Your networth - key to managing your wealth

Your net worth is simply what you own after subtracting what you owe. It's just basic math, but understanding your net worth is a critical first-step to checking to see if you're realizing your financial goals. Figuring out your new worth is really quite simple: just add up your assets and subtract your liabilities.
Getting on TrackMost people don't know their net worth, but it's a great way to look at how many years worth of spending habits affect financial health.

Lisa, a young professional living in Kuala Lumpur, figured out her net worth and found that she had too much credit card debt and too much money languishing in a low-interest savings account. It inspired her to pay cash for a new lap top she really needed--a lap top she was planning to put on her credit card because it seemed so expensive. Her new lap top is now a real asset rather than a liability she might have spent years slowly paying for.

The Importance of Net Worth
Whether you're making big purchase plans or saving for your retirement, your net worth is crucial information. Here's why:

Getting a grasp on your real net worth is the first step in reorganizing and rebuilding your finances. If you are in debt, the important thing is to turn it around and start saving.

Before you can reach a financial goal, you need to know where you stand now. Your net worth is a reference point on your financial road map. Once you know your net worth, you can set a budget to reach your goals.

You'll be better able to protect your assets. Determining the worth of your valuables is not only necessary to figure your net worth, it also helps you get the proper insurance coverage.

On the Plus Side
Things in the "plus" column are your assets. For instance:

Home
Car
EPF
ASB/ASN/ Bank account
Stocks, bonds and unit trust/mutual funds
Artwork
Jewelry /Gold
Collectibles /Antiques
Cash value of life insurance
Do not include a future inheritance; you can't count on it. The same goes for future paychecks. You only want to tally assets and debts you have right now.

Your home is probably your biggest asset and your mortgage your biggest liability. Be sure to get an accurate idea of what it's really worth by seeing what homes are selling for in your area. If you want to be really accurate, subtract seven percent from the price you think your home is worth today for a broker's commission and other costs of sale.

On the Minus Side
Now, here are things that go in your "minus" column:

Car loan
Home mortgage
Student loans
LHDN/Income Tax debt
Credit card debt

Credit card debt is often overlooked, but it is every bit as real as a home loan and can be more dangerous to your financial health if you carry large balances from month to month.
Take ActionIf you find you're spending more than you're earning, make an action plan to control expenses and increase investments. Keeping more of what you make is the key to increasing your net worth.

Use our calculator to find out your networth as a start on how to manage your wealth:

7 steps to better investment planning!

We invest to safeguard ourselves for a rainy day. If you’ve just started investing or want to start, then you could use our 7-step plan to become your own investment consultant!

Managing your investments becomes easy when you make it a habit to save, even if it’s very little money. You need to keep a meticulous account of personal income versus expenditure on a monthly basis before you start investing.

Here are some steps you can follow:

Step 1: Create a budget and track your expenses
A budget helps you identify problem spending areas and also helps regulate your cash flow. Tracking your expenses against the budget helps you control spending and free up cash to clear existing debt and save for retirement or your child’s education. For example, your budget allocation includes a certain amount for groceries for a week. You discover on comparing that amount against actual expenses that you have overspent on buying additional items that you did not really need. This will caution you against making similar expenditure next week and at the end of the month, you will end up saving money!

Step 2: Pay off your existing credit card debts
Are you surprised that paying off credit card debt is a step towards investments? Credit cards charge a high amount of interest along with the principal repayments. When you clear this amount, you‘ll be glad to realize that all the interest amounts and late fees you paid to credit cards can be utilized for your savings and investment program.

Step 3: Save effectively for a rainy dayEmergencies often arrive unannounced. Ensure that some money is set aside to cover monthly expenses for at least three months. These funds should be invested or set aside in instruments that can be readily accessed should you need cash. For example, keep these funds in a savings account in a bank or invest in a money-market unit trust fund.

Step 4: Design a disciplined savings program
You can open a recurring deposit account. In this case a particular amount from your income gets deposited every month for a fixed tenure. You can also invest in a series of fixed deposits (FDs). For example, if your cash reserve is RM 24,000, this amount can be divided into six FDs of equal amounts, each with a 6-month maturity. At the end of 6 months, you’ll have a fixed deposit maturing every month. You can continue to roll them over to create a source of regular income and minimize risk.

Step 5: Invest in an insurance plan
choose the company that can give you a good coverage with the minimal annual premium.the most important INSURANCE you should take :-
1) Medical Card - for hospitalizations & operations purpose
2) Death - to pay all your debt upon your death or to present to your loves one
3) Disability - to support the whole of your life if you are disable
4) Critical Illness - to support your expenses upon your Illness. example - cancer, heart attack, coma, blindness, benign brain tumor, paralysis etc
5) Personal Accident - all Malaysian driver are recommended!!

Check out!! Have you completely cover yourself or your loves one?
Tips!!- choose the company that offering you with a very minimal premium with the maximum of coverage.-
example (the existing product) : average ANNUAL premium RM 200-400 with the coverage around RM 100,000 - RM 250,000.- if you paid around RM 200-400 / year you are SAFE!!! don't waste your money with a little coverage.

THINK before you make a decision!!!- the separate/term insurance are more advisable compare to package of insurance/insurance+investment(not advisable).
Look for purely insurance.- if you seek for investment go purely for investment.

DON"T BUY THE PACKAGE!! it will cost you a lot!!!-
CHECK OUT WHAT IS YOUR NEEDS!!!
Step 6: Buy yourself your dream home
Investing in a house is one of the best investments you can make. First, your payments towards interest and real estate taxes are tax deductible. Second, your property increases in value over time.

Step 7: Invest in a diversified investment program or systematic investment planYour risk tolerance level goes a long way in defining your investment approach. If you’re not averse to taking risks, then you may want to invest in an equity based mutual fund. Else, you may want to invest in a plan that involves bonds and other safe securities. Also, ensure that you keep in mind your investment objectives before you subscribe to an investment plan

Financial Planning Strategies in Tough Times

Even with hints of recovery, it's not easy to scope out the economy's direction and even harder to make financial decisions for your family in such rough-and-tumble times.

The following strategies can help strengthen your money management skills. All are designed to give you an edge during the tough times.

Evaluate your spending habits

Are they helping or hindering your financial stability? Can you really afford that SUV? Or season’s tickets to the symphony? Do you need a financial planner to help you reduce debt? It might be helpful if you get a financial planning consultant.

Start first by analyzing spending and savings habits. Here are questions that you may want to ask yourself:

Do your debt payments, including your mortgage, exceed 35% of your gross monthly pay? If so, you have too much debt. Your mortgage should not exceed 35% of your gross income. (That includes property taxes and insurance.) Add that payment to other debt - your credit cards, car loan, etc. and you may be approaching a dangerous debt threshold.

Do you justify impulse purchases? You’ve had a tough week, so you buy things to feel better. Or you tell yourself; “I don’t go on vacation much, so I’ll just buy these Italian shoes!” If this sounds familiar, try a “Stop Spending Week.” Eliminate restaurant meals and unplanned purchases. You’ll be surprised at the results.

Do you shop around for the best deal? You could lower your expenses by shopping around for discount. Shopping around could save on a lot of expenses.

Deal with the immediate bills. You should make regular payments and not add to current debt. Time to crack down: Don't add any more debt and continue paying down current debt. You should try the “pay yourself first" method with automatic paycheck deposits to a savings account.

Organize your financial life

You should keep everything at your fingertips - your budget, investments and bills in one place. Staying on top of your finances can be empowering because you know exactly where you stand. Review and assess your savings goals monthly.

The foundation for living within your means is to get your finances in order. That’s essential because you’ll need to calculate what it’s going to take to meet your long-term goals, for example, retirement.

Get serious and take these steps:Consolidate credit cards. If you’ve got three credit cards with different teaser rates or annual percentage rates, you may not have a grip on how much debt you’re actually carrying. Transfer the balances to one card (make sure you know what the transfer fees are before you do) and pay off the card with the highest rate first.

Review investments periodically. Keep on top of how well diversified you are in and make periodic tweaks to your portfolio.

Prepare for the worst. No one ever expects to get laid off. Built an emergency cushion. Six months is ideal. But if you’re carrying too much debt, pay that down first.

Get life and disability insurance. All of us need life insurance - enough for a surviving spouse to pay off debts and to live comfortably for a time.

Invest regularly and diversify

Start investing in a mutual fund. Make sure your investments are diversified in different asset classes for a steady return. Knowledge is power

Continue to explore your attitudes toward money. This is essential if you want to sharpen your skills as your money manager. Educate yourself.

Get financial planning tips from me or any of financial planner out there and other Web sites or magazines on how to invest or save for your future.

The more you know, the better money manager you will become.

How To Select Unit Trust Funds?

There are many unit trusts funds from which to choose, but having considered the type of fund or funds most likely to meet your needs, you have already narrowed down your choices considerably.

The next logical step is to decide which unit trust fund to invest in.

What To Look For ?A random check will confirm most, if not all, investors would look at the performance or investment results.
Unfortunately, it is impossible to predict a unit trust's future investment performance. This will depend on the type of fund, the general market trends and the investments which a fund manager picks.
Most managers would provide the past performance tables that normally show the total returns since inception or how much an initial investment made several years ago would be worth today with any income reinvested.

Look at the performance of the funds but do not pay too much attention to period of a year or less - external factors beyond the control of the managers may have influenced results - a high flyer may not stand the test of time. Ideally, a fund showing consistent performance over a long period, the longer the better.

Check the performance of a company's other funds to make sure that it was not just a bit of luck with one fund.

Do not let another type of fund take your fancy just because it has produced better results than the one you had initially chosen. It may be more risky and may not meet your requirements.

However, be warned, past performance figures are no guarantee of the future. A fund that has performed well in the past may not do so in the future and vice versa. Go to Fund Performance for fund comparisons.

Do's and Don'ts of Choosing a Unit Trust FundDo
-Decide which type of unit trust fund meets your saving needs.
-Shop around for a reliable unit trust company
-Check whether investment limits, frequency of income payments, etc, are suitable
-Check past performance records

Don't
-Don't choose any unit trust fund just because its performance has been good, make sure it is the right fund for you.
-Don't pay too much attention to short term performance, good consistent performance over all periods is the best lead.
-Don't decide on a unit trust fund just because it has low charges, good performance is far more important
-Don't borrow to invest in unit trust unless you are absolutely aware of the risk involved.

Baby Steps to Debt Freedom

(taken off Health Today- November 2008 issue by Ruth M Floresca)

Many people resort to buying against their credit card or borrowing from an office mate or a close friend to survive from pay day to pay day.

But a habit of borrowing, coupled with poor personal financial management, can land you in deep indebtedness and cause you to lose your home and lose other people’s trust.

Crawling out of debt is not easy – but it can be done. Financial planners share some sound advice for overcoming your money debacles.

Money drainersBefore taking those small steps to debt freedom, recognize what practices contribute to your accumulation of debts:

- Overspending: Spending more than they earn is the most common reason people get mired in personal debts. And the most efficient tool for over-spending is the credit card. Unfortunately, credit card misuse can get you into deep trouble by spending money yet to be earned.

- Absence of a financial safety net: Even wise spenders can suddenly find themselves in debt if they get caught unprepared by life-changing circumstances, such as a medical emergency or a death in the family. If you haven’t taken steps to protect your family against financial impacts, unfortunate events can easily get you into serious debt.

- Lack of plans for the future: Not having concrete goals, such as “we need to have out own home in 5 years” or “next year I sould be able to afford an educational plan for my child” can worsen your overspending tendencies. It is important to educate oneself on financial planning and the importance of savings.

- Being materialistic: Being unable to differentiate needs from wants can get you into a personal debt crisis

Path to freedomFollow these practical tips to start eliminating your debts.

1.Live within your means. Make a budget and stick to it. List down how much money comes in and how much you can afford to spend and what you can set aside for savings and debt payments, Your best chance of fixing your debt problem is a simple lifestyle change. So stop comparing yourself with others and be satisfied with hat you have.

2.Pay yourself first. Immediate reserve 10% of your salary for savings every month. The savings can then be put into investment plans. Take an insurance plan that you can comfortably pay even if it means being under-insured. Under is better then nothing.

3.Make debt payments a priority. No matter how long it takes, pay off loans one at a time until they are all zeroed out. If you have multiple credit cards, transfer all balances to the card with the lowest interest rate. Cut up all the other cards and avoid using the remaining card until all debts are paid.

4.Get the whole family involved. Make your financial goals a family project. Help children understand why everyone needs to tighten their belts, teach them how to save and train them to prioritize expenses.

5.Start a sideline or home business. Start a small venture base on whatever interest you have using the minimum investment to help yourself earn some extra money and widen your entrepreneurial experience.


Being free from debt is an arduous process, but the rewards are well worth it- peace of mind and the opportunity to start saving for your family’s future.

BEGIN FUNDING FOR YOUR FINANCIAL SECURITY

Congratulations! You've graduated from school and landed a job. Your salary, however, is limited, and you don't have much money (if any) left at the end of the month. So where can you find money to save? And, once you find it, where should this cash go?

Here are some ways to help free up the money you need for current expenses, financial protection, and future investments—all without pushing the panic button.

Get Out From UnderFor most young adults, paying down debt is the first step toward freeing up cash for the financial protection they need. If you're spending more than you make, think about areas where you can cut back. Don't rule out getting a less expensive apartment, roommates, or trading in a more expensive car for a secondhand model. Other expenses that could be trimmed include dining out, entertainment, and vacations.

If you owe balances on high-rate credit cards, look into obtaining a low-interest credit card or bank loan and transferring your existing balances. Then plan to pay as much as you can each month to reduce the total balance, and try to avoid adding new charges.

What You Really Need to BuyHow would you pay the bills if your paychecks suddenly stopped? That's when you turn to insurance and personal savings. Two items you need to "buy" before considering future big-ticket purchases:
-Health insurance is your first priority, as hospital stays can be extremely costly. If you're not covered under a company group plan, get a simple plan that will cover you in case of any unfortunate events.
-Life insurance is the next logical step, but may only be a concern if you have dependents. In fact, you're statistically more likely to become disabled than to die prematurely. Disability insurance can replace about 60% of your income if you can't work for an extended period due to illness or injury. If you can't get this through your employer, call individual insurance companies to compare rates.

Build a Cash Reserve
If you should ever become disabled or lose your job, you'll also need savings to fall back on until paychecks start up again. Try to save at least three months' worth of living expenses in an easy-to-access "liquid" account, which includes a checking or savings account. Saving up emergency cash is easier if your financial institution has an automatic payroll savings plan.

These plans automatically transfer a designated amount of your salary each pay period—before you see your paycheck—directly into your account.

To get the best rate on your liquid savings, look into putting part of this nest egg into unit trust funds to get better returns over the long term.

Stop Waiting for the Next Paycheck
Beginning your working life with good financial decisions doesn't call for complex moves, it does require discipline and a long-term outlook. This commitment can help get you out of debt and keep you from a paycheck-to-paycheck lifestyle.

Points to Remember
1. Outstanding debt is one of the biggest obstacles to saving.
2. Disability insurance is a major safeguard against financial trouble if you're out of work for an extended period.
3. Most experts recommend saving at least three months' worth of living expenses in case income stops. An easy and painless way to fund an emergency cash account is through an automatic savings plan.
4. Unit Trust funds are a potentially higher-earning alternative to bank savings accounts. But unit trust can sometimes technically lose money during an economic downturn(if the investor is not invested long enough ), and yields will fluctuate, unlike savings accounts.

How to Curb Your Overspending

Are You Waiting For Financial Independence?

It's easy to become consumed with our own quest for financial freedom. Sometimes so consumed that we forget why we want to achieve our goal in the first place. For most of us, we share a goal to regain control of our time so that we can choose what we do instead of having to do it.

But do we have to wait for financial independence before we can begin to do the things that we truly enjoy?

This is where the reading from the bible or Quran provides some guidance.

We are told that if we have the ability to do good, then we should not withhold it from those who need it. Financial independence may involve sacrifices, but helping those who look to us for assistance is not one of them.

It's great to have a goal of financial independence, and it's great to be earning lots of passive income, but these pursuits will be empty and meaningless unless you can look to help others when you have the ability to do so.

There's no doubt you'll some excess time when you become financially free, but can you bring forward some of the benefit now?

Your money goal should not be one that forsakes all else, as there are many important aspects to your life. If you have the time now, don't delay... use it to help people who ask of your time, including your family and friends.

With this in mind I'd like to get you to try to write down the top three priorities in your life?

1.

2.

3.


What's one thing you can do for each of these priorities that doesn't require that you become financially independent first?

Remember that your personal wealth should be measured in both monetary and non-monetary terms.