Saturday, October 07, 2017

Is P2P Lending Set To Disrupt Funding and Investing In The Country?

Is P2P Lending Set To Disrupt  Funding and Investing In The Country?

The small and medium enterprises (SMEs) make the Malaysian economy. According to the World Bank, 97% of business establishments in Malaysia are made up of SMEs. These businesses contributed nearly 36% of the country’s GDP, 65% of the country’s employment, and nearly 18% of Malaysia’s exports.
When Securities Commission chairman Tan Sri Ranjit Ajit Singh said that Malaysian SMEs are facing a financing gap of RM80 billion, this could potentially pose a problem to the country’s economic growth.
In the current landscape, SMEs have to apply for business loans from financial institutions such as banks to get a working capital injection into their business. In order to secure a loan, these SMEs are required to submit almost flawless business track record or even pledge some form of collateral before their loan application is approved. This means many of the SMEs will not make the cut.
This creates a gap that peer-to-peer (P2P) financing is expected to fill, to provide a much needed platform for SMEs to gain funding, and eventually to spur the growth of the SMEs in the country.

Peer-to-peer financing is not new globally, but Malaysia is the first country in ASEAN to regulate it. In 2014, the global P2P financing recorded a US$9 billion growth and in the following year, the number increased to US$64 billion!
Based on the global trend, does this mean an investment opportunity for investors who are looking to further diversify their investment portfolio?

How does P2P  financing work?

P2P financing is also known as “marketplace lending”, where businesses can borrow money from P2P platforms like Fundaztic. Once their application is approved, the platform would assign a risk category or credit grade. The loan is then funded by individuals or a group of investors who act as the lender.
p2p financing
Currently, P2P  financing is regulated by Securities Commission with six licensed operators in Malaysia, namely Peoplender, B2B FinPAL, Ethis Kapital, FundedByMe Malaysia, Managepay Services, and Funding Societies Malaysia.
Fundaztic, P2P  financing platform owned and managed by Peoplender, offers a straightforward and transparent investment and application process for borrowers and lenders.  SMEs are able to raise funds for business related purposes ranging from RM20,000 – RM200,000 and investors can invest with as little as RM50.

Why should you invest in P2P?

Investors expect to make money from their investment portfolio most years. However, in the past five years, Kuala Lumpur Composite Index (KLCI) has not been growing as quickly as investors like to see.

In 2016, KLCI was down 3%, while the MSCI Asia ex Japan index was up 3%. It has only managed to inch up 10% over the past five years, a weak performance compared to MSCI Asia ex Japan’s 16%.
In the early 2016, Jack Bogle, founder of Vanguard Funds, warned Morningstar that stock market investors were likely to see gross annual returns of just 6% over the next decade. After accounting for inflation, the real return would be closer to 4% annually.
That’s just slightly better than putting your money in a fixed deposit account. So, how can investors rebalance their investment portfolio to ensure it is performing at its peak in today’s investment climate?
With its surging popularity, P2P investing is seen as an investment vehicle that could possibly provide stable cash flow and higher returns. Depending on your investment objectives, P2P investing could have a place in your portfolio.
Here are a few reasons why P2P investing should be included in your portfolio:
1) Low entry cost at just RM50
Starting your P2P investment is easy. You can register on Fundaztic online, by providing some personal details and uploading a copy of your identity card. Once your account is verified, you can immediately start investing.
As an individual investor, you can start investing with a minimum of RM50, and are encouraged to invest not more than RM50,000. Making the minimum investment low, it gives investors the freedom to try out the platform and also the investment vehicle without taking on huge risks.
2) Potentially higher returns
The usual suspects found in an investor’s portfolio are unit trust funds, bonds and stocks. However, with KLCI giving lacklustre performance in recent years, it’s time for investors to explore expanding their portfolio to include fixed money investment that could potentially provide higher returns.
Here’s how it can potentially bring you higher return if you invest RM30,000 for 2 years in the following investment vehicles:
P2P Investing^
Fixed Deposit
Unit Trust*
Average rate of return
7.85% p.a.
4.50% p.a.
5.79% p.a.
Total returns
^ Based on Investment Note ID 16 with B3 grade. 
* Based on the one-year bid-to-bid annualised returns for Affin Hwang Select Bond Fund.

The above example shows gross returns, and have not taken into account the investment costs involved.
The returns will be automatically credited into your Fundaztic account, which you can choose to withdraw or invest in another investment notes.
3) Lower investment fees and charges
Investment cost is an important consideration for investors because fees and charges erode one’s investment earnings. This becomes an even more important factor to consider when your portfolio performance is below par.
Here’s the investment cost for P2P investing, if you are investing RM30,000 over 24 months.
Fee Type
Verification Fees
RM0.00 – RM50.00
One-time platform verification fee charged upon making the first investment.RM0.00
Transaction fees
RM0.00 – RM3.00
Fee charged for each investment transaction that is successfully made.
Platform Management Fees
1% of monthly repayments
Fees charged by the platform for managing the health of the invested notes for the duration of the notes / financing tenure.(RM 1,446.25 x 1%) x 24 months
= RM347.10
Withdrawal processing fees
RM0.11 – RM1.00
Transaction charges (such as IBG, FPX) if any as charged by the banks
Total costs over 24 monthsRM347.10
Compare this to the cost of unit trust investment of the same amount and tenure:
Fees & charges
Initial feeSales charge
Up to 5.50% of the NAV per unit
Annual management feeUp to 2.00% per annum of the
NAV of the Fund
Annual trustee fee0.06% per annum of the
NAV of the Fund
Total costs over 24 monthsRM2,886.00
Based on Affin Hwang Select Bond Fund NAV unit price of RM0.6848 as at September 08, 2017.

Comparing the fees and charges for both types of investment over the same period shows that P2P lending is a much more affordable investment. Currently, Fundaztic is not charging any verification fees for investors.
However, as with any investment, there are risks involved and it is important for an investor to understand his/her risk profile and the investment before taking the plunge.

What are the risks involved?

Understanding your risk profile is important before you take on any investment. At Fundaztic, investors are advised to take a questionnaire to gauge his/her risk profile, which will guide them in choosing the right investment note to invest in.
For example, for an investor between 30 and 40 years old with a Bachelor’s degree-level qualification, who would like to see moderate capital growth in his/her investments, would likely have a conservative approach towards his/her investments.
As indicated by this risk profile, the most suitable investment notes to include in the investment portfolio would be those graded A1 to B3 for funding private limited (Sdn Bhd) or partnership businesses.
Fundaztic uses the Risk Grade method to categorise “issuers” risk profile. There are 10 levels as shown in the image below. The grading is assigned based on several factors inclusive past credit behaviours as reflected in available bureau data and it will determine the amount of funds that an issuer can raise and the pricing that they must pay, among many things.

Source: Fundaztic
To help investors mitigate investment risks, Fundaztic also uses information from Credit Bureau Malaysia (CBM) report to determine the Probability of Default or PD of a business.
It is calculated using statistically valid models developed specifically for the Malaysian SME environment using various event triggers to determine how unlikely the credit will be paid in full. This will give investors an idea of the risks involved in a particular investment notes. The lower the PD, the lower the risk and the better the grade.
However, as with any investments, the higher the risk, the higher the returns. Investors should carefully analyse his/her risk profile before deciding on a particular investment note to invest in.
In short, P2P financing does have a place in your portfolio, but only if you understand how it works and the risks involved. One attraction is that you can start small with as little as RM50 plus also the significantly lower investment cost. For new investors, this is a good platform to try out as you build up your stake as you get the hang of it.

Click link to register today! Register now


Simpan dalam SSPN-i Plus & Menangi Ganjaran Tunai Lebih dari RM500,000. Peluang besar kepada lebih 2,500 Pemenang!
Another source of good investment is invest in your child education future. Plus it covers takaful insurance and you even might win big prize!
Klik link di bawah untuk tahu lebih lanjut lagi.

I’m Shahril Hamdan And This Is How I Spend

I’m Shahril Hamdan And This Is How I Spend

Shahril Hamdan is a man who wears many hats. But how many thirty-somethings do you know is the CEO of an oilfields company?
He joined Destini Oil in 2014 at a time when the oil and gas industry was ripe with tales of layoffs and losses.
And for the last three years, he has been hands on, putting all those experiences as a business consultant to use in tackling a battery of tests.
We caught up with Shahril to learn a little about his background, how he manages his finances and his aspirations for young Malaysians. Here’s how he spends.

Briefly tell us how you got to where you are today as CEO of an oil and gas company?
I joined Destini Oil three years ago upon its acquisition by the current parent company, Destini Berhad.
Prior to that I was working in a consulting firm, McKinsey & Company. Then, I got the opportunity to run this oil and gas services firm or drilling services firm, which was a very big jump from consulting for big multi-national corporations to actually running a local services company.
But I felt there was an opportunity for me to take the learnings I developed at my old job, to apply and see whether I was able to follow my own advice and how practical some of the consulting advice was to a real-world situation.
For someone in your position, doing what you do, share with us your money management rituals. How do you manage your finances?
Without going into too much details, I’m also involved in public life. So what I do with the salary and the income that I get, is that I tend to put them into three buckets.
The first is your personal type of expenditure: the day-to-day expenses, the groceries, and that holiday with the wife.
I am quite strict about making sure there’s always a buffer within this first bucket; so I have an idea of how much I spend every month on necessities.
I also have a second bucket which I use for my own expenses in my public life. So, if I need to travel, to do work, or if I need to fund some of the activities of a few non-governmental organisations that I run, I’ll use this bucket.
And the same process happens. I have an idea of what the mean expenditure every month is and I also know there are some months that would cost a bit more due to travel or just doing a lot more things.
So, I would plan and as I plan ahead – a month or two months ahead – to ensure that I have enough in that bucket to spend.
If there are times where bucket two is going down – I mean all these come from the same source: my salary – I will, sometimes, have to compromise or shift from one to another.
I really dislike doing that because I feel the discipline drops, but there are some times where you just have to.
So if you move, for example, from bucket one to bucket two, from the personal bucket to the work bucket, you may need to tighten belt for the next two months.
In this case, instead of going out for dinners three times a week, we go out once a week. Then you immediately see the results coming in – it’s those kind of strategies.
I also have a third bucket, where it’s for charity. Sometimes when I go to mosques and suraus, I would leave some money there. I try to do as much as I can.
Obviously it’s not the biggest bucket due to my expenses in buckets one and two, but I ensure that there is still something I can commit to every month. That’s the least I can do to give back for how lucky I have been in life.
Speaking of tracking your expenditure, do you use apps or tools?
I’m a bit of an old-school guy; I have an Excel sheet going.
I probably need to migrate at some point to an app to make it easier… but maybe this comes from my McKinsey days where Excel and PowerPoint were basically my entire life [laughs].
So, I’m very familiar and sort of versed in the mechanics of using Excel – I tend to use it quite quickly and conveniently.
But maybe I’ll try an app and see if it’s as convenient as people make it up to be. One day.
We are living in the digital age where there’s easy access to financial information. Is that a good thing?
I think this is sort of academic because you can’t control it like any other sphere of information.
Easier access to information is something we’ve got to accept as a given. The question is, is there enough financial education being given to young people especially on the different tactics and techniques to track your spending and to invest correctly and smartly.
That’s the question, right? So if there’s enough access to information about credit, there ought to be enough access to information about how you manage finances and how you think about it in the long-term.
Okay. So what’s the best way to handle credit?
Yeah, I read a stat the other day about 22,000 Malaysians under the age of 35 being declared bankrupt over the past five years. Clearly it is a problem to contend with.
I don’t know about advice but how I do it is I try to avoid personal loans, and I can share that I don’t have one, apart from credit cards.
And regarding credit cards, whatever your credit is, I don’t see that as your yardstick. I mean, banks can be quite cheeky sometimes, like all of a sudden they increase your credit to double whatever it is.
And you think, “Oh, I have more spending power.” I suppose you do, but I am quite prudent in the sense that because I track my expenses, I know how much I need to save in my first bucket.
So for my credit card expenditure, I try as far as I can to make full payment. As long as I can meet the full payment for that month, I am satisfied. This requires discipline.
Of course, there are exceptions to that, like maybe I want to get that guitar or I want to go on this holiday because I’ve worked really hard all year, then if I do any of these, I may not be able to pay the full amount, but I can clear it all within two or three months, so that the interest doesn’t hurt me so much.
I have gone as far as three months of not paying the full amount and that already got me jittery.

So that discipline of paying it off as quickly as possible… because there’s a way of racking up that credit limit and after that, you don’t change your lifestyle for the next three months and it just goes on and on, and you’ll carry a debt for the rest of your life.
Then, you’re just waiting for your bonus to pay it off, which is what I went through the first couple of years of my professional life.
I was just stuck with my credit limit and I just waited if there’s going to be a bonus on payday and then I’ll be able to pay off my credit card. Not the healthiest way of looking at things
On investments, what is your approach?
As a young person who doesn’t have a bucket of cash to be spending and investing around, I am quite balanced in my approach to it.
As a Bumiputera, I have access to Amanah Saham Bumiputera (ASB), and I’ve maxed out in terms of loans as I feel that’s a no-brainer. So that’s done, all the low-hanging fruits are done.
I withdrew some of my EPF for unit trusts. Not all of it but an amount I’m comfortable with to spread the exposures and risks because you know unit trusts are not going to be higher than your EPF returns… but they just might?
I dabble a bit in equity markets as a retail investor and I look at this the way a typical retail investor would.
So, I make some smart guesses about which counters/industries are going to show an uptrend or downtrend and I make my decisions accordingly.
Here you win some and you lose some, but for me, at this age, this may sound strange to Gen-Ys who want to make millions so quickly, but I am still at the tail end of learning these things and I want to let experience always guide me on investment decisions.
For me, it’s not about whether I win on that counter or whether I make money out of this investment in an equity market. It’s more of learning what did I misread, if I made the wrong decisions.
And hopefully, at some point, if I have more income and wealth to play with then I would have learned a lot from these experiences.
You are relatively young. Have you thought about retirement planning?
Retirement planning, sure. But retiring early, no.
And why is that?
Two reasons. First, I think it’s an unattainable goal for too many people and there’s something about Gen-Ys who do think a lot about this. There are a few examples of people who made it big, and they feel that’s something practical to aspire towards.
I don’t mean to say it’s impossible but it’s so improbable it ought to not be your guiding principle in life. Also, I doubt the people who were able to retire early set out in their early life to retire early. It’s more like, I want to do my best and if things go my way then I have that decision to make.
But you don’t work backwards. In this case, if you say you do, I think your thinking process starts getting muddle up and you start thinking of exiting early as opposed to making the right career decisions and letting things fall as they should.
The other reason is I enjoy professional life and I wouldn’t know what I’ll do if I retire early because I enjoy going to work, engaging with professionals, learning from one another and making tough decisions.
I enjoy holidays but I don’t think I would live my life as a holiday. That would be too strange for me.
Tell us the best money advice you’ve received.
It doesn’t grow on trees? [Laughs]
That it’s not everything. I’ve lived long enough to realise that there’s a point where the change in lifestyle based on money doesn’t necessarily equate better emotions or life or even utility.
And I am not a believer in this utility economics we’re taught in university anyway. I reject that notion partly because of my own experiences, in the sense that I grew up from being not-so-well-off to middle class.
I wouldn’t say I was happier then as I was when I was a kid.
Similarly, now, I’ve been lucky to experience a few salary increments, from when I first started working. You get to do different things, sure. I can go buy an expensive pair of shoes once in a while but it doesn’t give me joy.
For me, it’s about family, time you spend with people you care about. So I wouldn’t get too crazy about it.
As long as you are able to provide for your necessities, lead a fairly comfortable life or whatever you are used to, that’s enough.
In the next five years, what do you want to see changed/improved in the way young Malaysians handle their money?
I would like to see a reduction in private debt. I think young people, as we’ve discussed, have a lot to do with it. I am not blaming them but they are part of the private debt phenomenon.
Our private debt to GDP ratio is close to 90%. I think that’s something we need to be looking at more closely than, say, government debt.
There’s a lot of talk about fiscal debt and how we should address that. Actually, to me, private debt is a far more important thing to monitor.
What I hope is for young people to have enough of an income increase such that consumption is no longer driven by credit.
I think that’s where the country needs to look at very seriously, at how to increase productivity, wages and salaries. That’s your long-term solution, I think – driving growth through consumption that is not driven by credit.
So, I want that to change.
Lastly, who do you like to see answer these questions.
Nadhir Ashafiq, who runs
He made that transition from a steady income to running a start-up and I feel he has a good head on his shoulders to advice on some of these questions.

Simpan dalam SSPN-i Plus & Menangi Ganjaran Tunai Lebih dari RM500,000. Peluang besar kepada lebih 2,500 Pemenang!
Another source of good investment is invest in your child education future. Plus it covers takaful insurance and you even might win big prize!
Klik link di bawah untuk tahu lebih lanjut lagi.

Friday, September 29, 2017

Is Bitcoin Really the New Gold?

Is Bitcoin Really the New Gold?

There has been plenty of hype surrounding bitcoin and its increasing value, but is it really worth investing as much as gold is?

While saving money is important, investing it is really how we can grow our money the best way. And if you’ve been keeping up with investment news, you’ll have heard about how the cryptocurrency bitcoin have surged in value and how people have been clamouring to get in on the action. Some have even claimed that investing in bitcoin is comparable to investing in gold.
But how true is that? And should you start investing in bitcoin right away? Let’s find out.

Wait a Minute, Bitcoin and Gold Are Totally Different Things...

On the surface, yes. One is a shiny mineral with various industrial applications and aesthetic value, and the other is a cryptocurrency that exists digitally. However, both of these have some important similarities when looked at as investments.

Both are not tied to any government currency, which means they won’t be affected by geopolitical instability. This makes both investments attractive for people who are sceptical of traditional financial institutions or those who prefer to keep their finances separate from regular fiat currency.

Gold and bitcoin are also tremendously hard to counterfeit. Gold’s 5000-year old history of being traded as currency means we’ve developed a myriad of ways to weigh, track, and detect the purity of the metal. Bitcoin on the other hand relies on its encrypted system and complex algorithms (attributed to its blockchain technology) to ensure that no counterfeiting or fraudulent transactions with fake bitcoins could ever take place.

Another important similarity between the two is scarcity. The world’s gold supply is technically finite, and the more we dig up, the costlier it is to look for more, which in turn, will drive the price of gold even higher. Bitcoin also has a finite supply. The way bitcoin is set up, computers can mathematically “mine” for bitcoin, but there is an imposed limit to the number of bitcoins they can mine. Once this limit of 21million units is reached, there will be no more bitcoins, and where there’s a limited amount of something while demand is high, prices naturally increase to follow.

Okay, But Why is Bitcoins’ Value Getting Higher Recently?

There are several reasons for this, but without getting too technical, part of it has something to do with bitcoin’s underlying technology and efforts this year to upgrade the system to support faster, smoother transactions to help support its increasing popularity. In anticipation of this uptick in transaction volume and subsequently after the upgrade went live, prices soared.
A unit of bitcoin climbed from RM4,021 on March 16th to RM18,424 on August 16th. That’s an increase of 358% in the span of 5 months.

In comparison, gold prices per kilogram for the same period increased from RM165,756 to RM172,648. A relatively lower increase of 104% for the same 5 months.

That Sounds Great! I Should Get Some Bitcoin Right Away!

Whoa, hold on now. Just as with any hot new investment, you shouldn’t leap in head first without really knowing what you’re getting into. Especially since bitcoin is an entirely new asset class under cryptocurrency.

Since August, its value has actually dipped over some recent regulations by China. And while we’re on the subject, the legal standing of bitcoin remains a hotly discussed issue with widely differing opinions across the financial world. Countries have elected to tax itencourage itdevelop entirely new laws for it, and even ban it outright.

As far as Malaysia is concerned, while Bank Negara does not recognise it as legal tender and does not regulate bitcoin operations. This doesn’t mean you still can’t invest in it of course. It just means that if merchants offer to do business with this currency, that transaction isn’t recognised as legal. Which is tricky since bitcoin transactions are also non-reversible, so if you’ve been defrauded or scammed out of your bitcoin, there’s no getting them back.

An important thing to keep in mind is that unlike gold, bitcoin cannot function as a store of value. Since bitcoin is not linked to any government currency or any intrinsic value like gold, its price can just as easily drop to zero if enough people lose interest.

Another point against bitcoin is that it can’t yet be easily exchanged for cash. Unlike gold, which has an established history of trade and equally legal and valuable across country borders, bitcoin has different legalities and laws surrounding it and is more difficult to convert into cash in hand.

This is not to say you shouldn’t invest in it if you want to, we just want you to be aware of what you’re getting yourself into if you do. Remember: we’re a website with financial tips and stories, not an investment advice blog. All investments come with their own risks, and since bitcoin is a particularly new asset class, be careful and don’t expect too much!

Got it. So How Do I Get My Hands on Some Bitcoin?
Right now the most economical way to get some bitcoin is to buy them. There are a few ways you can do this:

A Word of Caution

Bitcoin’s decentralisation, detachment from government economy, and (near) untraceability means it’s also highly attractive for people who conduct illicit dealings. From demanding ransoms, money laundering, to the purchase of illegal goods, bitcoin has been the go-to currency.

With its current popularity as an investment asset, be aware that some people might take advantage of this and try to scam you by offering to “sell” bitcoins they don’t have. Be wary when using peer-to-peer trading services and make sure only to use trusted services.

Good as Gold?

Bitcoin is experiencing a bit of an upswing and is forecasted to continue is ascent, and it just might be a good addition to your investment portfolio. However, if you’re still on the fence about investing in it or even in gold, you can start small by setting up a fixed deposit account. It functions the same as a savings account with a higher interest rate, which makes it a good place to start. Good luck out there!

Tuesday, September 26, 2017

How to Use Credit Cards Responsibly

Using credit cards can be confusing. Many credit cards have a range of options and features that can be difficult to understand. In this guide, you will find everything you need to know about using your credit card in an effective and responsible manner.

Credit Card Management: What you should do

Although a credit card can make your life a lot easier, it can also make it more difficult. If you do not manage your credit card spending in a responsible manner, your credit card debt can start to drag you down financially. To help you prevent this, we have listed the best practices in money management:
  1. Pay your credit card bills on time

A lot of money problems start when you delay payment of your credit card bills. When you use your credit card, you are buying something for which you will pay for later. This is fine within reason, but if your debt starts to pile up, you will likely find yourself in financial trouble. Try to pay for things immediately, or within the 30-days statement cycle to avoid being charged interest and minimize the debt that you carry forward into your next statement.
  1. Make a budget for your credit card spending

A smart way to go about your spending is to predetermine how much you plan to spend on something. This can apply to anything, for example, monthly groceries, petrol, a large purchase or just your monthly spending in general. It is very useful to compare your expectations with your actual spending behavior. Additionally, your budget can help to keep your spending in check if you are struggling to make ends meet.
  1. Keep your credit history clean

Throughout your life, you will likely want to apply for various financial tools, such as a mortgage, insurance, or credit cards and personal loans. In order to be eligible for these products, you will need to satisfy certain criteria set by the bank. In order for a bank to trust you with a loan, they need to have confidence in your ability to pay them back. If your credit history, shows that you consistently fail to make timely repayments, this will reflect poorly in your credit score and your application might be denied. This can be very inconvenient, especially if you are planning to buy a house or a car.
  1. Know how much money you have outstanding on your credit card

It is smart to always know how much you owe. Review your credit card statement thoroughly each month to keep track of your spending, but to also spot any errors. You should be aware of your outstanding loans and when you plan to repay them. Creating debt repayment plans for yourself can give you great insights in terms of money management. For example, if you know when you plan to pay off your student loan, you can make a more realistic estimate of future spending.
  1. Keep an eye on your credit utilisation

Your credit card utilization refers to how much of credit limit you are actually using. , if you consistently have a balance of RM 5,000 on your card, your credit utilisation ratio for a limit of RM 12,000 is 42%. It is recommended to keep your credit utilisation below 30%, which means that your average credit balance is 30% of your credit limit
  1. Live within your means

Although this might seem quite obvious, it is recommended to never spend more than you earn. If your income is RM 2,500 you should not be spending RM 3,000 per month. By keeping your spending in check, you make sure that you don’t drown in credit card debt.
Your credit card is meant to be used for short-term financing. Even though many people use it as such, it is not ‘free money’. A credit card only gives you more flexibility in when and how you pay your bills, it does not make you richer.
  1. Create a financial buffer

You never know what might happen in your life. At any point, you could be faced with financial struggles that you had not anticipated. If you have an emergency fund for these situations, you can deal with financial issues a lot easier. For example, you could have a financial buffer of 3x your monthly income. This ensures that, in case you lose your job, you have three months of money left to keep your affairs in order.
  1. Become financially literate

If you don’t understand the basics of money and are not familiar with financial terms, you will not be able to make the right decisions when it comes to your money. For example, if you don’t know how a credit card works, you might start to use it irresponsibly. With any financial product, especially a credit card, it is important that you completely understand the risks and commitments involved.
  1. Save a portion of your income

A good and reliable way to accumulate savings is to set aside a portion of your savings. This is already happening if you are contributing to your EPF, but that money is specifically for your retirement. Next, to your EPF contributions, it is not a bad decision to save 10% to 20% of your net income and put it in an interest generating account. This will ensure that you have some funds when you need them, and if done over longer periods of time you will start to accumulate a significant amount of money.
  1. Always compare cards before you purchase a credit card

In Malaysia, there are large differences between interest rates and features for different credit cards. By comparing different credit cards, you can find the cards that best match your requirements. You can use our site to save time and money, by comparing credit cards across a wide range of banks.

Money Management: Mistakes to avoid

With the range of financial products that are available today, it is incredibly easy to accumulate a significant amount of debt. If you have a mortgage, a personal loan and a credit card; your income might be heavily dragged down because of interest payments. To avoid living in debt your whole life, we have listed the top mistakes to avoid when managing your money.
  1. Don’t live to wait for pay day

Most of us get paid on a monthly basis in the form of salary. It’s easy to fall into a pattern where you are spending your entire income until your next paycheck comes in and then start over again. If you do this, you will never accumulate any savings and your financial situation will remain the same. If you want to see an improvement in your money management, it is recommended to start accumulating some savings and cut you spending.

  1. Don’t use your credit card to buy things you can’t afford

Your credit card is essentially a tool that allows you postpone a payment. It is not cheaper than paying directly, but it is very popular because it allows people to buy stuff that they cannot afford right now. If you catch yourself using your credit card because you have no other option, you are using your credit card the wrong way. This kind of behavior will make you think it is okay to buy things you can’t afford, thinking you just ‘pay later’. It is therefore recommended you only use your credit card in emergencies and generally pay for things right away.
  1. Don’t hide your money issues

If you are having money issues, it is generally not recommended to hide that fact. Although it can be embarrassing to admit that you cannot make ends meet, it is better to ask for help than to go further into debt. There are a lot of places where you can get quality financial advice to help you manage your money better. Don’t be afraid to ask for help!
  1. Avoid getting scammed

In Malaysia, financial scams are very common. Don’t fall for investing schemes that promise you unrealistically high returns without doing anything. You can generally assume that higher returns come with higher risks. Be sure to thoroughly understand anything you put your money in. Don’t just assume something is generating returns just like that. Making money is hard and making money without putting in work is borderline impossible, so stop looking for the easy way out, it does not exist.
  1. Stop comparing yourself to others

There are always going to be people who have more or less money than you do. If you are always going to compare your income with others, you will never be satisfied. If you are comparing yourself to people who have more money than you do, you might try to adopt a lifestyle that you cannot afford. This kind of behavior can make you go into debt very fast. Stop comparing yourself to others and start living within your means.
  1. Resist shopping on impulse

Even though it is okay to indulge once in a while, you should avoid buying things on impulse. Especially when using a credit card it is very easy to buy things on the fly. Impulse buys are generally not well thought out and you might regret the purchase later. Especially if it is something that you cannot afford.
  1. Don’t borrow too much

Borrowing too much money can be a significant driver of debt. If a substantial amount of your income goes to interest payments, you will not have enough income to support your lifestyle, and you will go further and further into debt. Do not borrow more than you absolutely need and pay off your loans as soon as possible.
  1. Don’t forego insurance to save money

Although it might seem at times, that you are just having insurance for nothing, it is important as it protects you and your finances just in case something goes wrong. If you have a bad car accident and you are severely injured, your car insurance and your health insurance will make sure that your bad fortune does not affect your finances. Therefore, it is important that you keep at least your very basic insurance plans, such as health insurance. Don’t insure too much but definitely don’t cut down on your essential insurance plans.
  1. Don’t neglect your retirement savings (EPF)

Although you might not see the point right now, your retirement savings are an important part of your future. If you want to be able to retire comfortably at a reasonable age, you are going to have to start saving money for your retirement. Your EPF is already a start, but you should supplement your EPF with additional retirement savings to make sure you can keep on living comfortably after you retire.

Should you get a Credit Card or Personal Loan?

The decision between a credit card and a personal loan can be a complicated one. Both are essentially debt instruments but their use varies a lot. The main different between a credit card and a personal loan is flexibility.
A credit card allows you to decide how much you borrow and how much you pay back on a monthly basis. Credit cards are tailor made for relatively small purchases. For example, for some credit cards, you can get cashback on certain spending categories, such as petrol or groceries. A lot of credit cards also come with promotions and rewards that can further reduce your monthly spend if you use the card frequently. If you are looking for a little more flexibility in your monthly spending, a credit card is an excellent choice.
A personal loan, however, usually has a fixed interest rate and fixed loan repayments. You are also committing to a fixed loan amount up front. This kind of debt is ideal if you try to finance a big purchase, such as a car or a kitchen. The fixed nature of the loan makes this kind of debt ideal for such purchases.

How many credit cards should you hold?

Credit cards are increasingly common and easy to obtain. Many people have 2 or 3 credit cards with various balances, but is that actually smart? Even though more credit cards can mean you can buy more right now, it might not be a smart financial decision if you consider all the additional annual fees and interest on the debt. If you have a lot of outstanding credit card debt, the combined fees might be too much to handle.

Why would you want more than 1 credit card?

There are several reasons for having more than one credit card. The most common one is that different credit cards have different benefits. You might have one credit card for petrol purchases and one for groceries. The different cashback rates might make it appealing to have multiple credit cards. However, the amount of savings you generate on cashback should be more than the annual fee to warrant an additional credit-card.

Is it smart to have multiple credit cards?

Your combined annual fees on credit cards owned can negatively affect your credit rating and it is therefore recommended to keep the number of credit cards to the bare minimum, taking into account the variety of different credit card benefits.
That means that if you have the spending pattern to warrant it, it could be beneficial to get credit cards that would allow you to capitalize on that spending. For example, through cashback from specific purchases. Do not make this decision lightly, however, as the added annual fees are going to be a drag on your income.

Should you share your credit cards with your spouse?

If you are a single earner supporting a family, you might consider getting a supplementary card for your spouse. Before you make that decision, you should consider the following points:

What does it give you?

A supplementary credit card can give you a lot of benefits. For example, it allows you both a bit more flexibility in your spending because you don’t have to make payments for your partner. Your partner does not have to go through you anymore and is now empowered to make his or her own decisions.

Do you agree on the rules?

Before you commit to sharing credit cards, it should be clear to you both on how the cards are meant to be used. Clearly lay out your expectations so there won’t be any surprises later. For example, if you are not clear; your partner might go on a shopping spree with your credit card, which is something you might want to avoid.

Does a supplementary card save money?

If you both have a very different spending pattern, it could be beneficial for you both to use cards that correspond with that. In this case, a cashback credit card can save you a lot of money.

What is the level of disclosure?

Before you agree to share credit cards with your spouse, you should agree on how much you want each other to know about your spending. You might agree on a certain level of spending but not on what to spend it on. It could also be that you don’t want your spouse to know about a certain expense on your credit card. In this case, you should make clear what the boundaries are in terms of privacy.

Do we share a credit limit?

If the credit card is still in your name than your credit limit will apply to your supplementary cards. This has some implications because even though you are both using the credit cards, you carry the end responsibility to service the debt.

Does a supplementary card affect my credit score?

Yes, it does. As long as the card is registered in your name, you are responsible for it. This means that your performance with supplementary cards also affects your credit score and not the score of your partner.

How to use installment plans


What are installment plans?

Instalment plans are a feature of credit cards that allow you to turn your credit card debt into repayments with 0% interest. This is ideal if you plan to make a purchase that you will not be able to pay back in the next month. If you would use your credit card for these purchases, you would have to pay interest on the excess debt.

How do installment plans work?

Similar to other purchases made with your credit card, you will have to pay the installments on time, otherwise there will be consequences. For example, if you miss your installment payment, the 0% interest rate may be retracted without notice and you will be charged with normal interest rates which could range between 12%- 18% of the entire outstanding balance until you pay it all off.
Therefore, in order to optimize this feature, you must be disciplined and not miss any payments. If you miss any payment it may result in you paying a lot more because of the penalty and revoked 0% interest!
Aside from that, some banks will allow you to opt to pay the 5% minimum amount instead of the agreed monthly installments. But it is important for you to know that if you pursue this option you will still be charged with interest on the outstanding amount.

When should you use an Installment plan?

Electronic gadgets, like a new mobile phone or laptop, can be expensive and can set you back financially. If you make the payment with your credit card, but cannot afford to pay off the amount in full at the end of the month, you will then be incurring interest every month on the outstanding balance. So, if you’re thinking of upgrading your phone or are in the market for a new gadget, look out for installment plans so you won’t feel like you’ve just had to part with a huge amount of cash in one go.

When should you not use an Installment plan?

Services like gym memberships or salon packages. Keep in mind that you will still have to make installment payments to the bank even if a service provider goes out of business. So avoid using EPP to pay for services. Here’s another word of caution. Don’t make purchases that you cannot afford. EPP should only be used so that you can have better cash flow instead of having to use up your cash for a big purchase.
This is because even though you can make various types of purchases in installments, you can lose your money if you are not disciplined. If you miss your installment payment, the 0% interest rate may be retracted without notice. You will then be charged with interest rates that could be as high as 18% for the entire outstanding balance until you pay it all off! On top of that, they may also be late payment charges, so you end up paying a lot more in the end.
Remember using an EPP will also affect your credit card’s available credit limit. For example, if you have a credit limit of RM 10,000, and you use an EPP to buy a new mobile phone that cost RM 3,300, you will now only have RM 6,700. Even though the EPP affects your credit limit, it will return to normal as you pay off your installment payments.

How to use a balance transfer card

Are you looking to resolve your credit card debt? Learn how a balance transfer can work in your favour and help you to clear your credit card debt faster.

When should you use a balance transfer?

The main advantage of a balance transfer is the low-interest rate or 0% interest rate depending on the amount of your transfer and the time frame for repayments. This will then provide you with lower monthly payments by consolidating all your credit card debts under one card.
For example, Sarah is currently paying RM 10,000 on a credit card with an 18% interest rate. With a balance transfer to a credit card that charges 0%, or even one that charges 3% interest rate, she will be paying less on her monthly installments as a result of the lower interest rate.
Aside from the lower interest rate, a balance transfer will also help you to clear off your credit card debt faster because of the reduced charges incurred. This means that a balance transfer can provide you with a solution to clear off your credit card debt. Additionally, you can also improve your credit score with a balance transfer, however, this is provided you fulfil your monthly obligations diligently and promptly of course.

How to take advantage of your Balance transfer

  • Balance transfer only works when you switch banks
  • The 0% interest is usually only active for 12 months, after which the bank might switch to 18-20%. If you plan to hold debt longer than 12 months, it might be better to get a debt consolidation loan instead of a balance transfer card.
  • The interest rate is not the only thing that you should be paying attention to. A balance transfer card might have a 0% interest rate, but this might be accompanied by additional fees for example administration or processing. A 3% fee on a six month 0% balance transfer equals a 6% interest loan, which is still quite low, but definitely not 0%.
  • Some banks have different balance transfer rates depending on how much money you plan to transfer.
  • Some banks require you to repay the entire transfer amount within a certain period, while other loans might not have a fixed repayment time frame.
  • Once you have transferred all your credit card debt, you should cancel your old card to avoid paying unnecessary annual fees.
  • The 0% interest rate only applies to the debt you transfer, not for any new purchases you intend to make with your new credit card. For these purchases, you will likely pay around 18%.
Always make sure you understand the exact cost and have a plan in place to pay off the debt before the end of the promotional period.

Does a balance transfer affect your credit rating?

The effect of the balance transfer on your credit rating is entirely up to you. If you are consistent in making your repayments you might actually clear your debt faster, which would increase your credit rating. However, if you do not fulfill your credit obligations, a balance transfer could lower your credit score.

How to use debt consolidation to reduce your credit card debt

A debt consolidation loan is a type of loan that you take to consolidate or combine different debt products you have. For example, if you owe RM 8,500 and RM 6,500 on two credit cards, plus another personal loan of RM 10,000, you can simplify these three separate debts by consolidating and paying for all of them in one RM 25,000 loan.
Debt consolidation can be a good choice if you have multiple outstanding credit cards or personal loans. You can choose longer loan tenure to bring down the monthly loan payment to a manageable level, commensurate with your financial capability and comfort.

How does debt consolidation work?

By getting all your debt consolidated into one loan, you can reduce your your total interest payments because the new interest rate might be lower than the weighted average interest rate that you used to pay on your credit card debt. Next, to being cheaper, it also gives you a much better oversight of all your debt because everything is consolidated into one loan.

Should you get a debt consolidation loan?

You should only get a debt consolidation loan when the interest rate on the new loan is lower than the weighted average interest rate on your outstanding debt.
A debt consolidation loan can also be used as a last resort. If you are overwhelmed by your debt repayments, you can use a debt consolidation loan with a longer term to lower debt repayment amounts to lower levels.

How to get out of debt

No matter how good you manage your money, you might still end up in a situation where your debt just keeps piling up. If you are convinced that you won’t be able to resolve your debt issues by yourself, you can contact the AKPK to discuss your options.

What is AKPK?

Agensi Kaunselling dan Pengurusan Kredit (AKPK) or the Credit Counselling and Debt Management Agency was established by Bank Negara Malaysia (BNM) as part of a Consumer Protection Framework under BNM’s 10-year Financial Sector Master Plan. Although AKPK was originally known for their debt management services, they are now focusing on providing services for three main categories; financial education, financial counselling sessions and debt management program to Malaysians.

How does AKPK work?

AKPK will develop a personalised debt repayment plan for individuals who are unable to manage their monthly repayments to banks. An individual will have a one to one session with an AKPK officer where they will calculate their financial commitments then proceed to work out a restructuring plan which will usually take between 8 to 10 years to complete.

When is AKPK useful?

The financial advice given by AKPK is useful for anyone who is struggling to manage their debt. The debt management services that are being offered by AKPK are recommended to people who are confident they will not be able to manage and repay their debt themselves. Do not hesitate to contact AKPK and discuss your options.

Do you qualify for AKPK?

You have to apply for AKPK before bankruptcy is filed against you. The basic requirements for you to enroll in the Debt Management Program (DMP) program are:
  • Have not been declared bankrupt
  • Not in an advanced stage of litigation with banks
  • Debt not amounting to more than RM2 million.

Where can you apply for AKPK?

To apply for this program, the first step is to fill up the online application form for the Debt Management Program. After which you can proceed to set up an appointment at the nearest AKPK branch to you, prepare the documents you need to bring and attend the counselling session. Do take note that AKPK does not deal with hire purchase or housing loans under the DMP and while enrolled in the program you will not be able to undertake any credit facilities from banks. AKPK has a total of 11 branches and 26 counselling offices across Malaysia, to find the nearest to you click here or you can call the AKPK Infoline at 1-800-88-2575.
If you do not qualify for AKPK, your only remaining option might be bankruptcy.

How to deal with bankruptcy

If you have been negligent in repaying your debt, your creditors can file bankruptcy against you with the Malaysia Department of Insolvency. If the case is valid, the Director General of Insolvency (DGI) can seize your assets and sell them for proceeds to pay your creditors.
Bankruptcy is the final straw for people who cannot repay their debt. Depending on what kind of debt you have you could lose everything from your house to your car. Unless you have almost no assets of value, a bankruptcy should be avoided.

Filing Personal bankruptcy

When you declare bankruptcy, your case will be handed over to the DGI. In order to settle all outstanding debts, the DGI will investigate your current financial position. Any assets or properties you might have will be sold and the proceeds will go to your creditors.
Bankruptcy is a very tough situation to be in. If you declare bankruptcy, you will face the following restrictions:
– You have to give up all your belongings and assets.
– You are not allowed to open a bank account without the approval of the DGI.
– You are not allowed to travel outside the country without first getting approval from the DGI or the court. The DGI will hold your passport.
– You are not allowed to do any business nor become a company director nor even be part of the company’s management.
– You have to sacrifice a certain percentage of your monthly income to the DGI to repay your debts.

Effective Money Saving Habits

The best thing to do to make sure you avoid financial trouble is to internalize effective money saving habits. These are things you can do without much effort, which will decrease the chance of you going into debt or otherwise mismanaging your money.

Save before you spend

To really take your savings to the next level, you can start saving before you spend. If you look at your savings as just another expense, something that you have to pay, you will be much more diligent in contributing to your savings. Don’t even make it a decision, just think of it as an expense that is due to yourself. You have to pay it, period. You can even set up your bank account to automatically transfer a percentage of your income to your savings or investment accounts, this will make it much easier to stay consistent.

Don’t inflate your lifestyle after an increase in income

Most people will follow up a bump in pay with what is called ‘’lifestyle inflation’’. You suddenly have more resources at your disposal, which makes you want to increase your spending pattern. Try to ignore this temptation and instead increase your EPF or savings contributions, it will have a much larger pay off in the long run.

Track and compare your spending

By tracking your spending and comparing it across months, you will get a much better idea of what and where you are spending your money on. Our minds are subjective and you might perceive your spending pattern in a certain way, even though it might be very different. By tracking your spending, you will supplement your decision making with hard data. See what your biggest spending categories are and try to be frugal in the right areas.

Set financial goals

A good way to check if you are on track is to set financial goals for yourself. This can range from small daily goals to large 10 years plan. The important thing is that you create consciousness for yourself about your spending. For example, you could say ‘’my maximum spend today is RM 50’’ or you could say ‘’I want to be completely debt free by 40’’. Both statements create a frame of reference for yourself that you can use to benchmark your financial progress.