Wealth & Wellness Network

How to Ensure that Your Wealth is Distributed as You Will?

2012-01-11T06:16:00.001+08:00

Recently, I personally came across two cases where both the deceased passed away without any Will. One of them had a business with his brother and many issues need to be tackled to move forward. The other left a house which is one-third owned by him and thus his part of ownership needs to be sorted out. What happen if one passes on without a Will? What are the advantages of having a Will? Is it time for you or your loved ones including your parents to write a Will now? These are the several issues:

1) Who are the beneficiaries?

Without a Will, the law will decide who your beneficiaries should be. With a will, you decide for yourself who would inherit each of your assets, and in what proportions. The Will will prevent the splitting of assets among many beneficiaries, and more important, prevent the dispute of asset distribution. Make a will and the law will protect your wishes.

2) Why does it take longer time when there is no Will?

Without a Will, your assets distribution will usually take longer time (2-6 YEARS) to settle, if it is free of arguments. If there is any dispute among the beneficiaries, they could involve in a long and complex legal battle. With a will, the court will decide speedily (2-6 MONTHS) on the assets distribution according to your wishes. The process of distribution differs for cases with or without a Will.

3) What are the main problems when there is no Will?

Generally, the beneficiaries need to apply for the Letter of Administration (LA) from the High Court, which may take 2 to 6 years, depending on the complexity of the case. Furthermore, all lawful beneficiaries have to give written consent to appoint one or two Administrators and two Sureties or Guarantors for the case. The lawful beneficiaries are Children/Grandchildren, Spouse and Parents.

With a Will, you could exercise your right to appoint your choice of Executor and Administrator. No Surety or Guarantor is required. This will ensure faster distribution as it only takes 2 to 6 months to obtain the Grant of Probate, hence saving cost as well.

4) Are there any other benefits with a Will?

You can appoint a Guardian of your choice to take care of your minors so as to protect their future. You can also give away part of your properties to non-immediate family members including charity organizations. Your appointed Executor or Trustee can raise emergency money to help your family members at a time when they are most vulnerable, against a scenario where your bank accounts are frozen after your death. You can also include provision to settle debts (if any), include future inherited and acquired assets, and prevent your estate from going to the government. Lastly, you can even leave a personalized message for your children within the Will.

Why use Professional Will-Writing Service?

Now drawing up a Will is as easy as making a phone call or writing an email. The Professional Will-Writer can take your instructions in the privacy of your comfort. With Professional Will-Writing system and personalized service, your Will can be tailor made to suit every situation.

In case you have further inquiry or need the service of Will Writing, do email me at shpoh88@gmail.com.

How To Keep Ourself Physically Fit?

2012-01-07T08:36:00.001+08:00

We are all very busy about our daily routine. How to keep ourself Physically Fit? One of the basic routine we must follow is to exercise our physical body, but we have no time to exercise! So, how to ensure that we do enough exercise to keep ourself fit?

There are a few rules to follow:

One, make exercise part of your routine. Make exercise part of your life! If you are a student, ensure that physical exercise is part of your "homework if not schoolwork". If you are an employee, make it part of your "job at home if not in the office". This mean that exercise is an essential part in your daily or weekly plan, it is in your time table! If we do not make exercise part of our routine, we will convenient forget about it by giving excuses that we are too busy, that we will do it another day. You just have to do it in a regular routine.

Two, choose an easy exercise. Your exercise must be convenient to you. If you choose swimming as your exercise, make sure it is easy for you to go to the pool. If you do not have a proper green garden to jog or walk, then is it possible for you to jog or walk in the compound that you live? Or is it possible for you to walk home from your work place? If it is difficult to exercise outdoor, choose an exercise that you can perform at home.

Three, enjoy your exercise! It is only when you enjoy that you keep motivating yourself to exercising regularly. If you do not like to do things alone, find a group of friends who would exercise together with you, or join a team game. If you are sociable, choose an exercise that has been organised in your community such as taiji or line dancing. If you like to do things alone, then set a goal so that you would keep pushing yourself to achieve further, in order to be self motivated.

Finally, commend yourself for exercising well. Tell yourself that it is because you exercise regularly that you are physically fit today. Remind yourself that you will continue to be fit for many years to come if you keep exercise a part of your life. Whenever you are physically sick, console yourself that you recover fast simply because you are fit. I am sure if you are fit, you would realise that you have less physical problems compared to many of your friends.

So, keep exercising regularly, enjoy your exercise and the reward is that you are fit!

How to Use Pareto Principle, 80/20, to be Effective in Our Works?

2012-01-05T07:39:00.000+08:00

There are too many things to do every day, every year. How do we prioritise our work? How do we make sure that our work can be completed effectively?

Pareto Principle can be used as a tool to analyse our effectiveness. It is also known as the 80/20 Rule. There are several interpretations of this rule. I personally use it from the aspect of "Cause & Effect". Always bear in mind: Something is always more important than others. I always reverse the 80/20 into 20/80, by equating 20% of cause with 80% of effect! These are some of the examples.

20% of a company’s customers produce 80% of its revenue

An effective company will have most of its sales from a small targeted group of quality customers so that it can serve its loyal customers well. As its customers base gets bigger, the number of loyal customers is also getting more, it should continue to focus on the satisfaction of this group of loyal clients.

20% of meeting time results in 80% of decisions made

In a meeting, most decisions are made within 20% of the meeting time. Of course, we are not saying that all meetings should be shortened to 20% of the normal duration. What we should be aware of is that we should make use of the 20% of the "golden time" of the meeting, especially when the attendees are still fresh and enthusiastic, to discuss the most important agendas.

20% of items to read on your table produce 80% of info you need

If you examine the papers on your table, most likely only 20% of them are informative and useful. Throw or store away the junk, just focus on the useful documents.

20% of your work time contributes to 80% of success in your job

You may not agree, but you should focus by spending 20% of your "golden time" in order to ensure that you achieve 80% of the success of your work! This means that you should identify your "golden time" which is unique for each individual, get ready whatever materials you need, prepare well mentally before the golden time, and then just focus and complete the most important part of your job to an extent of 80% satisfaction. You may want to touch up the job further on another time later.

These examples show that we strive towards using our BEST 20% efforts, which I called "golden time" in order to achieve 80% of our targets! Attention is focussed on key issues that have dramatic effects!

What should we do:

Examine your job scope. Think and decide what is the most important task (80% effect) that has the greatest effect,

Think and identify when is your "golden time" (20% cause) when you are most effective, like which period of the day, which day of the week, which period of the year, etc

Prioritise so that you use your golden time (20% cause) for the most important task (80% effect)

If this practice is effective, make it a routine.

How to Handle Pressure?

2012-01-02T21:53:00.000+08:00

My colleagues once asked me, how to handle pressure? I have a three-step solutions to offer.

First, you must be mentally prepared for the pressure. There is no job without pressure. There is no study without pressure, if you are a student. Even as a family member in whatever role, we face pressure. So we must be able to know what type of pressures we are going to face. We must also predict how heavy is each of the pressure. Then GET READY to face the pressure! Once you are ready, you will simply accept the pressure and face it squarely, no escape, no complaint, just accept and face it.

Second, most pressures are due to interpersonal relationships. As a worker, we face problems with our boss as well as our subordinates. At home, we have problems with our family members. In schools, our classmates, teachers and headmaster seem to be problematic. If we can handle INTERPERSONAL RELATIONSHIP well, most of the problems we face do not arise. What we do will be smooth. Whenever we have problem, our colleagues, friends and schoolmates would be willing to help us. There will be less pressure!

Finally, in whatever capacity we are, DO OUR BEST! Most of our bosses, colleagues, family members, teachers and friends would be able to accept our performance if we have done whatever job given to the best we could. In fact, if we are hard working and yet underperform, they would offer helps and advice so that we can improve ourselves! It is only if we have contributed the best of our abilities that we are able to grow in any institution we are in. There would be less undue pressure due to our performance.

In order to fulfill the three criteria above, we must be have POSITIVE thinking. We must be prepared to face pressure and be able to work amicably with people around us, as well as put up our tip-top efforts in the role we play.

Spiritual Check Up

2011-12-31T18:44:00.002+08:00

Have you done your annual Spiritual Check Up? Many people have the habit of taking an annual Medical Check Up, what about a Spiritual Check Up now, for the new year!

I have done a Spiritual Check Up by attending a four-night five-day Meditation Retreat under a young and humble Master.

The type of meditation that I attended is called Vipassana Meditation. It is a meditation method that I learned in 1982-83. I have not done much Vipassana Meditation since then, instead I have done more Metta Meditation. It is a full circle that I return happily.

After interviewing me on my progress, my Master rightly identified two issues I faced now.First, my health started to deteriorate and the first part of the body that deteriorates is my legs! How true, I could not stand the climbing up and down of the hill where the hostel was situated! Second, I have lost my concentration! There are too many distractions in my mind...

I have decided that I need to keep maintaining an active life! I need to make exercising regularly without fail and laziness. Taiji, swimming and walking are the three exercises that I need to carry on and on.

I have also decided to meditate more regularly and do ONE thing at a time, and do the thing well! Hah, life is to be treated fairly so much so that I need to be focussed and mindful.

I have certainly done a good Spiritual Check Up, and I should now plan for my Medical Check Up soon.

investmentinfunds.co.uk - Investment in Funds

2011-03-01T22:52:00.002+08:00

Today, I receive an email from Shiela of investmentinfunds.co.uk. They have stumbled on this blog while searching for Investment In Funds related information. Investmentinfunds.co.uk operates the largest Investment Funds website featuring more than 30,000+ blogs. Their site averages 200,000+ uniques visitors per month.

Please visit http://investmentinfunds.co.uk/blog_awards/index.php?id=44689.

TOP Money TIPS for Malaysians

2008-11-30T19:52:00.007+08:00

If there is an easy and yet effective guidebook on taking good care of your hard earned money,
then please go for this one:

Title : Top Money Tips for Malaysians

ISBN : 978-983-3364-68-8

Author : Lau, KC; whom I met via googling at his http://KCLau.com.
His nice photo of a young face caught my first attention! Not sure of his age though.

Publisher: True Wealth Sdn Bhd, www.MillionairesPlanet.com.

List Price: RM29.90 (Please read on if you are interested to buy at a discount from me!)

Extend: 208 pages

There are a total of 24 tips which are organised under four categories, namely

Smart Money Tips
Money-Making Tips
Money-Saving Tips
Money-Protection Tips

These tips may sound mundane, but they are not to be ignored as they are simply practical yet seldom practised by most of us.

You may not believe that you could get your first car free! How? Make use of NCD, No-Claim Discount, of the motor insurance. In the example given in the book, you could earn your first used car of RM5000 eight years later. The gist of the lesson is how one can make full use of NCD when one adds himself a new expensive car, if one bothers to transfer the NCD to the more expensive car. I know of my money-savvy friend, CK, doing this. Read this practical guide in Chapter 13.

The above tip is a Money-Saving Tip. Let's look at a Money-Making Tip next.

I for one have been thinking of how to make money via Internet. Do a business by creating a website or a blog? The fear of time, money and effort to be spent and uncertainty of making any profit puts me off even before I get started! KC Lau has been getting more than USD5 monthly for creating a lens. You need to read Chapter 8 to find out what a lens is. I will try his method and shall blog on this again once I make my first US Dollar!

His last section of the book, Money-Protection Tips, dedicates entirely to the intelligence and advice on insurance planning. Practical tips on choosing a traditional or an investment-linked insurance; insurance switching; investment replacement; and how to choose the frequency of premium payment to your advantage are definitely very useful.

You may have noticed that I have not covered the first part of his book, the Smart Money Tips. I am leaving this favourite section of mine to the last. I am particularly proud of myself as this is one book that confirms my principle of earning versus spending money. Chapter 3 starts with a quotation credited to Lynson Forman that makes me happy, "Don't focus on how to spend less money. Focus on how to make more money." This chapter assures me that the risk management that I have been taking in dealing with money could be right only if I know how to find ways to make more money! And THANKS to the author, he has listed 50 ways on how I can spend less money as against 25 ways of how I can make more money! I guess what I need to do now is to look at each of these latter 25 ways seriously in order to live with a positive cash flow happily always.

I have found this book not an ordinary one as compared to the many titles on the book shelves, which are full of jargon and theories, that are far from practical. As a service to all my dear friends whom I dedicate this review to, I am offering you a special price for this book: you just need to pay me RM25.00 to have one copy delivered to your home within Malaysia. If you are interested, kindly email me at shpoh88@gmail.com. Offers ends before Christmas 2008.

Let Your EPF Savings Grow

2008-11-24T22:38:00.000+08:00

Do you know that you can invest part of your EPF Account I in Mutual Trust Fund?

Please see the table below:

The following is an example:

If you are 25 years old, and you have RM20,000 in your KWSP Account I, the table shows that the minimum cash amount you need to maintain is RM9,000. You can then invest 20% of the amount in excess of RM9,000 in Mutual Funds.

So, amount to invest is (20,000 – 9,000) x 20% = RM2,200.

Please check if your Account has excess for Mutual Fund Investment.

FYI, I have invested in Mutual Funds regularly for the last 7 years, and the returns are much better than EPF interest. I would thus like to share my happy experience with you!

Please let your family members and friends know about this.

Let me know and I can help you invest.

If you have any question on this matter, email me please.

shpoh88@gmail.com

[This posting was first published on May 1, 2008]

What Is A Unit Trust?

2008-11-24T22:28:00.001+08:00

A unit trust is a financial tool through which you may invest your savings. The idea behind unit trust is having better investment through collective investing. That is done by pooling the investments of many investors, individuals and institutions.

Investing in a unit trust offers investors numerous advantages, including:

a. Professional management at a low cost
b. Safety through the spreading of risk (diversification)
c. Liquidity - able to convert investment into cash at any time
d. Ease of transaction - I can help you invest!
e. Capital appreciation/income stream - let your money grow!

The operation of a unit trust may be best explained by outlining its similarities with the operation of a bank, with which most individuals are familiar.

Many individuals deposit money in the banks, for which they receive interest. These individuals expect complete liquidity where they must be able to withdraw their deposits in cash at any time. The banks employ professional managers to look after the deposits. The deposits are invested. These managers lend the deposits to other individuals requiring funds and a host of other profit generating facilities of the banks.

Similarly, unit trust holders wish to put their money to generate higher returns. The goal of all investments is to make money more productive, either through producing income or growth. Unit trust holders have liquidity because their units can be readily converted into cash at any time. By investing in unit trusts, it allows them to engage professional fund managers at a low cost to the individual investors. These managers diversify the investible funds in many different securities (shares in stock market) and other approved channels to spread the risk.

The unit trust is constituted through a document known as a deed (contract-like) which brings together and binds the various parties to the deed:

The trustee (a third party company appointed by the unit trust company), who holds the assets of the trusts on behalf of the unit-holders.
The manager (the unit trust company), who is the promoter of the scheme and provides investment and administrative expertise and markets units to the public
The unit-holders (you as the investors) who provide the funds for investment and expect to receive the benefits derived from the investment. The effect of dividing the beneficiaries' interest in the trust into units is that their interest is quantified into discrete portions.

Particular advantages of unit trusts over the pooled investments include :

The provision of an independent trustee to hold the trust's assets on behalf of unit-holders and to watch over their interests on an on-going basis.
The deed and prospectus are scrutinised by government authorities, prior to an offer of units being made to the general public. The managers and trustee are themselves approved by the regulators.
A buy back provision or covenant in each deed which requires the manager to redeem an investor's units within specified time limits at a price determined in accordance with the deed.

Provisions in the deed under which the manager and trustee are in a fiduciary position in relation to the trust (i.e. they can only profit in ways laid down under the deed). The investor can determine in advance what costs and charges they will be required to pay to join and stay in the trust.

Email me if you wish to invest or for more info: shpoh88@gmail.com

[This posting was first published on May 1, 2008]

Why EPF Pays Lower Dividends?

2008-11-24T22:28:00.000+08:00

[The following extract was taken from theStar, http://thestar.com.my/news/story.asp?file=/2007/12/6/nation/20071206205452&sec=nation.

Though it was a piece of news dated five months ago, it shows why EPF could not pay very high dividends. There are three main classes of investments.

(1) EPF investment in Government securities, loans and bonds, and instrumental money market takes up 80%. These investments have low rate of return with the advantage of low risk.

(2) The RM58.64bil investment in equities makes up only 19.4%. This investment fetches high return which comes with high risk too.

(3) EPF has started to invest properties, amounting RM1.72bil which is only 0.6%. This investment is of higher return and higher risk than the investment in Government securities, loans, bonds and money market.

As a large portion of EPF investment is of low return, EPF dividends average at 4.7% . ]

*****

Thursday December 6, 2007
EPF invests RM300bil in first 6 months of 2007

KUALA LUMPUR: The Employee's Provident Fund has invested RM301bil as at June 30 this year, Finance Ministry parliamentary secretary Datuk Seri Dr Hilmi Yahaya told the Dewan Rakyat.

He said that of the amount, RM104.21bil or 34.6% was invested in Government securities, RM112.15bil or 37.2% in loans and bonds, RM58.64bil in equities, RM24.72bil in instrumental money market and RM1.72bil in properties.

[This post was first published on May 13, 2008]

EPF Dividends vs Unit Trust Returns

2008-11-24T22:18:00.001+08:00

I was asked about the returns of Unit Trust investment, particularly with reference to my statement in my first article that "I have invested in unit trust regularly for the last 7 years, and the returns are much better than EPF dividends."

As for returns of mutual trust investment using our EPF saving, the annual EPF dividend is a better parameter for comparison.

Below are the graph and table of EPF dividends from 2001 to 2006. In 2007, the dividend was the highest at 5.8%.

You could notice that EPF has been paying an annual dividend of 4.25 to 5.8% since 2001. Subtracting the inflation factor, the Real Dividend Rate ranges from 1.35 to 3.6%.

What about Returns from Unit Trust Investment?

I started investing in unit trust on 10 June 2000. Every three months or so after that, thanks to Ms Demy, my Unit Trust Consultant, she would come to my office and process the EPF withdrawals and Trust Fund investments for me.

I have six funds under my portfolio by now, one of which is a bond fund. The oldest fund in my portfolio has grown more than double, 2.17 times to be exact. A check with the latest Master Prospectus of the Trust Funds, this fund has recorded an Average Annual Returns Since Launched of 29.83%, which is far much better than EPF.

Last year, EPF made a ruling that all EPF withdrawals have to be invested in local funds. Therefore, we should look at the the returns of local content funds. The four local content funds listed in the Master Prospectus show Average Annual Returns of 16.26%, 14.40%, 33.75% and 19.82%. These Average Annual Returns were based upon the returns since the funds were launched.

The various funds that I used for comparison above are equity or balanced funds which invest substantially in share markets.

Mutual fund companies in Malaysia have launched several new funds which were approved for EPF investments. There are ample funds which are open for new investors to choose from.

If you would like to have more information of EPF-approved mutual funds, kindly email shpoh88@gmail.com.

[This posting was first published on May 5, 2008}

Some Figures on Returns

2008-11-24T22:08:00.000+08:00

[This is a news article from Business Times Online. There is a general comparison of the rates of return from various investment tools, as highlighted in the article below. I am not in any way related to CIMB Wealth Advisors Bhd. This article simply serves to illustrate various ways of managing wealth cycle. Read on.]

CIMB Wealth upbeat on 3-in-1 education plan
By Chong Pooi Koon Published: 2008/05/07

CIMB Wealth Advisors Bhd is bullish on its new three-in-one education plan, a package that uses unit trust investment instead of endowment to help parents keep enough money for their children's education.

Chief executive officer Tan Beng Wah said the product comes with insurance coverage to ensure that the fund will continue to grow in the event of the investor's sudden death or total permanent disability.

A trust nomination service is also thrown in to ensure that the money will reach beneficiaries without delay.

"We designed this as we know this is what the customers want, based on years of experience. I'm really excited about it," Tan said in a media briefing in Kuala Lumpur yesterday.

The unique part is, even with the additional features of insurance and trust nomination, the product is still cheaper than an average education plan in the market which uses endowment to grow the fund.

For example, parents planning to raise RM200,000 over 15 years for the study plan of a three-year-old will need to put in an average of RM11,000 to RM12,000 a year.

This compares with a payment of RM27,000 a year for an average endowment plan for the same goal.

Tan said unit trusts may be a more appropriate investment tool to finance long-term needs such as education.

This is because unit trust investments in general return 9-12 per cent a year, much higher than an insurance's annual yield of 5.7 per cent.

The Employees Provident Fund pays 4.7 per cent a year on average, while a fixed deposit gives 3.7 per cent interest per annum. Savings rate is the lowest, at 1.7 per cent.

"This product is not possible at this cost if not for all the necessary business components within the CIMB Group," Tan added.

CIMB Wealth has worked with the insurance division, the trustee service provider and the asset management arms within the group to package this plan, which helps to cut costs.

The education plan targets those with a household income of more than RM5,000 per month.

The company aims to sell 400 plans every month, with an average value of RM200,000 each.

The plan is available in both conventional and Islamic versions. Tenures range from nine years to 20 years.

[This post was first published on May 8, 2009]

Dollar Cost Averaging

2008-11-24T21:58:00.000+08:00

What is Dollar Cost Averaging Principle?

Dollar Cost Averaging (DCA) is when a unitholder invests a fixed amount of Ringgit in a unit trust fund regularly. For cash investors, you can instruct your bank to direct debit a fixed amount monthly to invest into a named unit trust fund. For EPF investors, you can practise DCA by investing once every three months as permitted by EPF.

For DCA, you are buying a fixed ringgit amount, say RM100 of a particular trust fund on a regular schedule, regardless of the unit price. More shares are purchased when prices are low, and fewer shares are bought when prices are high.

Eventually, the average cost per unit of the trust fund will become smaller and smaller. Dollar-cost averaging lessens the risk of investing a large amount in a single investment at the wrong time. The idea of Dollar Cost Averaging Principle is to solve the problem of TIMING.

What is the advantage of applying the Dollar Cost Averaging Principle to a regular savings plan?

a) No timing problem.
b) The total number of units will be more in the long run.
c) The average cost will be lower in the long run.

Why NOW?

As the prices of shares now are low, the unit prices of equity-based unit trust funds are also low. Many unitholders, however, are worried and are refraining from investing NOW. Acutaully, NOW is the best time to invest, as every one of your Ringgit will bring you a GREATER number of units! This is what the saying BUY LOW SELL HIGH implicates!

If you want to know more investment in Unit Trust, kindly email me for more details at shpoh88@gmail.com.

[This post was first published on Sept 7, 2008]

Q&A on Financial Planning

2008-11-24T21:42:00.000+08:00

[This is an article from theStar
http://thestar.com.my/news/story.asp?file=/2007/6/10/focus/17962749&sec=focus.

From the article, it makes sense to invest in Unit Trust rather than keeping the saving in FD. However, we must bear in mind that higher returns come with higher risks, like the saying that no risk no gain.

Another lesson is that investment in Unit Trust should be of long term, of say three years.]

*****

Sunday June 10, 2007
When playing it safe might not be that safe after all

Q & A on financial planning

Q: I CURRENTLY have about RM120,000 in my FD, which only provides me a 3.8% annual return. Can you suggest any other safe methods of growing it faster? As you know, our inflation rate is about 6% per year, which means my money is at a losing rate of 2.2% (6% to 3.8%) if I keep it in FD.
SW Yeoh

A: Congratulations on realising that placing your hard-earned savings in fixed deposit (FD) is not as safe as many people think. You are absolutely right when you said you are indeed losing 2.2% after taking into account your inflation rate of 6%. In fact, playing it safe is not “safe” at all as your money cannot grow fast enough to outpace inflation.

From our many years of experience in helping investors achieve their financial goals, we have concluded that investors want a reasonable personal rate of return, within an acceptable level of risk. Therefore, it is important to understand that investment returns are always a function of investment risk.

Generally speaking, the higher the sought-after investment returns are, the higher the associated risks. Therefore, you must be prepared to take risks, with a view of investing in the long term (at least three years), in order to invest successfully.

The next step is to explore the investment options available to you such as property, stocks and unit trusts. Investing directly in the stock market is great if we have the time, skill and money required. Since most of us do not have the time or skill to invest directly in the stock market, unit trusts could be the answer for us.

According to well-known investment author and fund manager Peter Lynch, “The Mutual Fund (unit trust) is a wonderful invention for people who have neither the time nor the inclination to test their wits against the stock market, as well as for people with small amounts of time to invest who seek diversification.”

Before investing, you should understand the various asset classes of unit trust fund. There are three broad asset classes based on risk. The highest risk is associated with the Equity class. Second is the Bond class. The third and lowest is the Money Market class.

The most basic question you must ask yourself when you decide to buy a particular unit trust fund is: Is it an Equity, Bond or Money Market fund?

Each of us is in different financial circumstances. Therefore, it is very important that you meet with a qualified Financial Planner to undergo a detailed and systematic process of analysing your investment objectives, risk profile and investment time horizon.

Without going through a systematic process, it is difficult to design the most appropriate unit trust portfolio that matches your unique risk profile and investment needs.

Answer provided by MAAKL Mutual Bhd, a Charter member of FPAM

Note: Financial or retirement planning requires an analysis of the readers' personal and financial circumstances and knowledge of their goals. Without the necessary details, the answers will have to be general in nature. For a proper plan specifically tailored to the needs of each individual, they are advised to see qualified professionals.

[This post was first published on May 13, 2008]

Insights into Wealth Cycle

2008-11-24T20:08:00.001+08:00

[This article is extracted from theStar Business, Thursday July 5, 2007. It gives a very good introduction to WEALTH cycle]

Most individuals and families go through a series of financial events during their lives. As they pass each of these stages, their financial strategies need to change to reflect their evolving needs and financial circumstances.

RALPH Waldo Emerson, an American author in the early 19th century, once said: “It requires a great deal of boldness and a great deal of caution to make a great fortune, and when you have it, it requires 10 times as much skill to keep it.”

Even back then, the West understood the importance and the difficulties of accumulating and preserving wealth. They discovered that everyone goes through a lifecycle that consists of different stages and each phase calls for certain financial needs and objectives they want to achieve. These different stages are known as the “cycle of wealth”. Our Western counterparts have actively practised this concept, as they understand the significance of the cycle and the important role it plays in building and sustaining one’s wealth.

Via a simple research, we found that a majority of Malaysians has yet to adopt the wealth cycle formula. Instead, Malaysians tend to manage their wealth in fragments with most concentrating on wealth creation and enhancement, and often ignoring preservation and distribution.

Neglecting any of these cycles will impact on one’s retirement and can result in insufficient means to provide for family members or even future generations. Taking the right steps in accordance to the wealth cycle can reduce financial uncertainty and financial distress.

The wealth cycle is commonly known to consist of four pillars – creation, enhancement, preservation and distribution.

“Wealth creation”, also known as “start-up”, is the first pillar of the cycle. It plays a vital role in forming the base for the wealth accumulation process.

“Wealth creators” are individuals who are in the early stages of their professional career and they tend to have larger financial responsibilities such as mortgages and credit purchases. Typically, their liabilities tend to be higher than their income.

Financial decisions tend to be mostly short term and they often adopt the characteristic of an aggressive investor, seeking ways to maximise the returns on their assets.

Once wealth is established and created, these individuals – by now in their mid to late career life – would shift their focus to “wealth enhancement”. The primary objective of this cycle is to multiply or enhance the returns on the accumulated assets with lower risks or better capital protection.

This is where with proper asset allocation, they are able to determine areas of financial interest and investment products that suit them in order to generate more income. Managing the acquired wealth is also crucial at this stage, taking into account tax considerations and debt management.

“Wealth preservation” starts when one has built up a substantial amount of wealth. The key strategy is to ensure that wealth is well managed with protection being the key objective. At this stage, the portfolio is managed with greater focus to generate income, while minimising risk.

Many times, individuals or families fail to anticipate and prepare for this cycle. They focus on accumulating wealth only to lose almost everything in the end as a result of not having proper wealth management structure.

Finally, the “wealth distribution” phase is where one ensures that one's assets or wealth and even business are transferred or distributed in the most optimal way and according to one's wishes. This is also a stage most individuals and families often ignore.

Estate and succession plans should be put in place well in advance to ensure that the family wealth and the reins of the family business are handed over to the following generations in an orderly manner.

Too many people have learned that making a fortune is the easy part. “In the long run,” cautions multi-millionaire entrepreneur and educator Robert T. Kiyosaki, “it’s not how much you make, it's how much you keep, and how many generations you keep it.”

As such, wealth distribution through the use of mechanisms such as trusts and wills would make certain that one’s wealth will last over many generations, thus ensuring a legacy of prosperity that every individual dreams of.

It is every individual’s dream to have financial freedom at retirement or at the very least, most hope to be free from any debt obligation. This is achievable if one were to diligently practise the management of wealth cycle accordingly.

In essence, one needs to understand that the key to success in using the wealth cycle is to know what steps to take and in what order.

[This post was first published on May 1, 2008]

Millions Lost Without An Exit Plan

2008-09-21T18:46:00.009+08:00

PROTECTING YOUR BUSINESS INTEREST

As a business owner you and your business partners would have spent many hours of hard work building to what it is today. You and your loved ones are now enjoying the fruits of your labour.

However, you may not have given enough thought about an exit plan from the business. I am sure you would want to avoid what was faced by Mr. Yow and his family as illustrated below.

[The following is an adaptation based on a true story. The names have been changed to protect the identities involved.]

“Mr. Yow Sang Yee was a successful businessman. He had joined his childhood friend, Mr. Tai Sek Sai, to start a factory manufacturing carpets. Mr. Tai had a 60% share of the business while he had the remaining 40%. Ever since they started, the business had grown by leaps and bounds. Annual profit was now in the region of RM2 million. Their accountant had indicated that the business should have a value in the range of RM10 to RM15 million.

Then tragedy struck. He was diagnosed with third stage cancer of the liver and his health deteriorated. He wrote a will to give his assets to his wife and children. He took comfort in the thought that the value of his share of the business alone was enough to take care of his family comfortably and see his kids through their tertiary education. He also felt comfortable that his partner would not short change him as they had been childhood friends and had gone through thick and thin together for so many years.

After Mr. Yow’s departure, the wife wanted to dispose of his shares but Mr. Tai turned her down because he was already controlling and running the company.

Unfortunately for her, no outside party was willing to buy her shares and she had no choice but to plead with Mr. Tai to reconsider the purchase of the shares. He offered her a price of only RM1 million, rather than RM4 to RM6 million, which she had no choice but to accept it.

The above story illustrates the dramatic drop in value from business disruption due to the loss of a co-owner or partner and sometimes even the downfall or closure of the business that could have been avoided.

A well-constructed plan is essential to protect the value of the business in the event there is a major disruption in the business due to a co-owner’s death, disability, retirement or serious major illness or any other event that jeopardizes the continuity of the business.

Ask yourself:

• If a co-owner dies today, can you work with his family to run the business?
• Will the co-owner’s family members know how to run the business with you?
• Can they work well with you?
• Would your beneficiaries be able to get a fair price?
• Do you have the funds to buy out the co-owner’s shares/interests from the family members when there is no pre-agreed price in a written agreement?
• Can the shares/interests you are purchasing be transferred quickly to you?

Our Business Value Protection Trust provides the solution and,

• It guarantees the sale of shares/interest at a full and fair value that was agreed by co-owners;
• It prevents inexperienced and unqualified heirs from being involved in the business or the selling of the deceased’s shares to outsiders;
• It allows for the smooth transfer of ownership to the co-owners at the point of exit;
• It enables your co-owner(s) to purchase the shares/interest by way of life insurance where it becomes very affordable, minimizing the need to use their savings for the purchase;
• Rockwills Trustee acts as the Trustee acting impartially according to the terms of the agreement, providing protection to your loved ones and that of the co-owners; and
• Your loved ones will receive cash for the use of your beneficiaries in their time of need, instead of the shares/interests which may be difficult to dispose of.

If you would like to avoid what Mrs. Yow had to go through, email me at shpoh88@gmail.com for a free presentation to explain further on the details of the Business Value Protection Plan.

Declaration of Trust

2008-09-07T13:28:00.004+08:00

In today’s world of economic and political uncertainties, the need to have better asset protection and planning is increasing day by day. Based on this, more and more people are seeking advice or assistance on the following situations below:

You are using your sister's name to buy a house. It is registered in the your sister’s name but you are paying for it. How to protect your right/interest in the property?

You have 3 minor children. You are worried that in the event of death, disability or serious illness, all assets will be stuck when you are bed-ridden or stuck in court for some time. How can you solve this problem?

An association bought properties but registered it in the name of several committee members, how can the association prevent the properties being inherited by the families of the committee members?

A foreigner who is staying in Malaysia under the Malaysia My Second Home (MM2H) program, but he has only a bank account, listed shares and golf club membership. He wants his wife to get the moneys in the bank account quickly without having to wait for Probate.

The above are some of the areas that a Declaration of Trust can be used to fulfil your wishes.

If you want to know more about the Declaration of Trust, kindly email me for more details at shpoh88@gmail.com.

The Fountain of Youth

2008-07-13T11:02:00.010+08:00

Want to stay young always? Please read on.

Introduction

There is an energy layer in our body that does not show up in Western Medicine. The Chinese calls it chi, and have mapped it in detail and used it in acupuncture, demonstrating that this energy layer is real, eg. surgery using no anesthesia, just needles along the energy meridians.

The energy collects in seven centers, called chakras, in our body. The Tibetan monks could see these chakras and they noticed that in an old person the chakras spin slowly and are out of synch with each other, whereas in a young person’s body the chakras spin fast and are in synch with each other. So they devised a set of 5 exercises, called rites, that spins and synchronizes the chakras just like in a young person’s body. This causes the old person’s body to behave like a young body, and affects all biological functions including healing and rejuvenation.

Lately it was found that the chakras correspond to the sites of the seven endocrine centers in the body and is postulated to be the interface between the energy and the biological bodies.

My Personal Experience

The above introduction was written by Mr SK Wong who introduced The Fountain of Youth to me.

I have been doing the five rites for one year now. I have found them very powerful.

Start with doing each rite three reps, and slowly increase to 21 reps. You will be able to see the effect.

If you are interested to know more about this wonderful exercise, kindly email me for more details at shpoh88@gmail.com.

Rite 1

Rite 2

Rite 3

Rite 4

Rite 5

You Are Already Insured!

2008-07-11T22:38:00.001+08:00

We shall examine three statements.

Statement 1: You are already insured, whether you buy insurance or not!

Statement 1 may sound odd, but there is some truth in it. Read on…

Statement 2: Insurance is a contract concerning time and money. When you do not have the time, the contract will pay your family the money. When you do have the time, the contract will pay you the money. Therefore, insurance is a financial security contract.

So, either way you are secure.

However, if you do not have an insurance policy, there is no contract. Therefore, Statement 2 has to be re-worded as below.

Statement 3: If you do not have an insurance contract, you have to be self-reliant. When you do not have the time, you yourself will have to pay your family the money. When you have the time, you will pay yourself the money. Therefore you will have to ensure your own financial security.

This means you have to save enough money for your family and yourself so that you are able to handle the following situations:

1. Living too long or Living far longer than you imagine – planning for a lengthy retirement

2. Living death or Protracted death – protecting your loss of income due to injury, sickness or critical illness

3. Dying too soon – protecting your family against financial loss due to premature death

4. Children’s future – planning for your children’s educational funds

5. Wealth creation – saving and investing towards more comfortable living

To sum up, if you have insurance coverage, the insurance company will assist you to meet the five needs mentioned above, because you have transferred your risks to the insurance company. The insurance company charges you a premium which is usually about 2 to 3% of the sum insured annually. Otherwise, you have to insure yourself by covering 100% of these costs yourself. You can then say you are fully insured either way.

The choice is yours!

I Need More Time To Consider

2008-07-11T22:28:00.001+08:00

You may hesitate to sign up for an insurance policy because there are so many factors to consider:

I don’t think I have enough money
I’m fine, I don’t need insurance
Insurance may bring misfortune – pantang lah

However, if you flip your thinking:

The more your budget does not allow, the more you need to be insured because what if you lose your stream of income? After all, the premium is only a small fraction, usually at about 2 to 3% of the sum insured annually. This is the cheapest buy you can get for financial security for yourself and the family you love.
Yes, you may well be “fine” now. This is all the more reason why you should sign up for an insurance policy. If you are already NOT fine, no insurance company will be willing to give you coverage. You will have to insure yourself on your own. [Please read my article in this blog: You Are Already Insured!].
If insurance brings misfortune, there are thousands of misfortunes every day, as thousands of people are signing contracts with insurance companies every day! Insurance policies function to help you tide over any misfortune you may face, be it death, disability, accident, critical illness, hospitalization, loss of income etc. Insurance can even create wealth for you so that you can support the rising cost of education for your children, save enough money for yourself when you are retired, prepare yourself a contingency fund.

So, why wait?

If you have the money, sign up now for a comfortable insurance policy as a means of saving with the intention of protecting your wealth.

If you do not have enough money, plan your expenditures so as to be able to set aside an affordable amount for the inevitable rainy days. Otherwise, you will be even poorer as there will be no insurance company willing to lend you a helping hand.

The choice is yours!

I Need to Compare with Other Companies

2008-07-11T22:18:00.002+08:00

A smart consumer will always exercise one of their very important rights as a consumer – comparing the various products available before buying any product or engaging in any service.

It is fair and wise to do comparison shopping for an insurance policy. There are bound to be differences in different policy plans, be they from the same company or from different companies. Each policy has its own good points & weak points. There is no one policy that can be the best of all. The most important consideration should be which plan serves your own personal purposes.

What are you looking for in term of protection?

The choices depend on the type of benefits you plan for:

1. death and disability

2. accidental death and total permanent disability

3. critical illness

4. medical & hospitalization

5. personal accident

6. repayment of the outstanding loans to financial institutions in the event of the untimely death, disability or critical illness

7. waiver of premium in the event of misfortune

8. investment in a fund managed by the life insurance company

Go through the checklist. Choose which items suit your needs. Talk to your insurance agents. Ask for quotations. Make a decision, the soonest the better so that you are protected right away!

The choice is yours.

Insurance as a Wealth Preservation Tool

2008-06-06T08:48:00.001+08:00

If you have accumulated a substantial amount of wealth, how would you preserve it? The key strategy is to ensure that wealth is well managed with protection being the key objective. At this stage, the focus on generating income has an additional dimension on minimising risk. The most cost-effective, time-effective and complete way of wealth preservation is via life insurance.

What is life insurance?

In life insurance, a large number of people (called policyholders) pay some money (premiums) into a fund managed by an insurance company. When someone in that group of people suffers a hardship, he/she is given an amount of money from the fund to help ease the hardship.

The policy contract

When you buy a life insurance policy, there is a contract between you and the insurance company. You agree to pay a premium for a period of time and, in return, the insurance company will pay your nominee or estate a sum of money upon your demise. In the event you suffer total and permanent disability or loss arising from any other specified situation, the payment will be made to you. In the case of total and permanent disability, the money is usually paid in instalments.

Why should I buy life insurance?

You may want to buy a life insurance policy for the following reasons:

• To ensure that your immediate family has cash and income after your demise so that they can easily pay bills, taxes and other obligations.

• To ensure that your immediate family members are able to maintain their standard of living upon your demise.

• For your children to have money for education.

• For you to have a savings plan for the future so that when you retire, you have a constant source of income.

• To ensure that you have extra income when your earnings are reduced due to a serious illness or accident.

Whatever the reason, you need to be careful when choosing one to suit your needs. Always take time to discuss with the insurance company or its intermediary about the policy that you are thinking of buying.

Income tax relief

You can claim tax relief on the premiums that you pay, subject to certain terms and conditions. For an ordinary life policy, the maximum amount of relief is RM5,000 per year inclusive of any contributions you have paid to an approved retirement benefit scheme, such as the Employees Provident Fund or other pension scheme. For a medical or education policy, the tax relief is RM3,000 per year.

Which policy should I buy?

You must choose the type of policy that best suits your personal circumstances. If you are young and wish to make sure that your spouse and children will be taken care of if you pass away suddenly, a term insurance is most suitable. If you are older and have a more established family, the fixed premium type and those that build up cash value is more appropriate.

You should understand the scope of cover provided under the policy, the various terms and conditions and the cost of the insurance cover.

The basic types of policies are:

• Term insurance – This offers insurance protection for a limited period only. The money will be paid only if you pass away or if you suffer total and permanent disability during the term of the policy.

• Whole life insurance – This offers life-long protection and premiums are paid throughout your life. The money, including any bonuses, will be paid when you pass away or if you suffer total and permanent disability.

• Endowment insurance – This combines protection and savings. The money will be paid at the end of a specific period upon your demise or if you suffer total and permanent disability. If you are still living after the policy matures, you will get the money, otherwise, the money will be given to your nominee.

• Investment-linked – Your premium is used to buy life insurance protection and units in a fund managed by the life insurance company. The price of the units is based on the investment performance of the managed fund. The benefits paid to you or your nominee will depend on the price of the units at the time you surrender the policy or when you pass away.

• Life annuity plan – An annuity is a series of payments paid to you until you pass away. There are two types of annuities:

–Immediate annuity – the payments begin within 12 months after you buy the annuity. Those who are about to retire or have already retired will choose this type.

–Deferred annuity – the payments begin more than 12 months after you buy the annuity. People will buy this type during their working years to provide retirement income later in their lives.

• Supplementary rider/cover – A rider is a supplement attached to the basic insurance plan, such as an endowment or whole life. It gives you flexibility to meet your individual needs, such as cover against accident, disability or hospitalisation. You will need to pay additional premiums.

• Other plans – Life insurance companies also provide medical and health insurance plans.

• Mortgage Reducing Term Insurance (MRTA) – When applying for a loan to purchase property, the borrower may wish to consider insurance protection against the unforeseen events. The insurance cover, normally known as MRTA policy, will cover the repayment of the outstanding loan to the financial institution in the event of the untimely death, disability or critical illness of the borrower. In the event of such contingencies, the insurance company pays the bank the outstanding amount of the loan and in return, the bank releases the ownership of the property to the owner or his beneficiaries.

Most MRTA policies are paid by a single premium when the loan is taken. The premium rates will normally depend on the age of the borrower, the term of the loan and the interest rate of the loan. In the event that the borrower sells the house or decides to pay off the loan prematurely, the bank will assign the MRTA policy back to him and he may choose to continue with the additional life cover or surrender the policy and receive a cash value.

Please read more about Life Insurance in the following site:
http://www.liam.org.my/cms/cms_pdf/booklifeinsurans.pdf

If you would like to have more information on Life Insurance, kindly email shpoh88@gmail.com.

Medical and Health Insurance

2008-06-06T08:46:00.001+08:00

We would not want the wealth we have accumulated to be wiped out by our health, or rather the lack of it. One of the most effective tool for Wealth Preservation in this aspect is via Medical and Health Insurance (MHI).

What is MHI?

A MHI policy is generally designed to cover the cost of private medical treatment, such as the cost of hospitalisation and healthcare services, if you are diagnosed with covered illnesses or have had an accident.

Why should I buy a MHI policy?

A MHI policy will help you to pay for the various hospitalisation and medical expenses that you will incur, if you become ill or injured. These expenses will include hospital room and board, professional and surgery fees and medical supplies and services. A MHI policy will also help you if you are not able to work because of illness or injury.

Types of MHI policies

There are four main types of MHI policies:

Hospitalisation and surgical insurance provides for hospitalisation and surgical expenses incurred due to illnesses covered under the policy.
Dread disease,or critical illness insurance provides you a lump sum benefit upon diagnosis of any of the 36 dread diseases or specified illnesses.
Disability income insurance provides an income stream to replace a portion of your pre-disability income when you are unable to work because of sickness or injury.
Hospital income insurance pays you a specified sum of money on a daily, weekly or monthly basis, subject to an annual limit, if you have to stay in a hospital due to covered illness, sickness or injury.

An insurance company may offer you these products individually or in combinations. You need to be very careful when choosing one to suit your needs and therefore, always take time to discuss with the insurance company or its agent about the MHI policy that you are planning to buy.

Please read more about Life Insurance in the following site:
http://www.liam.org.my/cms/cms_pdf/bookmedical.pdf

If you would like to have more information on Life Insurance, kindly email shpoh88@gmail.com.

Investment-linked Insurance

2008-06-06T08:45:00.001+08:00

An Investment-linked Insurance has an additional element of Wealth Creation on top of Wealth Preservation.

What is an investment-linked insurance plan?

An investment-linked plan is a life insurance plan that combines investment and protection. The premiums that you pay provide you not only with life insurance cover but part of the premiums will also be invested in specific investment funds of your choice. As a policyholder, you can choose how to allocate your insurance premiums towards protection and investment.

The insurance coverage provided would include death benefit, disability and critical illness.

The investment fund is divided into units of equal value. The prices of these units are published daily in the newspapers for you to track the value of your investments.

Unique features of investment-linked plan

As an insurance plan that combines investment and protection, investment-linked plans have the following unique features:

• You are given the flexibility to choose your own level of protection and investment.

• You can vary the amount of your premium payments or coverage according to your changing financial circumstances.

• You can choose from a wide variety of funds to invest in, depending on the level of risk that you are comfortable with.

• Investment in growth or equity-related funds may give higher returns than traditional life insurance plans over the long term. However, you have to bear in mind that higher returns come with greater risks.

Types of investment-linked insurance

Understanding the risk

• Investment-linked plans, like other types of investments, involve exposure to investment risk. Since an investment-linked plan is linked to the unit price of an investment fund (managed by the insurance company), the total value of the plan fluctuates with the movements in the unit price.

• When the unit price falls, the value of your investment will also reduce and vice versa. You may realise a gain or loss when you sell your units. You may even get less than what you have invested.

• Past performance of the investment-linked fund’s track record can only be a guide to its future performance which is not guaranteed.

Important considerations in choosing the right plan

Once you have decided on buying an investment-linked insurance plan, you have to consider factors such as the amount of investment, the choice of either single or regular-premium plan, types of funds, and the level of protection you need. Buying such a product is like having a personalised plan tailored to your special financial needs. It is important that you evaluate your options carefully to find the right plan with the right fund to suit your needs.

Please read more about Life Insurance in the following site:

http://www.liam.org.my/cms/cms_pdf/bookinvestment.pdf

If you would like to have more information on Life Insurance, kindly email shpoh88@gmail.com.

Make Your Wishes Come True with Will

2008-05-01T23:12:00.000+08:00

The “wealth distribution” phase in the Wealth Cycle is where one ensures that one's assets or wealth and even business are transferred or distributed in the most optimal way and according to one's wishes. This is also a stage most individuals and families often ignore. Estate and succession plans should be put in place well in advance to ensure that the family wealth and the reins of the family business are handed over to the following generations in an orderly manner.

As such, wealth distribution through the use of mechanisms such as trusts and wills would make certain that one’s wealth will last over many generations, thus ensuring a legacy of prosperity that every individual dreams of.

What is a Will ?

A legal document in which you declare your wishes for your loved ones and how to distribute your assets after you pass on.

Why do I need a Will ?

Without a Will, your assets could be more troublesome than beneficial to your family at a time when they are most vulnerable. They could become involved in a long drawn process with the law or a complex legal battle.

Without a Will, the law will decide who your beneficiaries should be. You should never assume that your assets would go to the person you want to benefit. Leave nothing to chance. Make a Will and the law will protect your wishes.

Why use Professional Will-Writing Service?

Now drawing up a Will is as easy as making a phone call. The Professional Will-Writer from Rockwills can take your instructions in the privacy of your office or the comfort of your home. With Professional Will-Writing system and personalized service, your Will can be tailor made to suit every situation. This will avoid delay due to Distribution Act 1958 (Amended in 1997). For example, if Mr. A passes away without a Will, leaving behind his wife, surviving father, 5 brothers and sisters, and 3 children, the distribution shall follow the Act as illustrated in the diagram below:"

In case you need the service of Will Writing, do let me know: shpoh88@gmail.com