3 Circles of Wealth

“If you fail to plan, you are planning to fail!”

Benjamin Franklin

The 3 Circles of Wealth recommended by Guy Baker that every person need to be aware of and plan.

Wealth Accumulation

Wealth Succession

Wealth Preservation


Studies have show that households that plan their finance will end up more wealthy. So it's good to understand your finance and plan for it.

Knowledge Resources

http://www.investopedia.com/articles/pf/07/three_steps.asp

https://financialmentor.com/wealth-building/how-to-build-wealth/7699

http://robertmtownsend.net/sites/default/files/files/papers/published/WealthAccumulation2011.pdf

http://www.nyu.edu/econ/user/bisina/americks_caplin_leahy.pdf

https://www.brookings.edu/wp-content/uploads/2016/06/02_saving_wealth_bosworth.pdf

Malaysia EPF Rate for 2016

The EPF dividend rate for 2016 is just being announced.
It has drop as compared to 2015.

For 2016, the dividend rate is at 5.70%.
In 2015, the EPF declared a 6.4% dividend.

Members can check their EPF account statement for the crediting of the 2016 dividend starting Feb 19, 2017, through i-Akaun via the myEPF website at www.kwsp.gov.my.

Resources:
http://english.astroawani.com/business-news/epfs-5-70-dividend-rate-still-commendable-says-economist-132877
http://english.astroawani.com/business-news/epf-declares-5-7-pct-dividend-2016-total-payout-rm37-08-bil-132868
https://www.facebook.com/KWSP.Official/
http://www.thestar.com.my/news/nation/2017/02/18/epf-declares-5dot7-per-cent-dividend-for-2016
http://www.themalaymailonline.com/malaysia/article/realistic-epf-dividend-to-commensurate-with-prevailing-economy
KWSP Page

Income Distribution in Malaysia

I always wonder what is the income distribution in Malaysia.
We always heard from the news that many EPF account holder do not earn enough to retire comfortably.

Malaysia has about 31.4 million people in 2017.
There are 30.7 million people in 2014.

According to the Economic Planningg Unit (EPU), about 45% of the population is earning at least RM5000 household income in 2014. That is not a very bad income. In 2004, there was only 16.8% of the population earning at least RM5000. Quite a huge improvement in 10 years.

The mean monthly household income of the top 20% by ethnic in 2014 is as below:
Bumiputera: RM12630
Chinese: RM17981
Indians: RM14605
Others: RM14732

The mean monthly household income of the middle 40% by ethnic in 2014 is as below:
Bumiputera: RM5190
Chinese: RM7049
Indians: RM5646
Others: RM5510

The mean monthly household income of the bottom 40% by ethnic in 2014 is as below:
Bumiputera: RM2367
Chinese: RM3127
Indians: RM2672
Others: RM2234

The top 7 mean monthly household income by state in Malaysia in 2014 is as below:
Wilayah Persekutuan Kuala Lumpur: RM7620
Putrajaya: RM7512
Selangor: RM6214
Johor: RM5197
Melaka: RM5029
Pulau Pinang: RM4702
Negeri Sembilan: RM4128

Resources:
http://www.epu.gov.my/en/socio-economic/household-income-poverty
http://www.epu.gov.my/en/malaysian-economy-figures
http://www.mhdr.my/page/205/The-Malaysian-Insider:-Growth,-income-distribution-and-poverty-in-Malaysia/
http://www.ukm.my/news/archive/tahun-2014/june-2014/call-for-the-rich-to-be-taxed-more-to-reduce-income-disparity/

Exchange Traded Funds (ETFs) - Should You Invest?

ETF seems to be one of the less risky investment tools available.

What is an ETF?

It stands for exchange traded funds. This is a collective investment scheme like unit trusts but the difference is that the funds are listed on stock exchanges. You can trade – buy and sell – them throughout the market trading day.
Another key feature of ETFs is that they have an investment strategy that is index-based. For instance, a global emerging market ETF would buy component stocks of a global emerging market index in exact proportions of the component weights.
ETFs offer investors the opportunity to invest in a diversified list of assets with lower capital requirements.

https://www.imoney.my/articles/understanding-exchange-traded-funds
https://www.imoney.my/articles/do-exchange-traded-funds-really-trump-actively-managed-funds
http://www.thestar.com.my/business/business-news/2016/04/02/attractive-returns-from-etfs/
http://www.bursamalaysia.com/market/securities/equities/products/exchange-traded-funds-etfs/
http://www.theedgemarkets.com/my/article/cover-story-low-cost-investing-etfs

What are the ETF available in Malaysia?
As of the time of writing, there are about 8 ETFs in Malaysia right now.
http://www.myetf.com.my/en/

The Key Advantage of ETF is that ETFs have lower investment costs.

Why Spending Carelessly Can Make You Bankrupt

Proverbs 21:17 ESV

Whoever loves pleasure will be a poor man; he who loves wine and oil will not be rich.

It's amazing that how we really spend money. We basically we do not really know how to control ourselves. The danger is, if we are not careful, we will end up in a very ugly situation. Someone said before, to become wealthy, it's not how much we earn, but how much we keep. We need to learn to keep our money. Be a keeper, not a spender.

Here are some of the examples where people spend carelessly, and end up in bankruptcy.

1. Mike Tyson
2. Kim Bassinger
3. Michael Jackson
4. Rapper 50 Cent
5. Nicolas Cage

6. M.C. Hammer

Be wise in your spending.

Reference:

http://www.businessinsider.my/rich-and-famous-people-who-lost-all-their-money-2015-7/?r=US&IR=T#xgCZCWlBb62ST5l6.97

Compounding Interest

“Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.”

~ Albert Einstein ~

Anthony Robbins, Money, Master the Game Book

Should You Settle Your Mortgage?