Wednesday, March 31, 2010

How To Double salary in 10 years, country wise.

Malaysia is aiming to increase its average salary from $2,000 to $4,000 in the next 10 years. How can that be done ?

First of all, using rule of 72 you can estimate that doubling in 10 years would mean a continuous compound raise of 7% annually. Or a total of 72% increment within that 10 years. For example, it doesn't matter if the increment is from 2.72% to 11.72% adding 1% annually OR it went from 11.72% to 2.72%, either way will result a $4,000 monthly salary in 2010.

While it may sound tough to double a person's salary in 10 years but there are a number of ways this can be achieved rather easily country wide;

1. Increase Inflation

By decreasing supply on purpose, prices increase. Where does the extra money go to ? It goes to people who produce the supply. It may sound weird but when done properly, all the extra money collected from the consumers will be passed down to the workers themselves. This way, although items price increase, your salary increase as well. Nothing in life actually change, just that the numbers get bigger. This method work best with monopoly in place, as in all consumers are also the same workers for that few same companies.

How much inflation rate do we need in order to achieve this ? Properly 10% a year for the 1st 7 years (2011-2017) and then back to a very low figure in the last 3 years (2018-2020). It will take a while before the effect of inflation hike is brought over to salary increment. Furthermore, we can't have a high inflation rate approaching 2020.

Will this help us ? Well no, I have already said Nothing in life actually change, just that the numbers get bigger ... on everything.

2. Foreign Exchange

Believe it or not, it is entirely possible that by simply doing NOTHING, our country wide average salary can become double in the next 10 years. Notice that our finance minister is using USD as a benchmark for this target. Today 1 USD = 3.3 MYR. If USD continues to devalue and the exchange rate become 1:1.65 in 2010, then by having the same MYR 2,000 salary, we would have already doubled our salary from USD 606 to USD 1,212.

How possible it this ? Well, it is almost a certainty the trend IS CORRECT. The power switch from west to east has not only already occurred but it has been strengthening now. It is only a matter of how big a scale it will switch.

Will this help us ? Hell no. It would have helped if we BUY things from USA. But the fact is we BUY mostly from the EAST and we will buy MORE from within the EAST. A small currency rise on the EAST may knock us out of the game easily. We are anchoring on the wrong currency for our future planning.

3. By making a few people even RICHER

This is an average game. Simply by making today's millionaires into billionaires, it will easily pull up the average and skew the figures. How is this done ? By issuing more mega projects to turn key contractors, hiring super consultants to tell us what common senses are, setup independent groups for special projects etc.

Will this help us? Well, some of us maybe. You just need to get on the bandwagon as front seat as possible.

4. By giving FREE money to VERY POOR people

Just like above, pulling the other end of the graph can bring up the average as well. Despite qualification and ability to perform, we just simply increase basic salary for all those who are earning below $2,000 a month now. For the others who really can't fit into this category or still has very low salary, put them OFF work completely. They will receive FREE support from the government on their daily needs. By knocking out these VERY LOW SALARY figures off the chart, the average will rise too.

Will this help us ? Oh yea, quite a lot of us I guess. But if you are already one of the average guy to start with, not too poor not too rich, you are pretty much still on yourself. Lets just hope by giving out FREE money, there will be less crime !?


Now although all above may sound too extreme and may even be read as a joke, but I assure you 10 years later, we WILL achieve our 2020 goals and a combination of all 4 methods mentioned above WILL be used, partly or as a whole.

And here below I present you NEM fashion !!

Sunday, March 21, 2010

2010 Inflation vs life style change

In 2009, Dung, Mat and Ahmad's personal inflation rates are 4%, 24% and 2.5% respectively representing the Rich, the Average and the Poor. Unfortunately this year we can't do a 1 to 1 comparison because Dung's business has expanded into main land China and his life style has drastically changed. Mat lost his job and now float between temporary freelance works. Ahmad on the other hand has ventured into politics and sort of get himself 'upgraded' into the Average arena. Unfortunately, none of their personal inflation rate can be used to represent our 'typical' experiences. All of them are going through a 'transition' in life rather than reflecting the general senses of inflation. But perhaps you are experiencing a transition in life too ?

When one is calculating his own personal inflation rate, it is important to differentiate value and cost. For example, a plate of used to be $1 fried mee is now $1.50; that would be a 50% increase as in it has inflated by as much as 50%. Like wise, if the $1 mee is now much smaller plate, it has inflated as well. But if you are no longer eating fried mee at a street stall, instead you pay $10 for a dish of mee in a nice deco restaurant nowadays, your inflation rate is NOT 10X ! You are merely having a change in life style.

The rise of cost on the same value is inflation. Inflation does not usually apply when you are comparing 2 different things with 2 different values.

2010 is an interesting year. While inflation was on the rise in 2009, inflation has finished rising in 2010 especially after March. If you do your grocery in hypermarkets, you may have already observed a rise of 15-30%. Certain goods haven't had an increase in price for the past 3 years, hence averaging out would annualized to a 6-9% inflation rate.

If you do your grocery in a wet market, the worst is over. Most of the stalls which haven't gone bankrupt yet have found new supplies. Most of the selling prices remain the same as last year. Generally the inflation remains stable at 3-5%.

Local or individual grocery stores on the other hand are still facing challenges. Some of them who manage to find wet market's supply chain manage to stay more competitive than hypermarkets. Others are struggling wondering if they should just close the store or relocate.

Night clubs, bars, restaurants and places for The Rich remains similar by large. Most of them face reduce in sales and therefore beef up their marketing and promotion deals to play catch up. There aren't much change in price. But one may find these service providers start to charge for all the little things that were used to be free last time.

There you go, 2010 is a year of stabilizing inflation. But the worst is NOT over yet. When the bail out funds end mid this year, the critical turning point would be if all those dump ass giants can stand on their own. Even if only ONE of them still collapse when the bail out fund withdraw, it will still tear down the whole economy creating the worst recession ever. But its unlikely. The old faulty finance system will most probably stay through out this decade, forex loop holes will continue etc. Perhaps it may crash in 2018 ... but for now, we are off the hook temporary.

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Thursday, March 11, 2010

Malaysia Best Rates 2010 March 11 update

1 month Fix Deposit

Most banks offer 2.25% now except a few ones. Most of the ones who are still stuck at 2.0% are international banks like Bank of China, JP Morgan, Bank of Nova Scotia and Alliance banks.

1 year Fix Deposit

Highest offered rates is 2.75% by Affin Bank, AmBank, Bangkok Bank, Bank of Tokyo-Mitsubishi UFJ, Deutsche Bank, Hong Leong Bank, Malayan Bank.

Base Lending Rate

Most local banks stand at 5.8% now with Affin offers the lowest at 5.75%. International banks offer lower rate starting from 5.50% by Royal Bank of Scotland.

Saving Accounts
Kuwait Finance House continues to offer highest saving interest rate in its KFH Savings Account-i at 1.5%. This account is also very simple and straight forward.

Other than that, Standard Chartered's Al-Wadiah Savings Account-i offer 1.0% for up to RM 10,000 savings.

CIMB's Air Asia Savers Account and Mudharabah Saving Account-i also offers 1.0%.

Other accounts who seems like offering high interest rate but require high amount of saving are excluded. Some special accounts like OCBC's iQ Saving is also excluded because their offer rate may seems high at 3.28% but their effective rate is hard to simplify for general public. In short, for those accounts, if you use up the benefits they offer then it would be a great deal but if you do not use any of those stuff then its better you stick to a lower but 'real' rate, simpler and more straight forward saving account.

Don't forget you can get a simple widget
like above to show on your blog / web site.
Just visit here to see how.

Car Loan : NEW Car

Maybank continues to offer the lowest car loan rate starting from 2.7%. However, this is NOT a standard rate apply to all applicants. The actual rate can range up to 4.3%.

Bank Muamalat offers 2.85% for both New and Used cars but it requires an admin charges of RM600.

Most other banks rates offer are 3.25% for New cars.

Car Loan : Used Car

CIMB offers the lowest 3.25% used car loan rate.

Most of other best used car loan rates offer are 3.75% by Affin, Hong Leong Bank, Alliance, EON and RHB.

Don't forget Car Loan rate is Fix Term Rate
which is effectively a MUCH HIGHER
than variable term rate
like House Loan and Fix Deposit.

House Loan

Affin remains as the best house loan offer at BLR - 2.3%.
Standard Chartered offers BLR - 2.25%

Most banks offers are BLR - 1.8%.

Multi-tiers house loan offers are excluded because it would be impossible to simplify their pro and cons without knowing the actual details of your particular loan details. Hence, only simple and straight forward house loan offers are compared.

Wednesday, March 10, 2010


There are certain fundamental stuffs that you should do even before you fully understand what they are. That will at least keep you afloat at a certain stage, also often used as resting stage or jumping stone to higher level. Usually this stage is also adequate for young adult to retire early. What goes beyond however will require clear target and solid methods. Some of the easier methods shared before are ;

One common element to do great thing is the use of Leverage. Unfortunately, a lot of people learn about leveraging before they learn the right method. As a result they simply leverage everything they had.

Leverage is basically maximizing result, no matter what direction it goes. If you have a good investment system, leveraging it would result a bigger profit. Likewise, if you have a bad or no system at all, leveraging on it would only give unknown result if not just worse.

Leverage amplifies both the rewards and the risks. Hence if the risk was not properly mitigated before hand, then the result is always disastrous.

Make sure you have found a good method that you like and have proven working well for you, ie. your cup of tea. Then only apply Leveraging technique on that particular system. Else just DON'T Leverage at all !

One of the most common wrongly leverage stories come from property investment.

Monday, March 1, 2010

go on without a goal, but for how long ?

One of the weird concepts presented by this site is that you don't have to have a goal in your personal finance. It would be like an anti good finance practice, as guilty as Rich Dad asking us NOT to save in his Conspiracy publication.

Lets get straight to the point then. If I really don't know what I want in life or always fail to stick to the same goal, does that help if I keep on searching my goals and therefore should do nothing about my personal finance until I find the right goal ?

I think the hint should be clear. There is really nothing wrong or as a matter of fact, much better if you also start saving and save automatically while you are looking for your goal.

You may not understand exactly what Warren Buffet is doing but if you were to just follow exactly what he has been doing, what do you think you will end up with? Well, Berkshire Hathaway investors can tell you that they are very happy with exactly that situation ( at least historically ).

If you have found your goal, congratulation and good for you! Unfortunately due to the way our education system is set up, most of us might just spent our whole lives looking for what truly meant to us. At the same time our lives go on as usual and as real as it could hit us hard. So even if you haven't found your goal, go ahead and ;

MalPF doesn't say you don't need a goal. It says having one goal is better than not having any. And don't procrastinate while you haven't found your goal yet, start some actions. And if you don't know what actions to take before having your own goal, stick to what MalPF gives you, the wealth pyramid.

But there is always a line to draw, differentiate those with goals and those without. If you do not subscribe to Dollar Cost Averaging, stay within Bond Fund and Fix Deposit. If you do not follow some of the stock market investment principals, do not invest in stocks if you don't have a clear goal yet.

So you don't have to have a goal to start something, but eventually you will need a good goal to end great.