Myth About Money... Read Here.. Maybe Important

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Myth 1 – Buying Insurance policy is a form of Savings. WRONG, Insurance is not a saving, it will not save your money, Insurance is a form of risk management or a risk transfer, like money, it’s a tools use to transfer your own risk to a 3rd party. Insurance is only good for 3 things and 3 things only.

No 1 –Insurance is good for terms, example life insurance.
No 2 –Insurance is good for medical coverage, because the current medical expense is very high.
No 3 –Insurance is good for permanent or partial disability because you need money to live on.

Other then the above mentioned coverage, insurance is not worth the money and for the average person, your insurance premiums if you are below 30 years old should not exceed RM100/month and for some lower coverage, your monthly premiums should be around RM60 to RM70 a month for the above said coverage. So, if you have paid more then what I have stated, you should call your insurance agent and discuss your new policy and terms or you should just terminate your current insurance and get a new policy.

By the way, your insurance agent might not want to sell you the basic policy because they will not make much money (commission). Please remember that insurance agent is human too and they also thinking about their own survival and you would be the last person he or she ever cares about. So remember that insurance is not savings and not an investment either. It’s a form of risk transfer.

There is also a limitation in insurance scheme that limit’s it ability to act as an investment of savings.
• Insurance do not have the ability to let you use your premiums as and when you require. You cannot withdraw your premiums or saving it, increase or decrease your premiums as and when you want (insurance does not have the flexibility of saving accounts)
• You do not have insurance coverage once you failed to pay your premium payment
• You cannot use insurance policy as a collateral for future financial undertakings
• Insurance impose penalty for early policy surrender. You cannot get back your premiums that you have paid if you surrender your policy early.
• Insurance have a coverage grace periods (you are not cover immediately after you sign up)
• Insurance at best will give you a returns of 3.5% in whole no matter what the insurance company say. With this type of rate many other forms of investment can beat the insurance rate.
• Insurance cannot be use to beat the rising inflation rates. In long term Inflation will reduce the value of our money.


A lot of insurance agent that read this article will hate me or even wrote me a hate emails afterwards. It’s a true fact that insurance Is good but some of the insurance product or the insurance agent blurr us or simply not telling us the true story. Who is among you readers know exactly the terms stipulated in the insurance policy??, we never bothered reading it or understanding it. That would be the first mistake when you want to purchase an insurance policy. Those who is success in managing money read and understand what he / she got themselves into.

 

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Myth 2 – buying a house or a property is an asset; WRONG , against popular believes buying a house or property is a liability until your property has been fully paid then it will be converted into assets only if the property generate income for you, if not it’s still will be a liability since you have to pay for the property up keep (“cukai pintu”, sinking funds, maintenance, Indah water, etc). So buying a house is a liability.

In my case all the house that I own, all three of it was not paid by me, the banks paid it up for me, I got a free house, and my house is an asset because it’s generating income from rental and lease back guarantee. Well I did not stay in any of my property, I stay with my brother who own several property of his own. The secret of buying a property is location, location, location and location. McDonald is not being a fortune 500 company in the world because it could sell more burgers, it became one of the fortune 500 company because it has assets and all the property that is have has the best locations in town. Remember an asset is something that generates income for you. If not it’s a liability like your wife, children’s or girlfriends (Joking).

I only bought a property that is given free to me by the banks, NO down payment, no monthly payment. No legal fees. Basically free property, how do I do it? You need to have patient to do it. You will notice that in this article the word “patient” will be use a lot. Because patient means time and you need time to realizing your dreams. So ask yourself, do you have the time?

Note : When you purchase a property or a house. Make sure the value of the property will appreciate not depreciate, thus buying a landed property is the best choice, apartments and condo will depreciate thru times, a hard lesson that I have learn myself. Be patient when you want to purchase your first house, location, location, location is very important. From my experience, you should purchase a fully completed house, there are so many unsold properties in town now days, and it’s almost a bargain basement offer. Look for the best location for future value appreciation. Be patient in selecting your property.

 

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Myth 3 – To make more money, you have to work harder, WRONG AGAIN. You just need to work smart. Do you know that you can be a millionaire by earning just RM700 a month, you don’t believed me? I use to not believe it myself. The question is not getting the million ringgit, because you can surely get’s it. The big question of the day is whether you have the time and patient to reach your goals of a one million ringgit. To give you an example, let look at the power of “compounding effect” let me explain by giving example of two person. A and B.

A is saving RM1000 a year since the age of 18th years old until 28th years old. He then stop savings and just let the money grow by it self, at a 4% interest rates a year by the age of 55 A will have about RM 40,000 in the bank give and take. Now B start to save from the age of 28th to 55th years old at the rate of RM1000 a year, with the same interest rates of 4% by the age of 55 years old B will have estimated of RM50,000. now what’s wrong with this picture, a person (A) who is saving for only 10 years only have a different of RM10,000 compare to a person who is saving for 27 years. That is a 17 years different. That’s folks is what we call compounding effect. So, the moral of the story is, the early you start to save, the more money you have in the future. So, If A continue savings after his / her 28th birthday until 55 years old A will have estimated of RM 90,000 almost half of what B will have with only 10 years different.

Well, saving RM1000 a year is probably not enough for you to be a millionaire, however the capital that you can make for the first 10 years of your savings would be enough for you to use other financial tools to make more money. The hardest thing to do is to get the first one ringgit. Making two ringgit is much easier once you have the first Ringgit. Same as making 1 million ringgit, you just need to find the first 100,000 ringgit. So capital is what you must find and the best and cheapest way to get capital is by savings. The more you save the more capital you have.

 

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Myth no 4 – Money do not grow on trees, WRONG, yes money do grow on tree, it’s call money tree. Where is this money tree? It’s known as investment. The most important aspect of investment is managing the investment itself. The first step to successful investment is setting the investment goal. Why do you want to invest in the first place? What do you want to gain? How long (period) of the investment? Do you have an exit plan. Why do you choose such investment? There so many questions to answer before you start investing. This can be from the goal perspective or even legality perspective. Plan and choose your investment carefully. If you are not sure, please seek professional help. Do not try to invest on your own if you are not sure about the investment, seek professional help such as from certified financial planner or certified investment planner.

Myth no 5 – Children education is a form of investment. WRONG. Children expense is a form of liability, at the end of the day their educational expenses cannot be measured and quantify because you will never know when it’s going to end they is no monetary gains (education is a for whole life) .We often make assumptions that if we teach our children with the best up bringing they will end up taking care of us when we were old, however it does not always turn out the way we plan with the children’s does it?

Don’t get me wrong, it’s our responsibility as the parents to take care the children, physically, emotionally and financially, however we need to change our mindset from thinking that the money that we put in our children is an investment, we should treat it as an expense, so thus psychologically we tense to monitor what we spend more if it’s treated as an expense. As parents we have the tendency to give in to our children wants especially when we think and feel it’s for their future investment. Which is not rue at all. We have no control on how our children will turn up to be in their future.So, prepare for the worst and hope for the best. Teach our children the value of money and soon as they know what is “duit raya”.

 

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Myth no 6 – There is easy way to make or maintaining money. WRONG. If someone or somebody approach you and say that there is an easy way to make or maintaining your money. It’s all a scam. Either that someone will ask you to buy a product, services or just a straight thru pyramid scheme. NO there is NO such thing a fast or quick way to make money unless it’s illegal or a lie.

There is so many get rich quick scheme out there especially in the internet era, whether they ask you to buy a book, or deposit into someone accounts, or introducing someone, all of these is a scam , a lie designed to full you the PUBLIC. So be aware of such scheme. ALLAH has already warned us about such things. We have to “Berusaha” to get “REZEKI HALAL”. Each one of us already have it’s own “REZEKI” so be patient, if a particular “rezeki” is yours it will be yours, you do not need to worry about it. The question is how do you manage your “rezeki” so that it will be “berkat” and can be maintain and sustained forever. Remember “bukan senang nak senang” but with patient and perseverance “Insyaallah” you can make it.

Looks like more emails send to me requesting what is the magic formula that I’m using to be successful in managing money. As I anticipate, most of us just want a quick and easy way out. Well, let me enlighten the curious people out there. There is NO such thing as a magic formula or product or services that will make you success in managing money. There are many financial aid or tools that may assist you along the way, but like any other tool that you make use at home, you need to know how to operate them them. This require education and time.

Like I said before, I’m not here to sell you any product or introduce to you any services or to highlights any industry in particular. I’m here just to share my personal experience and killing my time writing this article while I’m still in town and not traveling to overseas this week. That’s all, no magic product, no services, nothing. Just my personal experience and thought.

I stress it out one more time. I’m a system engineer not a banker, not an insurance agent, I’m not a financial planner; I’m not involved in the financial industry at all. Like I said before, my secret of successfully managing my money is thru patient, a lot of patient. I’m not here to sell you anything. Just sharing my thought and experience, I’m not asking anyone to follow my footsteps or to become like me.

Every one of us is unique; there is no two of us out there, same as our financial needs, goals or objective in life. No one is the same, so there is no magic formula to become millionaires. I have said before; please seek advice or helps from the professionals if you need one.

 

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there's a sucker born every minute but that's how the world manages to even up all the good must be even with the bad. all the rich must also have same amount of poor.if not then our world will turn in reverse.

 

[tokputih]

there's a sucker born every minute but that's how the world manages to even up all the good must be even with the bad. all the rich must also have same amount of poor.if not then our world will turn in reverse.

hehehe... good revise from you...