Financial Health Check

While its common that we hear people visit their doctors to do their annual health check, its another thing to some of us that we should do a FINANCIAL HEALTH check at all! In fact the general response we get is...Huh! apa itu ~!! 

 

Just like the results of your blood test, which indicates the present state of physical health by which your doctor will review and diagnose your condition and subsequently prescribe the necessary remedy, the FINANCIAL HEALTH check does about the same but it is diagnosed by your qualified and competent FINANCIAL PLANNER (FP). Another way to explain this is...if you are on a long road trip heading to somewhere, you'd usually make stops to look into the map or perhaps even stop to ask for directions  to ensure that you are going the right way. An annual financial checkup serves the same purpose. It's an opportunity to review how you've done financially over the past twelve months and make sure you're still headed in the right direction, whatever you financial goal may be!
 
A good time to do your annual financial checkup is before the end of the year or if you find that is too much of a disruption to your holiday plans or partying moods...then make a note in your calender to do it as soon after the new year comes in. 
 
Here's what you should do...
Reveiw your Goals
The first step in your financial checkup is reviewing and evaluating your financial goals and objectives. If you are one of the smart few who have engaged the services of a financial advisor or financial planner (FP) to assist you with your wealth managements matters, make an appointment with him/her to speak about this. Please ensure that your FP is LQC i.e LICENSED, QUALIFIED and COMPETENT! Some important Qs to ask and discuss with your FP may include, have you made any progress with your objectives this year, if not..why? have any of the financial objectives change at all that requires resetting of your financial plans...have there been changes in your own personal situation that requires alterations to your financial objective.


Identify changes in your own Personal Situation
These personal situation changes can be anything from...a new job, a divorce (or for the guys...kahwin satu lagi!!), another baby (or babies...on account of the first and second wives delivering the same time), a new car, or even a disposal of one of your many cars, a passion in a new found hobby. Whatever these changes are, definite alternations in financial goals and objectives are necessary and you need to highlight this to your FP to make the necessary recommendations.

Asset Protection Review
We are most fimiliar with the term insurance but many of us fail to realize that insurance review is an important part of financial check up. Speak to your FP to review your asset protection situation on account of your changes in situation which includes houseowner's  insurance, health insurance, auto insurance. Don't forget to protect the greatest asset of all - your income earning ability - with long-term disability insurance.

Review your WILL / WASIAT 
Again this may relate to the changes in your personal situation...that pesky younger brother has finally gotten too much...he sneaked into your room to flick your INDIANA JONES COLLECTORS DVD and sold it to buy  tickets to TONY ORLANDO's concerts in GENTING!!!...and you no longer think he deserves mention in you WILL....REVIEW TIME!...Well you can catch my point here...if there are any particular changes that has taken place and require updating....discuss this with your FP.

Reveiw and Evaluate Your Investments
Are they meeting the targets and are you satisfied with their performance? If you are not sure of the direction, get your FP to share with you the market outlook and invite him to make recommendations.


List down and Evaluate Your "Hutang Piutang" (Debts) 
When you do a FINANCIAL HEALTH check, one of the important ratios to review is the debt to income ratio. This ratio tells you how much of your income goes to settling debts. How are you doing in this area? Is it within control? Has that credit card debt balance outstanding decreased or increased over the last 12 months? If it has been increasing, its best to figure out why? Remember, is important to plan for FUTURE CONSUMPTION too and this is difficult to do when most of your income is used for CURRENT CONSUMPTION. How else are you going to fund for that retirement?
Spend time too to review your housing loan mortgages and see if your FP has any idea about a new mortgage plan that can reduce your monthly commitments and perhaps at the same time reduce the tenure.

Prepare for the APRIL tax month...
During this month, you dread the nights when you are constantly jolted in your sleep with shouts from inside your head..."THE TAXMAN IN COMINGGG! THE TAXMAN IS COMINGGG!"...It makes Freddy KRUEGER run for cover too!!!"
This is a good time to plan for next year's tax commitments. What can you do to minimize them? Start to collect you reciepts of allowable deductions and put them in order for your LHDN submissions. It pays to be  organize. 

Review Your Retirement Plans
How much has the EPF fund grown over the 12 months. Is this sufficient for your retirement? Do you need an additional investment plan? Again you FP should be able to help you on this.
 
At the end of this check up you'd be in a better view of your FINANCIAL HEALTH...so how did you do? If your financial health is in good shape,  good on you!!!...if otherwise then you need help in your wealth management matters!

EPF Dividend Policy

Salaam and Good Blessings...

EPF will be announcing the 2009 dividends soon. If most of you are like me, you'd be keen to know what sort of levels will we be seeing this year. Lets tust take a quick look at how EPF did several years back.

In 2008 EPF declared 4.5% dividend to its members, which is lower than the previous year. EPF accounts this to "investment provisioning resulting from the sharp decline in global equity prices brought about by the worldwide financial crisis."

EPF made a huge provision of (RM4.6billion in the same year that they earned the highest ever gross income in 2008) due to reduced equity value as a result  of sharp fall in prices. This provision had effected their net earnings in an environment of not selling off their share holding. However, as the usual case of provisions, it will be written back once the market recovers. However, the announced dividend is definitely better than the 12-months FD rate offered by banks.

EPF declared that, of the RM4.69 billion provision described above, RM3.2 billion was allocated for overseas equities. In the FY2007 similar provision was just RM0.52billion. The reason for such a large differential is due the massive drop in equity markets especially in the fourth quarter of last 2008.

Despite this provisions, equities remained as the second biggest contributor to the EPF’s total gross income bringing in RM6.67 billion in 2008 compared to RM5.37 billion in 2007.

EPF proudly reports that their efforts and performance compares better than many other similar funds around the world. For example: (Source: KWSP)

The Government Pension Fund of Norway suffered a USD92 billion (RM340 billion) loss on its investments in 2008. (BBC News, 11 March 2009).
Temasek Holdings of Singapore suffered S$58 billion (RM140 billion) paper loss in eight months. (BT Singapore, 11 Feb 2009).
 
Government of Singapore Investment Corporation Private Limited (GIC) asset value fell 25 per cent from its peak. (Bloomberg, 5 March 2009).
 
California Public Employees’ Retirement System (CalPERS) suffered a USD68 billion (RM248.2 billion) loss in assets since October 2007 and a 41 per cent slide in its stock portfolio. (Bloomberg, 26 Feb 2009).
 
Khazanah Nasional Bhd suffered a loss of one fifth of its investment portfolio and its realisable asset value of RM88.2 billion as of May 31 was reduced to RM70.4 billion at the end of 2008. (BT, 20 January 2009).

Granted that they did better than most of the benchmarks above, we do wish that the soon to be announced dividends will help us enough to protect and build our retirement nest egg.

For your information, EPF's 10 years and 20 years average dividends are 5.18% and 6.34% respectively.  If you are comfortable with these numbers then you don't need to do anything...but I can tell you that many aren't pleased.

There have been an increase in EPF members who withdraw from their Account 1 to invest in alternative instruments that can give better returns.

Unit Turst investing has been the favorite vehicle for most of them - as 71% of members withdraw to invest in unit trust.

When your retirement future is jeopardized by low providing instruments, you ought to review your retirement planning with your financial planners to ensure a secured lifestyle...

May this image of peace, security and contentment be yours too. when retirement days comes around..

Do you find it difficult to save?

Salaam and Good Blessings

Most people take saving as the least important agenda on their monthly checklist...an afterthought.
When we get our salary or any form of income for that matter, there is always the long and almost endless list of things to attend to (mostly bills) before savings is addressed. The only time money is put into savings is when there is ANY money left after the obligations are attended to...sounds familiar?

C.S.I.
No, it is not to mean the famous TV series CRIME SCENE INVESTIGATION, but for me its to abbreviate the three things you need to give attention to and in the sequence it is described.

C- Commitment
Attend to your commitments first when you recieve your salary or any other form of income. It can be statutory commitments like EPF or SOCSO and even TAX and ZAKAT (for some of us). These things you cant get away from else we will attract more trouble with the law.

However there is another forms of commitment that you can control and which takes good planning and a sound and clear vision of your financial objectives and goals. These commitment come in the form of Mortgage Payments or Rent, or Hire Purchase payment. Best to plan these commitment within your budget so as it does not take away too much of your take home pay or else you will not have any thing left to live by.

S- Savings
Take this item seriously and put it as high on you monthly list as possible. Some good planners will recommend that you lump this item together with C above otherwise it will be forgotten and neglected.
One of the best way is to do this is automatic deductions form your savings or current account into your savings or investment program. Most banks have these arrangements for you with a simple form filling process at a small fee.

I - Indulge

With whatever is available after the two above have been attended to, you may enjoy your lifestyle. Do remember though that its advisable to enjoy only whatever is left and don't try to over size your lifestyle. Manage your HP bills and those eating out sessions with friends and family and as hard as it is but try to control yourself when YES (YEAR END SALE) comes around. Also "Leave home without it" (...that credit card that is)

The problem with most of us is we either practice "C" and then we do the "I" or even we drown ourselves in "I" and only sometimes look at "C"... and then we wonder how come we can't "S"..

Set the sequence right . REMEMBER.. C- S- I and enjoy that TV series too!

Go online to save your time...!

Salaam and Good Blessings...

Most of you have investment program with me via PM. Do you know that you can easily access your account via online?

It is a secured, easy and convenient facility which allows you to conduct investment transactions and make inquiries through the internet anytime.

You can make additional investments and also initial investments into new fund accounts if you are an existing unitholder. You can also pay for your investment transactions via PBebank and participating member banks of FPX (Financial Process Exchange).

Enquries can also be made online...about your investment details like SUMMARY of ACCOUNTS and TRANSACTION DETAILS.

With E-statements and E-Reports you can enjoy faster access to your account information.

With E-statemetns you can view your Statement of Transaction, Interim/Annual Statement, Quaterly Account Summary (for Mutual Gold Only) via online.

For E- Reports, you will gain access to Interim Reports and Annual Reports of your funds of investment.

You can also change your password, distribution instruction and update your personal information without the need of form filling and queuing at the bank for submission. This translates to more time for yourself to do what you do best to accumulate your wealth!

For more information, visit any PUBLIC MUTUAL BRANCH or call Customer Service Hotline at 6207 5000 or call me!

GO ONLINE TO SAVE YOUR TIME!....