, you can sign up for free and get RM10 free when you use referral code B7D3YNZPGO.
A way for females to get free insurance
We were talking to our super humble financial advisor friend one day and she started talking about some insurance product for females that provides coverage for all these female related illnesses. But more importantly, the contract also states that all the premiums will be returned at the end of the contract.
Seriously something for all females to consider!
Building a financial roadmap
For those who are lost when it comes to tracking your net worth and using it as a way to create the ideal life, this is something you should check out.
We have worked with a financial advisor to lead you through building your own financial roadmap by yourself online.
And if you want them to do it for you (at a huge discount), you can make the request as well.
Talking to an Independent Financial Adviser
A big issue when you work with someone who calls themself a financial advisor is you do not know if they really have your best interest at heart. That's one of the main reasons why I never work with any (the other one is that most of them get trained to say what the company wants and thus, do not know of all the other cool opportunities out there).
However, I've been talking to an independent financial adviser the last few months and I do believe that not only is she knowledgeable, but also super open to sharing her knowledge.
If you're interested in talking to her, join our facebook group and ask your questions. She will definitely find time to pop by and answer them.
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