Why SGD?

I have been advocating lately about keeping some cash in SGD.(I know this sounds a bit like a Malaysian "traitor" and will be condemn badly by Tun Mahathir if he came across my blog). Many might just ask me, why SGD ?
Singapore has been suffering from high inflation lately with steep fall in export revenue especially last two months. My wife visited Singapore 2 days back hoping to get some nice shirt for me and guess what, the same shirt I bought last year cost more now even during the Great Singapore Sale! Inflation, this is the reality that we have to face it, even in Singapore.
Singapore has limited land and manufacturing activities will not be able to sustain Singaporeans' cutting edge lifestyle anymore. Singaporean government, dubbed The Singapore Inc. , is gradually changing Singapore into a high tech, commercial and financial economy driven country. This reminds me about SimCity game where old factories are gradually faced out and replaced by high tech research labs and commercial offices as your population grows and as the city gets better.
This is what exactly Singapore is doing. No doubt, introducing stronger currency will hurt manufacturing driven economy especially South East Asian countries. Therefore, by getting rid of low cost manufacturing, strengthening the local currency will bring more good than bad. As the country is less dependent on manufacturing sector, stronger currency will not deplete the trade surplus as country's income is not dependent on this particular sector anymore. On the other hand, strengthening currency will cut down inflation(for a small country that relies heavily on imports), attract talents to work with high salaries and also attract depositors to keep their cash in SGD with Sg banks. Yes, Singapore is morphing itself into the so-called "Eastern Monaco".(Monaco is a small country where a lot of Europeans keeps their cash with Monaco banks and makes the country super rich)
Let's do some simple analysis. Malaysian's MYR is depegged from Singapore's SGD since 1992. What are the changes in terms of % for MYR/SGD currency exchange rate from 1992-2008? The maths is simple:
1992 - SGD 1 = MYR 1
2008 - SGD 1 = MYR 2.4

(2.4-1)/1 = 1.4/1 = 1.4 = 140%

16 years with 140 % of difference is not bad at all. 8.75% per year on average, which is better than the all-time-high foreign FD interest rate NZD is providing. Sounds sexy , huh ?

Many of my friends did the math and told me, "Cannot be la, SGD cannot be keep rising. You mean it will rise until it hits the same level as USD, are you kidding? There is always a limit"
Let's look at 2007-2008 rates. (with reference from BNM website) During June 2007, the rates was 2.20 and as of 30 June 2008, the rates was 2.41, there is a 9.51% rise in terms of exchange rates. If SGD rise another 8 % by June 2009 , the exchange rate will be something like 2.6, which sound possible. Besides that, we are really not sure how Malaysia politics will mess up our entire economy, turning our currency into "banana papers".
Again, the next question, why SGD? Why not Euro, CHF or GBP? Haha, the answer is simple, Singapore is so damn near and Malaysian can even open an account with Malaysian MyKAD. In any case of emergency, you can withdraw your cash from Singapore on a day trip. So , why make your life hard?
So, if you have some cash to spare, this is a good and safe option to go for, don't you think so ?

The nightmare that came true: High Inflation Era

I was reading NST Online when the bad news came. Yes, the nightmare came true, fuel price hits RM2.70 per litre. Literally, if you are driving a Wira which consumes about 1litre/10KM, you will be paying about RM 2.70 for a Char Kway Teow which costs you RM4.50 5KM away (to and fro makes it 10KM) from your house. It's tough to imagine but it is happening in front of our eyes!
Everybody will be hit. Higher income group will be the least affected group while middle class people will suffer the most. We are witnessing a downgrade of middle class income group to lower-middle class income group. Our dear Tun M has given his thoughts from a leader's perspective There are also strikes by DAP asking for a decrease on fuel prices. What will happen next and what we can do as middle class?
Though I am not an economist, but I reckon that severe after effects will follow through, some of the after affects are as below
1. Rise of transportation cost
I bet you that even POS Malaysia will be increasing their rates for postage and delivery services. McD Delivery might charge you with a 50 % hike for their delivery services as well.
2. Stock market crash
The business will be hit hardly due to high cost of inflation and slowing down of local consumerism activities. Stock market will not crash immediately but throughout the next few quarters, businesses will feel the pinch.
3. Rising rates of BLR
Inflation will definitely happen. One of the best way to curb inflation is to increase borrowing costs. Beware if you are taking a housing loan with fluctuating BLR rates. To contain inflation, BLR can be raised to 8-8.5 %. If you are taking a 300K loan, it will mean that you will need to pay RM500 more per month if the BLR is fixed at 8.5 % instead of 6.75%
4. Decrease in Real Estates Value
I agree with real estate experts that properties situated far away from cities will suffer from depreciation. However, I certainly do not agree that higher end properties that is near to the city will experience a boom in prices. A lot of houses and apartments around high-end areas such as Damansara and Sri Hartamas are rented out as quarters for restaurant and cafe workers. With high fuel prices, fine-dining and entertainment industries will definitely experience a drop in business volume. With a lot of vacancies for house rental in high end areas, do you think the property value will go up?
5. Soaring prices of hawker food
Hawker food business might go to an end. Would you pay RM 7 for a plate of Char Kway Teow? This is the reality, hawker food will cost more than today's prices of RM4.50 on average. When a plate of Wan Tan Mee cost you RM7, you will be thinking, I would rather cook myself! Even a pack of Maggie Mee with an egg cost you more than RM1 now, what do you expect,:).
6. Gen Y learning curve
We are living in an era where Gen Y pampered kids finally started their life journey seeking jobs. Gen Y will have a hard time looking for jobs as they normally ask for high pay and unable to cope with stress. It's a time for them to learn what is hardship or the country will fail with low productivity.
7.Widening of social gap
Middle class income group used to be able to afford imported Thai rice, which cost about RM25 instead of RM50 now for 10KG. Yes, they still can afford it now but everyone will think twice before buying. A lot of middle class people will switch to value-for-money, which suggest a downgrade in their lifestyle and standard of living. It turns out to be, you can only purchase imported fragrant rice without second thoughts when you are taking a 5 figure salary. And sorry to Gen Y again, you can no longer afford a Vios on your own for your first job.
8.Reduce of Office demand
Many will opt for SOHO and business owners will look for cheaper locations which is closer to their homes. Don't you think so ?
9. Credit Card Woes
Credit card companies will be forced to increase their minimum wage requirements but many will still get it. Gen Y debts will be growing faster than ever. Savings will be something that is easy to talk about but hard to be put into practice, especially when you are living in city.
10.Depreciation of MYR
Malaysian Ringgit might fall to lower levels due to pulling out of foreign funds as our country has become less attractive for business. Buy some Singapore dollar or open an account in Singapore,:).

Disastrous. What can we do then ? How to survive in city with such circumstances? I have provided some tips in my previous post. But i would like to give more tips here, with regard to the hike in fuel prices.

Saving Tips
1. Work from home
Suggest to your boss that to work from home on alternate Fridays.
2. Use Social Network to Carpool
Somebody please create some apps to carpool using Facebook. Social network gives you the trust to car pool with unknown strangers.
3. Plan your shopping list
Plan your groceries to avoid having to go out again just to get some soy sauce
4. Optimized your driving speed
Drive at off peak hours and average speed of 90-100km/h if possible
5. Food delivery
If you often drive out for lunch or dinner, try considering food delivery once or twice a week.
6. Register for Online Payment
Online payment and banking can save your time and fuel.
7. Check catalogues before shopping
Buying gadgets in Lowyat? Check them in Lowyat.net. Avoid wandering around searching shop to shop. Your parking fees and time might not worth the effort. For hypermarkets, most of them are distributing brochures house to house now, check them before you shop.
8. Call less, Call for free using Flekx.com
Call mobile phones and pstn using www.flekx.com softphone. You can save a great deal!

Financial Tips
1. Fixed Rate Loan
If you planning to get a housing loan, go for fixed rate loan.
2. Cash
Keep some cash , probably worth 3-6 month of your pay, preferably some in foreign currencies.
3. Stock market/Mutual Fund
Reduce holdings in share market or mutual funds and wait for a downfall to enter again,:)
4. Properties
Try to get out of properties. This is a bad time to get a second property if you have already got one. Properties market will collapse if inflation is uncontrollable.
5. Foreign Currencies
Carry trade some foreign currencies especially SGD.

Look for other posting below for more tips!

Take care guys.

Should we change our lifestyle?

"Change your lifestyle!" This is what the government urges Malaysians to practice during this everything-is-going-up era. Personally, I don't agree with this statement. What does it mean by changing your lifestyle? Let me give you some example:

1. Instead of eating fragrant rice, change to brittle rice.
2. Instead of driving your car, ride a bike.(with no bicycle/motorcycle lanes on trunk roads)
3. Less movies, more RTMs & TV3s(or pirate DVDs)
4. Less Starbucks and mamak, make your own coffee
5. Buy less books and papers, view online (how about poor people who don't even have broadband?)
6. No Baskins/ HagenDazs, consume low quality ice cream with more chemical and trans-fat
7. Less fresh food , more canned food
8. Less overseas vacation, more Cuti-cuti Malaysia (becoming a frog in the well)
9. Use RON 95 instead of RON 97 petrol, take in more sulfur dioxide.
10. And many more downgrades.......

Come on. Everyone can downgrade, but we do not want to be forced to downgrade. Philippines has better standard of living compared to Malaysia 30 years back. What happened now? Yes, they downgraded their standard of living. They flee their countries too, working in Singapore, Malaysia, Hong Kong, Middle East etc. Do we want that to happen to us Malaysians?

We have been enjoying 20 years of prosperity from rich natural resources which is going to be drained out very soon. What's more left for us ? Nope, we don't have world-class Malaysian owned technology, product or knowledge. This leaves us with nothing. All that we can do is to CHANGE and DOWNGRADE our lifestyle! What else we can do? I will share on my thoughts about how we can maintain our lifestyle while going through this tough time in next entry. :) Leave your comments!

Preparing for recession

How can you prepare for recession?

1. Keep your job. If you don't like your job, tell yourself, you just need to bite through the recession.

2. Increase income stream. You can blog, proof read, edit content, pick up more freelance jobs to decrease your debts.

3. Budget. We tend to have a mentality of "i-am-okie-as-long-as there-is-leftover-for-this-month-income'. We don't really budget our cashflow. Create one now and cut off unnecessary expenses.

4. Call up your bank to reduce interest rates if you have a property. If you bought a property 3 years back, your loan interest can be as high as 7% per annum. As banks are getting competitive now, some banks are even offering a 4.8 % per annum interest rate for the entire loan tenure. If you are still tied to a 5-year locking period loan, write to your bank to reduce your interest, a penny saved is a penny earned!

5. If your housing loan is free from locking period, REFINANCE it! HSBC offers you very competitive package now!

6. Don't put all your eggs in one basket. Never always count on a single source. Diversified your investment, sources of income or even you business deals.

7. Start saving in high interest yield banks! Standard Chartered Bank offers you very competitive Flexi Deposit rates through e$aver Account !

8. Balance transfer your credit card loan to a lower interest rate bank if you have any card loan!

9. Recycle. Always purchase refill packs and use both sides of your paper. ;)

10. Indulge in small ways. Admit it, we will go crazy if saving like mad without indulging ourselves once a while. Indulge yourself in small ways. For me a Perrier with lemon after a days work makes my day!

11.Always look for vouchers. Credit cards and membership card provides hefty discounts for dining and retail. Always browse the websites for latest promotion. Why pay more for the same thing?

12.Buy and Sell in Lelong.com or Ebay. Your jacket is too small? Thinking of throwing it ? Convert it to cash! If you are thinking of purchasing a new gadget, tr to search it at auction sites. For a month or two old gadget,you can even get a 30-40% discount for the same thing.

13.Diversified your investment. Hedge your wealth. I will talk more about hedging in future. Many people do not know what to do before a recession even they anticipated it. Hedge your funds! Try investing in gold, you can open a GOLD account in Maybank, Public Bank or Ambank. Since gold price was tagging at USD600/oz few months back, I have been asking my friends to invest in gold, now it is near USD1000/oz!

14. Beware of REITS. If you invest in REITS. Pull out when recession is coming. You never know what can happen to properties during a recession. It much better to keep liquid cash.

Hedging is an interesting game. I will talk more about hedging in the next few posts. Believe me, if you play it right, you can even thrive during a recession!

The Recession Litmus Test

It has been a long long time I am out of blogging space. Life is busy, and life goes on. Since 2007, I have been anticipating a recession to happen by 2008. Haha, sometimes i just feel myself looking like the little chicken in Chicken D Little, telling everyone the sky is going to fall. Yes, it has not happened yet, and yet it seems like everyone is waiting anxiously for the "dooms day" to come. Aren't you?
I have thought about this a long time. Why just waiting? At times of uncertainties, what can we do to prepare ourselves or even thrive during a recession? Everyone has some idea but no one has really been putting plans into actions. So , I have came out with some general rule of thumb to prepare myself for the forthcoming recession.

The Recession Preview: The Recession Litmus Test
I am not an economist, but I really like to talk and study about economy. It's just so fun to explore more about supply and demand. These days, even without recession, times can be hard. Rising cost of food, energy and transportation is turning a 10 ringgit note to look more like a 5 ringgit note. However, we will always try to comfort ourselves, "the GDP last years was 6 %, how bad can it be?" . I have thought about it and some of the indications of recession is listed as below:

• Rising Costs of Living: creates inflation, people will have less disposable income to spend on luxuries, properties and hobbies. Eventually ,creating an economic downfall.
• Dependency on limited commodities income: Malaysia, as what Tony Pua mentioned in The Star, is depending mainly on CPO and crude oil income to sustain our economy. These 2 commodities is accounting for almost 50 % of our exports income. Another major income comes from electronics industry, which is also at the brisk
• Properties Overhang: The government has recently allowed Malaysians to withdraw their EPF monthly to finance their housing loans. This act is merely delaying the financial problem to 20 years after. (ppl will suffer during retirement as they have little savings in EPF). Although RM 9.6 billion financial floodgates has been open up, it merely causes goods to inflate. From my personal perspective, those who really need a property, will buy it even without this incentive. While those who has already bought, they will just have more to spend, which can be good and bad. (it will cause inflation although it might boost economy activities). This clearly will not be able to solve the property overhanging problems in Klang Valley. Once the bubble burst, everyone who owns a house will feel it.
• The CPO effect: CPO has a great effect on our countries economy. During days of 97-98, per tonne of CPO can only sell for RM400 versus the RM4000 we have now. I would say , the current CPO price is very shaky as we have experience CPO trading halted for twice due to panic selling this year. If the CPO price permanently drops below RM2000, w will have a problem.
• Stock Market effect: A lot of people like to refer KLCI as an economic health indicator but I prefer to analyse trading volume as indicator of economic health. Trading volume reflects the confidence level of consumers in stock market and it is clear that since Jan 2008, the trading volume has plunged drastically.
• Retailer inidcators: Let's wait for quarterly result from Jusco, Seng Heng, The Store, HSL, Amway and I will be able to tell you more!

I will share more about preparing yourself in the next post. Watch out for more, ;)

Planning for your lifestyle .....

A lot of my friends have been asking my opinion about financial planning. Everybody seems to understand Fixed Deposit (a.k.a. FD) is not the best way to grow ur money but nobody seems to be able to give the best advice in managing your money. This is the reason i named the title "Planning for your lifestyle" rather than "Planning for your finance".

Our financial needs, plans and protection depend a lot on our lifestyle. I would classify our financial distribution into 4 different areas: Expenditure, Savings , Investments, Protection.

I have write a lot about expenditure and income generation, let's not talk about it today. (starting to get bored about it). Therefore, we will discuss about savings, investments and protection. I would start with protection as I think a lot of people got trapped in this area when they enter their working life phase.

During the 90's, buying insurance is "the thing" that everyone should do to protect your family and you kins. Yes, everybody loves their family and hope that in the event of unfortunate happenings, their family is protected and income is assured. Less than many people actually know that a lot of people are over protecting themselves and their family which causes them to channel inpropotionate amount of their income into the Protection quadrant of their financial distribution. When you first started work, how much you actually have is probably less than RM 30K during the first two years of your working life. Insurance agents always like to persuade their client to invest in insurance as a form of Investment. This eventually confused a lot of insurance holders actually found out that buying insurance is a liablity rather than investment. If an insurance agent tells you that you only need to pay X amount of years to get yourself covered up to 70 years old, they are only telling you the half truth. Always read the fine lines before you sign anything. Most of the time, you are required to extend your payment period or they will deduct the amount from your promised bonus given based on your insurance premium. Therefore , I always suggest step protection - increase your premium as your assets and family grow. Besides that i always emphasize insurance as a protection; so , protect yourself with medical insurance rather than life insurance especially when you are single. Money is more important when life needs to be prolonged. So , never over commit for protection. My suggestion is to just commit less than 5 % of your income for insurance protection. Anything more than that will surely be a burden for young working adults.

Investment is always interesting to talk about. I am sure you always envy your friends who tells you how much they make from stock market. I will have an idiots guide to Malaysia share market later. However, I suggest that a young working adult should not invest more than 20 % of their income in shares. I will talk about the risk and share market analysis later. Trust funds is also good for investments. But, never over invest trust funds with your savings. I will also provide a study on trust funds which i have experience for more than 10 years. Generally, there are 3 types of investments.

High Risk: Forex & Commodity (very high risk), Equity (share market)
Medium Risk: Trust Fund, Properties
Low Risk: Bonds, Government-Linked Trusts Funds(eg. Amanah Saham Wawasan)

Savings? How much you should save ? Of course, saving as much as possible is the best! However, it is recommended that you save at least 6 months worth of your salary for rainy days. Never treat savings as investments, vice versa. Savings comes with very very minimum risk, you can say that it has no risk at all. (I think you never heard of any Malaysia bank went bankrupt for the past 10 years).

The last question you might want to ask me. What all these 4 things have to do with my lifestyle ? The lifestyle you wanted will determined where you should put your money in. If you choose to be single, you might be able to risk more. Therefore, you can invest more and put less money for protection. If you plan to have kids, probably you need to save more , and buy some protection for your kids. If you are still single and plan to get a girlfriend(for guys), probably you might want to put more money on expenditure(spend on clothes and perfumes) and investments(for marriage) while less on protection.

My next major entry will talk more about investment particularly on stock market. Watch out.

Generate cash out from You Tube !

A few weeks ago, my friend referred me to an MV in Youtube. It's called Muar's Chinese, (mind you , a bit vulgar).



Multimedia and Web 2.0 world is constantly producing millionaires and web celebrities everyday. When i first watched this clip, my first thought was ,"wow, this is a creative song, but what does he gain besides popularity?" I was proven wrong when i saw the song's selling as True Tones in Digi , Maxis and Celcom website. Click here for the song preview by Digi

Fellow multimedia and art professionals out there, You have another alternate source of income now!