How to Survive Retrenchment?

Most of us are lucky. We have never tasted the bitterness of retrenchment in our entire working life. However, as many firms are undergoing major organizational restructuring in order to cut costs, the risk is adverse. Adding salt to wound, a lot of companies have freeze hiring. Thus, retrenchment is something many people may have to face, whether they like it or not. Here are some tips to help you cope with retrenchment if you land yourself in such a situation.

1) Face It, Not Face Off

The initial reaction you will encounter would be shock and anger. You are shocked that the firm is willing to lay off a good employee. But you need to understand that this is not personal, it's business. After that, you might feel depressed that your firm did not value you as much as you though they did. You may even feel a depreciating sense of self-worth. But there is one thing you need to do - you need to get back on your feet. Share your feelings with your loved ones, your spouse and family. Do not carry the burden alone. Your family will be there to support you and help you work things out during these difficult times. Once you have accepted the reality of your retrenchment, you need to find out what to do next. How are you going to cope with it?

2) Assess Your Finances

While sharing the bad news to your family, you may also need to tell them that there is a need to adjust your current lifestyle to survive financially. You may get a nice severance package when you were laid off, but refrain from spending it on luxury items that depreciates in value such as a new car or a long vacation. Instead, you need to spend on things that will help you make more money. For instance, you may want to invest the money to make it grow or set up a business to make more money. As a family, look into how your family can save money by cutting down on daily expenses or switching brands.

You may think that you have enough to cover for the next 6 months, but the reality may be different. The amount you have may not even last that long. Besides looking at your cash flow, also assess your debts, savings and assets.

It is also important that you get enough medical or hospitalization coverage for you and your family. Since you have stopped working for your firm, you may find that no one will cover your medical expenses. Get one as soon as possible. The last thing you would want to do is to have to fork out lots of money on medical expenses during these times.

3) Skills Training

Assess your current skills to see if they are still relevant in the modern job market. If they are not, you may wish to upgrade your skills with extra training so that you can land yourself another job easily. In addition to technical expertise and knowledge upgrade, you also need to learn to refresh your resume writing and interview skills to help you clinch the next job. Also, the Malaysian government has been kind enough to offer free skill retraining program for laid off workers. So, let's just grab the opportunity and make yourself a more valuable asset to your future organisation.

4) Positive Attitude

It is important to have the right attitude from the beginning in order to cope with the situation. You may be retrenched but it does not mean the end of the world. Continue to network with friends and ex-colleagues to be in the loop about what is going on in your industry. You may wish to ask them to look our for a job opportunity for you and get their recommendation. At the same time, you may want to seek help at employment agencies to get another job. They may offer you a temp-to-perm job. Start off with the temporary position and if you do a good job, you will be employed full-time. Be open to various opportunities available. Don't waste time feeling sorry for yourself; you've got a life ahead of you.

5) Be flexible

You may find that there are limited job opportunities in the industry you worked in previously. If that is the case, you may have to find work in a different industry. Be flexible. You may have to undergo more training, experience a drastic pay cut, or irregular working hours. In order to get the next job, show your employer that you are willing to be flexible about these things. It is important to take whatever job you can get at this moment and continue to look for other opportunities as you go along.

Coping with retrenchment is never going to be easy. But if we take certain issues into perspective, it might be easier to cope. Having the right mindset is the most important tip I have here. From there, you need to formulate a plan to streamline your finances and look for another job. All the best!

Excerpts from: Sydney Hazelton

Why averaging up is better than averaging down?

We are in the midst of financial turmoil, again. I can appreciate the "turmoil" better now as I am relatively wealthier than I was 10 years back. Many has started to pop me with this question: "Is this the right time to buy shares? When can we buy ?"
There is no best answer to this. Even if Warren Buffet tells you to be greedy when everyone else is fearful, you got to have "bullets"(money) to be greedy! However, I would like to share my thoughts on averaging.
Many have told me that they have started to "average down" following the turmoil. These includes averaging down their trust funds, stock holdings or even bonds. For financial idiots, averaging down means buying the same equity/trust/shares at a lower price compared to the price you have bought previously to lower down your average purchase price for all units held, vice versa for averaging up. Why I prefer to average up instead of down?

1. The Percentage Trick
If you have bought ABC share at RM 1 each last month and now the price has fallen to RM 0.50, you loss 50 % of your share's value in your investment. Think about this, if you were to break even again, you need the share to gain a 100% increase. In order to make a same amount of RM0.50 gain , you need the share price to perform 200 % gain for the share to move from RM0.50 to RM1.50. Which do you think is harder ? To move down from RM 1 to RM 0.50 or to move up from RM 0.50 to RM 1? Mind you that we are talking about the same value of 50 cents here with a different gearing ratio.

2. Bull and Bear sequence
Strong bull does not visit share market often, so does the bear. If you notice, our market is stagnant most of the time, with less than 15% variance over 3-6 months. A stable market is always the best time to make good decisions. Stable market normally occurs after a great bear market. You can take your own sweet time to average up.

3. Catching a Falling Knife
Have you experienced that before ? Have you ever averaged down, causing your portfolio to stay in red for a very long time? This statement is very true, you will bleed. I have a friend who recently told me about the hidden potential of IOI group, as their stock price have fallen from RM 8.60 to RM 4. I have advised him to put that purchase on hold. IOI shares has since fallen from RM4 to RM2 now in just 2-3 weeks. During a turmoil, you will finally find out all the risk that a company is exposed to.

4. 真金不怕红炉火- Genuine Gold is able to endure the fire
During the good times, everyone is concerned about share price gain rather than dividend yield. Who cares how much dividend you make as long as the company is making big money and share price is up exponentially. Most of the time, investors are not told about the investment risk a company is exposed to and the debts-translated-benefits during the good times. All these will gradually surface during a crisis as companies are desperate to keep their books looking good. Unfortunate incidents on risk exposure(such as Enron, IOICORP) will less likely to happen when the market is picking up.

So, when the market is bottoming out? Or, would it be better to say, when the market is picking up again? My personal gauge, when the market is moving up 15 % again over a period of 3-6 months, it would be a good time for averaging up. It's always better to be safe than sorry, don't you think so?

Snippets: Malaysia Property Outlook

I have been checking out on different opinions on Malaysia's Property Outlook lately. Some of the interesting views and arguments I found.

http://malaysiafinance.blogspot.com/2008/07/frank-assessment-of-property.html

http://biz.sinchew-i.com/node/14940

http://biz.thestar.com.my/news/story.asp?file=/2008/7/14/business/21807128&sec=business

http://www.estate123.com/reviews_articles/article_review_detail.aspx?a_id=59

http://www.bnm.gov.my/files/publication/msb/2008/5/pdf/5.15.pdf

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!