Dividend Magic

Saving and Investing towards Financial Independence in Malaysia

Investment

Rakuten Trade – Review and FAQ

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Filed Under: Investment, Dividends 59

Welcome to our Rakuten Trade review and FAQ guide. In this article, we dive into Malaysia’s popular online trading platform—examining its key features, fee structure, and overall performance. Whether you’re new to investing or a seasoned trader, you’ll find the insights you need to determine if Rakuten Trade fits your needs as an investor.

Rakuten Trade Referral Code

First off, if you’re thinking of registering for a Rakuten Trade account, and looking for a referral code, please consider supporting me and the blog by using my referral link hERE or with the code: DIVMAGIC

Just make sure that this section is filled this way:

You will earn 1,000RT (RM10 equivalent) points upon successful activation of your account.

Thank you in advance for supporting me and the blog.

Personal Finance and Investing

Personal finance and investing form the core of your financial journey. You should view personal finance—savings, protection, and insurance—as your defence, and investing as your offence.

I have articles on these that you can check out, too many to list them all here but let me start you off with a few:

Personal Finance

Investing

Latest News: Rakuten Trade’s lowest of the low brokerage fee

Rakuten Trade has revamped its fee structure, both locally and for international markets.

Rakuten Trade is currently the lowest against local brokers’ non-promotional rates for a trading value below RM9,999.99 for MY, US & HK Market (trading in MYR) and below USD990 trading value for US market (trading in USD).

More info officially from Rakuten Trade here.

The visuals below will speak for themselves. They’re one of the cheapest and most competitive brokers now in Malaysia.

Rakuten Trade 2025 Latest MYR brokerage comparison Old Vs New
Rakuten Trade 2025 Latest USD brokerage comparison Old Vs New

My New Investing Strategy for 2025

Starting Match 2022, I invested RM1-2K per month in Vanguard’s S&P 500 ETF (US: VOO) via Rakuten Trade.

For my Malaysia stock portfolio, The Freedom Fund, you can check it out here. I update this quarterly.
I also update my dividends received monthly via my Dividend Income Update 2025 page.

If markets do drop and if a big dip happens, I might be investing a larger amount that month. This will be a very passive investing strategy and I’d like to invite you guys to try and do the same. Instead of picking your stocks and timing the market, buy the whole US market. I think in 10-20 years, you’ll be thanking me.

I won’t go into details about the benefits of long-term passive investing, if this is unheard of to you, I’ll leave you with this write-up on Warren Buffet’s $1 million bet on passive investing vs hedge funds.

May 2023 Portfolio Update

Rakuten Trade – Latest Brokerage Fees

Rakuten Trade MYR Brokerage fee 2025
Rakuten Trade MYR Brokerage fee 2025
Rakuten Trade USD Brokerage fee 2025
Rakuten Trade USD Brokerage fee 2025

For a retail investor like me, with their new foreign trading fees, and the ability to trade in different currencies, it’ll be safe to say that Rakuten Trade offers one of the cheapest and more flexible options right now here in Malaysia.
So, in short, if you’re planning to buy US stocks, you can try Rakuten Trade. Assuming no currency exchange fluctuations of course

Forex Rate

Conversion rates will be competitive as per the briefing I attended. This will have to be tried and tested when they eventually go live.

Registration and Activating Foreign Trading

With the fees out of the way, I urge you guys to go ahead and open and activate your Rakuten Trade Foreign account right now. It can be done 100% online. Go register, activate and test the platform out together with me.

Step 1: Open your Rakuten Trade Cash Upfront Account

If you’re new to Rakuten Trade, you’ll need to first open a basic Rakuten Trade Cash Upfront account. Please consider supporting me and the blog by using my referral link hERE with the code: DIVMAGIC. You’ll also receive 1,000 free RT points (updated for 2023) which can be used to offset your brokerage fees!

Step 2: Activate Foreign Trading

Then, you’ll have to log in to your Rakuten Trade account and activate Foreign Trading. This can be done via the website or through their app. If you’re already an existing Rakuten Trade user, skip Step 1 and just proceed with Step 2.

Rakuten Trade – One of Malaysia’s Best Brokerages

Moving on, this is not a Sponsored Post.

With the Covid-19 pandemic, Rakuten Trade has reported an unprecedented number of sign-ups and activations.

In part, due to clients being allowed to register for and activate their accounts online.

Rakuten Trade activates 11,000 new accounts in March, amid MCO period

As reported by The Edge Markets

How I Use Rakuten Trade

For all Malaysian retail brokers like myself, I think Rakuten Trade is the best brokerage we have available here. I’m a long-term investor and typically make about 10-20 trades a year, depending on the market’s performance.

Low Brokerage

Rakuten Trade is perfect for me due to its competitive and low brokerage fees. As of 2021, most brokerages have lowered their fees to similar levels. Rakuten Trade is among the lowest.

And you know me, I always go for low fees. Fees add up. In my few years of stock investing, my fees add up to RM3.6K. And that is me being a long-term, slow investor. Remember to always keep your fees low.

RT Points

Apart from its low and competitive brokerage fees, Rakuten Trade is the only Malaysian brokerage that offers a form of cashback/reward for every trade made. You get RT points for trades and they have regular events that earn you even more points throughout your stock investing journey. And these points can add up. I usually cash in for AirAsia BIG points. You can also cash in your RT points for Bonuslink and Boost.

100% Online Registration

Another huge advantage of Rakuten Trade is its fully online registration. This has been a big hit, especially among younger retail investors. It can be a hindrance for the older generation but if you find it tough to sign up online, you can always walk into their premises and get help there.

FAQ

With this huge amount of sign-ups, I’ve also received plenty of questions from first-time investors as well as veteran ones. With a fully online brokerage being something totally new in Malaysia.

I’ve taken the time to compile a list of frequently asked questions below and sent them to Rakuten Trade for their official answers (highlighted in blue).

1.            Is it safe to trade with Rakuten Trade?

Yes, Rakuten Trade is licensed by Securities Commission Malaysia and holds a restricted Capital Markets Services License (“CMSL”) to deal in listed securities and to provide investment advice.

I get asked this question the most! And the answer is 100% yes. The SC does not willy-nilly hand out brokerage licenses.

2.            How long does it take for me to withdraw my money?

If you perform a withdrawal before the cut-off time (3pm on working days), the withdrawal will be reflected in your account the same day. After 3PM, we will process your withdrawal in the next working day.

So, for those who have asked me if there are problems with withdrawal, the answer is no. In fact, Rakuten Trade is one of the fastest in processing your withdrawal requests.

3.            I hear the shares held won’t be under my name.

Rakuten Trade accounts are nominee accounts and you will be the beneficiary of the account.

A nominee account is a securities account opened by an authorised nominee in accordance with Bursa Rules. With Rakuten Trade, your CDS account is held under a company’s name KENANGA NOMINEES (TEMPATAN/ASING) SDN BHD RAKUTEN TRADE SDN BHD FOR [CLIENT NAME]

4.            When do I receive my dividend payments?

As a Nominees CDS account holder, it may take an additional 3-5 trading days from the dividends payment date before it gets credited into your RT trading account

5.            Will Rakuten Trade charge for corporate actions in the future?

Rakuten Trade currently doesn’t charge a fee for corporate action-related activities and has yet to have plans to change this.

6.            I’m already trading with another broker, how can I transfer my existing shares to Rakuten Trade?

You just need to inform your current broker of your intention to switch. A physical share transfer form with a transfer fee of RM10.00 per counter will be submitted. Upon successful transfer, you will receive 1000 RT Points.  

My Full Review of Rakuten Trade

With their, rewards program, low fees, and no handling fees for corporate actions, Rakuten Trade is the top broker currently in Malaysia.

Rakuten Trade Advantages

1. You earn RT points whenever you trade.
As mentioned earlier, Rakuten Trade points or RT Points are what you earn when you trade or execute any trading exercise via their platform. The points can then be redeemed.

No other broker offers this!

2. Low brokerage fees starting from RM1 up to RM100.
Of all the brokers in Malaysia, Rakuten Trade offers the lowest commission rate at RM1 per trade for transactions below RM700. This is why Rakuten Trade is one of the best brokerages to start with when you’re a beginner.

3. No handling fees on corporate actions.
You open a Nominee CDS Account instead of a Direct CDS account with Rakuten Trade. This means no more manual paperwork to be done on your end for corporate actions.

Instead, these requests are handled by Rakuten Trade based on customers’ instructions from the website (online). They even absorb that revenue stamp guys and girls!

Now, this is a huge one, you no longer have to queue up at the post office to hand in your DRP forms for example.

4. Simple and fast account application. 100% online
Unlike all other brokers in Malaysia, you can apply for and activate your Rakuten Trade account online.

5. Online dividend tax vouchers
You receive your dividend vouchers in your inbox instead of in the mail. Save the trees!

6. High digital engagement with users
Rakuten Trade regularly posts updates and research on its website and social media accounts.

7. Clean User Interface
Rakuten Trade recently revamped its platform and it is now, even more, user-friendly. After using other brokerages for so long, Rakuten Trade feels much more modern. Try it!

Rakuten Trade Disadvantages

Most of these are due to Rakuten Trade being a nominee account instead of a direct CDS account. First off, let me assure you that your money will be safe albeit not directly under your name. Rakuten Trade is regulated by SC and your money is placed with a Trustee. In the unlikely case that Rakuten Trade goes bust, your money is held by a third-party trustee. Your money is safe.

The pros of a nominee account are that they will handle all the corporate actions on your behalf for free as mentioned above. No more long queues and RM10 setem hasils at post offices. This is a huge win for me as it saves time. The small disadvantages are listed below.

1. Late dividend tax vouchers.
You may receive your dividend vouchers a little late as the dividends will first need to be processed.

I do feel obliged to mention this as I get messages from readers asking me why they have yet to receive their dividends when their friends have. Your dividend will take around 3-5 trading days to process given your RT account is a nominee CDS account.

2. You cannot apply for an IPO.
Being a nominee account, you’re unable to apply for a company’s initial public offering.

This isn’t a big deal for me. To date, I’ve never subscribed to an IPO. If you, however, are big on IPOs, Rakuten Trade might not be for you.

3. Additional steps for attending AGM/EGMs
Due to it being a nominee account, to attend AGM/EGMs, you’ll have to email your request to Customer Service ten (10) working days before the AGM/EGM.

Register Now

As mentioned above, if you’re thinking of registering for a Rakuten Trade account, please consider supporting me and the blog by using my referral link hERE with the code: DIVMAGIC

Just make sure that this section is filled this way:

This image has an empty alt attribute; its file name is rakuten-registration.png


You will earn 1000RT points upon successful activation of your account.

Thank you in advance for the support!

End.

If you’re new to investing, you can start reading my Guide to Stock Investment.

To end this, I’d like to emphasize that this is not a Sponsored Post.

I am 100% backing one of Malaysia’s modern brokerages and recommend it to all new investors.

As always, I am on Facebook and Instagram. Follow, and keep up to date.

What to Do During a Bear Market in Malaysia

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Filed Under: Investment, Dividends, Financial Independence 8

What is a Bear Market?

In general, bear markets are markets in which the prices of securities fall by more than 20% amid widespread negative investor sentiment and fear. It can last from weeks to decades.

So, don’t be so quick to call a market a BEAR.

Things You Should Do During a Bear Market

Always Stay Invested

I’ve said this countless times, and it stays true time and time again. In the long term, you’re always better off staying invested.

And if you’ve been a reader of the site, I would like to assume – like me, you’re a long term investor.

”Wouldn’t it be better to sell off my stocks now and buy when the market bottoms out?”

This is the most frequent question I got during the last few weeks of turbulence. I even came up with a standard reply to copy and paste.

The above theory is sound, but I for one will never know when a market ‘bottoms’ out. And neither would you.

Instead of chasing that bottom, I’d suggest averaging down your stock positions regularly. And when a market rebounds, and trust me it will, you’ll be in prime position for the biggest upside of your life.

Remember the Fundamentals

Don’t panic. Don’t sell. Don’t panic sell.

Remember the reasons you bought into the stock and your portfolio in the first place. During a bear market, the company’s fundamentals will not have changed.

Do not just sell because the stock price is dropping. That goes against conventional wisdom.

What I am Doing

The Freedom Fund isn’t spared the current market downturn. In fact, my return right now is at a measly 0.91%. Since inception.

However, I’ve received and will continue to receive dividends every month. Which is why there’s no panic selling from my side.

Of course, there will always be regrets in hindsight where I wished I had sold stocks earlier so I’d have more money to spend now. But I’m happy where I am – receiving dividends while the market goes crazy.

So this is what I’m actually doing – I’m purchasing stocks and averaging down on my positions. And to continue doing this for the next few months or even years, I’d need cashflow. AND Dividends = Cashflow.

The money I’ve actually saved up in Fixed Deposits and in my savings account will be utilized and used to make more buys.

It is the Best Time to Start Investing

If you’re ever on the fence and wondering if you should start investing, the time is now.

You can read up on how to start investing hERE.

If you’ve yet to open a brokerage account, I’d recommend Rakuten Trade. They offer one of the best rates and you can do everything online right now.

And if you don’t want to invest on your own, I’d suggest a robo-advisor like StashAway.

End.

Now, this isn’t a call for everyone to take up arms and buy, buy, buy.

Instead, I am telling you to keep a calm mind and purchase more stocks if you are able to. Do not go over your risk threshold.

It is also a reminder to always, always stay invested.
Onwards and upwards my friends.

As always, Facebook and Instagram. Follow, keep up to date.

ASNB – Fixed-Priced ASM (Amanah Saham Malaysia) Units

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Filed Under: Fixed Deposits, Savings Accounts etc, Financial Independence, Investment 15

Updated February 2025

Latest update (August 2023) – ASNB opened up once more, for its Fixed-Priced ASM funds, the new limit is RM300,000 per individual. This will last till 31 October 2023.

Pretty straightforward on how to get your units, sign up on MYASNB and transfer your funds. I do it via internet banking.
Sign up link hERE.

ASNB - Fixed-Priced ASM (Amanah Saham Malaysia) Units


Link to document hERE

ASNB had on 1 May opened up its Fixed-Priced ASM (Amanah Saham Malaysia) fund for all Malaysians. But as we all know, most non-bumis will be interested in this. Bumiputras in Malaysia will be better off investing in ASB funds.

Did a post on Instagram on 1 May as well as a subsequent Q&A session with everyone via stories as I anticipated lots of questions from everyone.

You can find it in the post below and the full Q&A session via the Stories Highlight section on my IG page, titled ASNB Q&A.

My ASM Portfolio Now – This is a Rare Opportunity

Many current investors of the ASM fund will know that it is notoriously hard to get units. You hear stories of people pestering bank clerks every day to check for available units, lining up during festive seasons in an attempt to get units as you’ll only get them when someone else sells.

So, if you’re interested, grab it now. And to show you that I’m serious about this, I’ve put in the max RM100K allowed for each individual. Withdrew FD money for this and will be parking it here.

Now, I hope you know that the reason I’m showing this is to be 100% transparent. With or without a referral code, I put my money where my mouth is.

ASNB – ASM Dividend and Rate of Return

As only Amanah Saham Malaysia (ASM) is opened this round, the fund declared a 4.5% return for FY2023.
In 2022 and 2021, it was 4% and in 2020, it was 4.25%. Go back further and you can even see 5-6% returns.

You can find the full list hERE.

Key Things to Note

  1. How to sign up? Via their app hERE (you can do it 100% online)
  2. Malaysians only (you’ll need your IC to apply)
  3. Go for their Fixed Priced units only. Forget the Variable Priced ones as those are your traditional unit trusts, with fees and all.
  4. Fixed priced means you buy at RM1 per unit, you sell at RM1 per unit, this is purely a dividend play fund.
  5. Is it safe? Your assets are held in trust with Amanah Raya Trustee Berhad
  6. There is a limit this time around of RM100K per user until 31 July 2023.
  7. For other questions, please take a look at the ASNB Q&A highlights on my Instagram page.

More FAQs on this by ASNB officially below.

Previous Updates on How I got my Fixed-Priced ASM (Amanah Saham Malaysia) Units

Updated March 2022

There is a new 2022 ASNB campaign to get more fixed-price ASM units. Got this one from Maybank again and the brief details are as follows:

  • Ratio is now 60% variable price (VP) and 40% fixed-priced (FP); this is an increase from the last one I did!
  • Minimum total investment is RM10K; and
  • VP fund now has a lower sales charge.

I’m still on the fence about topping up my ASM fixed-priced funds. Dividends have been good but I really hate the sales charge of the VP funds from the bundle.

ASNB and All Their Funds

Amanah Saham Nasional Berhad, more commonly known as ASNB handles the funds found below.

ASB and ASM

The coveted fixed-price funds are what we will be focusing on today. Not

A thing to note – ASNB provides two kinds of funds. The first is the fixed-priced funds – namely Amanah Saham Malaysia (”ASM”). The variable-priced ones are just your normal unit trusts and mutual funds and are subject to NAV change, which means a potential loss for you. And you all know how I feel about them because of their fees.

I’ve been trying to get my hands on additional units of the ASM funds 1, 2, and 3 for ages now. I managed to get RM17,500 worth of it a few weeks ago and here’s how I did it (in 2019).

Now, if you’re a Bumiputera of Malaysia, you’re in luck. You’re automatically allocated units in the ASB funds. These typically give above 6% returns, with bonuses and stuff it’ll be in the 10% region.

Non-Bumiputeras, you don’t get to touch the ASB funds. The next best thing is the fixed-priced ASM funds I mentioned earlier. These are lower in returns compared to ASB though.

You’ve heard of aunties and uncles queueing up every damn day at banks just to ask the lady at the counter to query the system for available ASM units. This isn’t hearsay. I too do this on occasion.

The common belief is that during festive seasons, there will be a higher chance of available units as people tend to sell their units then. I’ve never gotten it this way.

In fact, I count myself among the lucky few because my mother had got me about RM3K worth of ASM units when I was younger.

ASM vs EPF

A common comparison I get from readers is ASM vs EPF. The dividends from ASM fixed-priced funds like ASM3 is lower compared to EPF of course. Instead, you get the flexibility of withdrawal for your ASM3.

I will probably max out my annual EPF and then put additional money into ASM FP funds.

Getting Additional Fixed-Priced ASM (Amanah Saham Malaysia) Units

The traditional way of purchasing additional units is as follows:

  1. You queue up and ask the bank if they’ve got available units. Chance? 0% for me
  2. You sign up at ASNB’s website and try to purchase online. You save time queuing but I have yet to get any.

Here’s the third way. I managed to get RM17,500 worth of ASM3 units a few weeks ago through my relationship manager at Maybank.

A few things you should know beforehand if you’re new to the blog.

  1. I’m a Maybank Premier Wealth customer and I have a relationship manager (”RM”).
  2. This is a campaign by Maybank. I ain’t sure if it’s only for Premier Wealth customers but my RM brought it to my attention.

OK. So this was the text I got:

Upcoming ASNB VP & FP Bundle Campaign 2019- Phase 3

Campaign Period: 10 – 20 Sept 2019 Bundle :
ASN IMBANG 1 or 2 & ASM3
Minimum: RM30k
Ratio: 65% ASN Imbang1/2 : 35% ASM3

The ASM3 units are limited and available on a first come first serve basis.

I had to basically put in a minimum of RM30K in. 65% will go to ASNB’s variable fund and the remaining 35% into its fixed-priced ASM3 fund.

ASNB is basically trying to promote and get you to invest in its variable fund which charges a 4% sales charge. I forgot the management fee per annum. But yeah, mutual funds.

I decided the 4% sales charge was worth it in the long term and invested RM50K into it total. Which gave me that RM17,500 in ASM3 funds.

As you can see, I was charged 4% immediately and the variable fund dropped in value since.

End.

That’s how I got RM17,500 worth of ASM funds. At a cost of RM1,300. Effectively, a 7% sales charge on it. Do you think it’s worth it?

I hope this one will help people get their ASM funds in the future. I’ll be sure to post an update whenever I receive news of new campaigns from my RM in the future. So follow me on Facebook and Instagram to get quick and immediate updates.

Emergency Funds & Fixed Deposit Laddering

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Filed Under: FI/RE, Investment, Other Investments 15

I’ll teach everyone how to set up your emergency funds using fixed deposits right here.

I know some of you veteran investors will already know all about FDs, but this one is for the newcomers.

You wouldn’t believe the number of inquiries I’ve had on FDs from readers. FDs are, by large the first form of investment everyone should have. They are a risk-free, interest-generating financial product offered by the good banks here in Malaysia.

In this article, I’ll show you how to set up your Emergency Fund with FDs.

What are Fixed Deposits?

Fixed deposits or FDs as we will call them are, first of all, a financial instrument. Here in Malaysia, they’re provided by banks and give a higher interest rate than a typical savings account.

The usual terms of a Fixed Deposit here in Malaysia:

1. You place a fixed sum with the bank for a fixed period of time.
2. The bank agrees to pay you a fixed interest rate.
3. You don’t touch that money. After the said period, you get your money back PLUS interest.

What if you were in an emergency you say?
And you needed to uplift the FD before it matures? Well, you’ll most likely lose all your interest. But your initial sum will NEVER be touched.

This right here is a liquidity problem with fixed deposits. Don’t worry I have a solution.

My Emergency Fund

An emergency fund is exactly what it sounds like. It’s a certain amount of money, easily accessible and put away in case of an emergency.

Exactly how much to put away? You’ll first need to know your average expenses and spending per month. After figuring that out, you’ll want at least a 6-month emergency fund.

Using myself as an example – On average, I spend around RM5,000 per month. All in.

So, a 6-month emergency fund would be RM30,000. But I try to keep a 24-month emergency fund going. Just cause. Which gives me around RM120,000 in liquid cash.

Now, the key ingredient for a good emergency fund is LIQUIDITY.

My emergency fund is 90% Fixed Deposits and 10% Savings Account and/or Cash. But an FD isn’t that liquid. So here’s how you make it liquid.

Why an Emergency Fund?

An emergency fund in my opinion serves two purposes.

The first one is to help you avoid a situation where you have to liquidate your investment assets in a crisis. As an investor, your portfolio can take a huge hit if you sell at the wrong time.

Imagine having to sell your stocks or that investment property due to a medical emergency.

The second reason is psychological. Knowing you have a safety net gives you a sense of security and peace of mind. It’ll give you a boost in confidence and has helped me as an investor focus on investing. I don’t have to worry about my expenses or my needs during an emergency.

I am genuinely positive that my emergency fund has helped me make better investing decisions.

Fixed Deposit Laddering

Fixed Deposit (FD) laddering is a strategy that tackles the liquidity issues inherent in locking all your emergency funds into one long-term deposit. Here’s how I do it:

Imagine again that you have an RM120,000 emergency fund. Placing the entire sum into a single FD doesn’t make sense—what if, suddenly, you need RM1,000 for car repairs, withdrawing early from that lump sum means forfeiting significant interest. At 3% per annum, RM120,000 would earn RM3,600 in interest over a year—no small amount.

The solution is simple: break the RM120,000 into smaller FDs with staggered maturities. Using Maybank as an example, the minimum FD placement is RM5,000 for a 1-month term. This approach ensures you have regular access to funds while still earning interest on your deposits.

My FD Ladder

If you’re comfortable with it, consider dividing your funds into 24 smaller portions.
I structured mine into RM10K and RM20K fixed deposits, using a mix of 1-month and 3-month terms.

Generally, the longer your money is locked in a fixed deposit, the higher the interest rate you’ll earn—though the difference is minimal when compounded monthly.

Additionally, stagger your fixed deposits by setting them up on different days of the month. I place mine in the beginning, the middle and the end of the month. This strategy lets you uplift the one that’ll cost you the least in interest in the event of an emergency.

Fixed Deposit Perpetuity

I always select the following 2 options whenever I place an FD.

1. Credit interest earned to the principal.
This essentially means you’re compounding your interest automatically.
2. Renew FD at maturity.
This means I never have to look at my FD Ladder again. It’ll run by itself.

End.

I know most of these are common sense to some, but I still hope I managed to bring value to everyone reading this.

I’m sure some of you have more sophisticated FD hacks and tricks. Please, do share!

For the next article of the FI/RE and Savings Series, check out article 005 – The Seven Stages of Financial Independence.

As always, follow my Facebook and Instagram to keep up to date!

Free Basic Financial Plan for Malaysians

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Filed Under: Dividends, FI/RE, Financial Independence, Financial Planning, Fixed Deposits, Savings Accounts etc, Investment 23

I’ve gotten so many questions from all of you seeking financial guidance that I’ve decided to once and for all to come up with a simple financial plan (a guide if you will) for all to use.  

We’ll begin with the basics first, getting yourself out of debt, saving up, and then investing that money for passive income.

The Goal

The final goal of this plan here is for everyone to have an investment portfolio that generates sufficient passive income to sustain your lifestyle.

What is your Networth

Use a paper or Microsoft Excel and draw up your Balance Sheet. You’ll have your assets listed in one column and your liabilities in the other.

I’ve got a simple template set up for everyone to use here. Add or remove necessary items. The download link for the Financial Plan excel sheet is below.

Personal-Balance-SheetDownload

1. Budgeting and Saving

First and foremost, you’ll need to have capital. For that regular, periodic investing. And also, for the opportunities that appear once (or twice) in your lifetime. This is why a financial plan is important.

Acquiring capital would mean you need a surplus in your monthly budget. Now, there are tons of budgeting templates out there on the interwebs so I’m not going to walk you through this.

I will, however, tell you that the most important aspect of budgeting is to make it into a healthy habit. Keep at it for a time and you’ll thank yourself 50 years down the road.

Savings – I want you to have at least a 20% savings rate. The higher the better, in fact, try for 50% of your take-home salary. You’ll invest more during your early years and let the magic of compounding take over sooner.

2. Your Emergency Fund

After you’re done consolidating and paying off your debts, you’ll have a nice surplus in your budget and savings every month.

The next step would be to start building up what we call your Emergency Fund. This is the fund where if and when you ever need money for an emergency, you’ll never need to take out that personal loan or worse, from loan sharks.

An example – medical bills, or if your phone got stolen etc.

How much should you have you ask? Some sites will tell you 3 months of your expenses. I say at least 6 months, go 12 months if you’re the risk-averse kind.

I typically keep my emergency funds in Fixed Deposits (‘FDs’). Now, you may need to liquidate this cash immediately, so put it up in one-month FDs. You can learn more about emergency funds and how to get an “FD Ladder” going here.

An emergency fund is a crucial part of your overall financial plan.

3.1 Investing

You’ve got a kick-ass budget going on, your behind is covered by your emergency fund, now let’s talk investing.

As you all know, I invest heavily in stocks. My portfolio can be found hERE.
Here’s what I do – I continue saving and accumulating my wealth. I then wait for and seize any opportunities that present itself. I try to always have cash on hand.

Of course, you may not want to invest in stocks. And that’s perfectly fine, you should invest in securities you KNOW and you’re comfortable with. Just as long as you INVEST. Don’t leave your money lying around in FDs and whatnot because inflation is gonna take a bite out of it every single day.

The 7 investment options in Malaysia can be found hERE.

Investing your money is essentially making your money work for you. The first few years of your investing will determine the outcome of your financial well-being so invest with care and diligence.

3.2 Building Your Passive Income

For me and hopefully, for you, the goal is to have enough passive income to not have to worry about work. I’ve calculated that to about RM3,000 per month or RM36,000 per year. This is the essence of FI/RE – Financial Independence and Retire Early.

To learn more about FI/RE – click hERE.

There are lots of people and information out there that touts and scream passive income in your face. But when I say passive, I mean the true passive. You receive regular income with little to no effort on your part.

For example, a rental property where you manage it yourself and you’re getting complaints from the tenant every other month is not passive.

Whereas if you let your agent handle every single thing regarding the said property and check-in maybe every quarter with him/her, I’d classify that as passive.

Or you know, just buy Real Estate Investment Trusts (‘REITS’).
Let professional property managers manage your property instead. No worries. Hakuna Matata.

4. Protection

Now I’m including protection into your financial plan because many either overlook this or overprotect and overinsure themselves.

This step should be done simultaneously with Step 3.

Let’s talk insurance. I know I’ll be getting flak from insurance agents for saying this but – You don’t need life insurance. This is my opinion.

What you should focus on right now, is medical insurance. To cover your medical expenses, should you be hospitalized or some critical illness should befall you. That’s all I have and that’s all I need. I can pass on my whole portfolio to my next of kin and dependants upon my demise.

While we’re on the topic, fuck investment-linked insurance. Get a standard, simple one. Don’t let the premiums in your 80s scare you. You’ll invest the money yourself, without paying a fee to the insurance company.

5. Review and Monitor

You finally have everything in order. The final step is a step that is continuous and ongoing. It is for life. And it is for generations to come.

You’ll need to monitor your budget monthly, and make sure your savings increase in tandem with your salary and income.

Your emergency fund will increase as your monthly expenditure goes up.

Your investments and assets AND passive income should always go up, up and UP.

And, your insurance should always be updated to include the latest offerings and cover all illnesses.

I myself go over my finances every month. Part of the reason I started Dividend Magic is to keep track of my investment portfolio as well as to hold myself accountable.

End.

It is my hope that this here Financial Plan would be of help to every single Malaysian. It is a very basic plan, I’ve left out some more advanced features of financial plans but the essentials are all there.

You and you yourself are responsible for your finances.

Remember – Save, Invest and FI/RE.
I’ll leave you one of my favourite quotes by William Shakespeare.

”There is a tide in the affairs of men, Which taken at the flood, leads on to fortune. Omitted, all the voyage of their life is bound in shallows and in miseries. On such a full sea are we now afloat. And we must take the current when it serves, or lose our ventures.”

Now go out there and don’t let them opportunities pass you by.

You’re done with the FI/RE and Savings Series! You can check out article 001 – A Guide to Stock Investment in Malaysia of the Investing Series.

As always, follow my Facebook and Instagram to keep up to date!

Funding Societies – My First Default

By
Filed Under: Other Investments, Dividends, Financial Independence, Investment 9

First off, an update on my portfolio’s performance with Funding Societies Malaysia. Annualised returns have gone down from 13% to 9.23%.

A lower figure compared to January but still, a 9.23% return is commendable for an investment.

Mainly due to –
1. A default; and
2. New unutilised capital.

My First Default(s)

It caught me off guard when I first received notice on the default on the issued notes, of which I’ve put in RM300 each into the affected notes.

MBBT-18080032
MBBT-18080033
MBBT-18080034

Being caught off guard like that isn’t always a nice experience but it was mitigated somewhat because I’ve constantly been managing my own expectations and prepping for a few defaults.

Re-adjusting Funding Societies’ Auto-invest Bot

If you’ve noticed, all the notes come from a single issuer or company. So it’s back to the drawing board for me.

I’ve now switched my auto-invest bot settings to have ‘Max Issuer Exposure’ from the previous 25% to a mere 5%. I don’t want to be over-invested in one single issuer.

In the event that a single issuer defaults, my loss exposure will never exceed 5% of my total loan portfolio.

Steps Taken by Funding Societies

It all started on 7 January 2019. The issuer contacted Funding Societies to delay payment. Below will be the notices I received from Funding Societies. In chronological order.

This will be pretty lengthy but it is important you as investors know the step-by-step process taken by Funding Societies.

7 January 2019

Dear Investor, The Issuer has reached out to us to push back the repayment of January 2019 due amount because pending receivables from their client, this will include late interest charges. Tentatively, repayment of January 2019 due will be on 18 January 2019. Thank you for understanding the situation. Team Funding Societies 7/01/2019, 6.20pm

** And thereafter, lengthy amounts of back and forth discussions with the issuer on the settlement. I’ll spare you the details. With the issuer failing to make repayments in March, Funding Societies finally decided to serve a letter of demand.

10 April 2019

Dear Investor, We wish to update that we have served the Letter of Demand as of 8 April 2019. At this stage we continue to be in contact with Issuer through our lawyers to demand for RM 50,000 which due on 31 March 2019, and upcoming RM 150,000 which is due 15 April 2019. As we wait for Issuer response to the Letter of Demand, kindly allow us to update you by 17 April 2019. Team Funding Societies 10 April 2019, 8.30pm

18 April 2019

Dear Investor, We would like to inform you that Note Issuer has made a partial payment of total RM 10,000 and it has been distributed as principle to investors on 16 April 2019. However, the amount made by Issuer is less than what we have requested from the Issuer. We are still in the midst of negotiating the outstanding repayment term with Issuer. As per our last update, the Letter of Demand has been served to the Note Issuer, and the Note Issuer has only made payment of RM 10,000.00 of the promised RM 200,000.00 upon the expiry of the Letter of Demand on 17 April 2019. At the meantime, we are escalating our recovery efforts through legal avenues and are discussing with the appointed panel lawyer on how to approach this matter effectively. You may refer to your email for full update. Kindly allow us until 3 May 2019 to provide you updates on the progress of recovery. We truly appreciate your kind patience and continued support. Team Funding Societies 18 April 2019, 1.25PM

End.

So there you have it. I’ve said there would be defaults and I’m sharing with everyone the first of mine.

There are inherent risks in investing in P2P financing. To mitigate, I am diversifying as much as I can. Putting in small amounts in every note issued.

And now, as I’ve learnt the hard way, not to overexpose myself to one single issuer.

I hope everyone learns from this.

That being said, I am still getting a 9.23% return. So don’t let yourself be discouraged by my defaults.

😀

Sign Up!

If you have not already, you can sign up with Funding Societies hERE.
Alternatively, you may use the code: j1mwa37p
You’ll receive RM50 upon investing your first RM1,000.

Note:
Funding Societies has reduced their referral bonus from RM50 to RM30 effective 1st March 2019.

Using my code and link, you’ll still receive RM50.